Understanding the Arizona Minimum Wage
Arizona is one of the many states that have passed a law to raise the minimum wage over the next few years. And if you own a business in Arizona, that could really affect you.
As an employer, it’s important to keep on top of these changes so you’re paying your employees what is legally required. We pulled together an overview of Arizona’s minimum wage increases as well as some ideas about how to prepare for those costs.
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What is the minimum wage in Arizona?
The minimum wage in Arizona is $10.50 an hour, up 50 cents from 2017. This is $3.25 more than the federal minimum wage.
While many states increase the minimum wage in accordance with the cost of living or inflation, Arizona’s increases from 2017 through 2020 are dictated by a schedule laid out in a proposition approved in the 2016 election.
Minimum Wage in Arizona
Some cities in Arizona are raising their minimum wages faster than the state. Flagstaff, for instance, has already raised its minimum wage to $11.
How is Arizona’s minimum wage changing in the future?
In accordance with the 2016 proposition, Arizona will hike the wage another 50 cents to $11 in 2019 and then a full dollar in 2020 to reach $12. For 2021 and beyond, Arizona will raise its wages based on the cost of living.
Flagstaff has passed its own legislation that will see it reach a $15.50 minimum wage by 2022 (this is in line with a number of cities around the country that have passed legislation to reach a $15 minimum wage). Beyond that, its wage will increase based on inflation (a function of the Consumer Price Index).
Flagstaff Minimum Wage Schedule
1This wage or $2.00 more than the state minimum wage, whichever is greater. Starting in 2021, increases to the Arizona minimum wage will be subject to increases in the cost of living in that state. The minimum wage in Flagstaff will be affected by that measure.
How should Arizona business owners prepare for changes to the minimum wage?
Since Arizona plans to raise its wages consistently over the next couple of years, it’s time to get prepared. Here are some things to put on your to-do list:
- Know your stuff: Make sure you are doing research and staying up to date with upcoming changes. If you’re unsure which wage regulations apply to you, talk to your city’s Chamber of Commerce or other business liaisons at city hall.
- Look at your budgets: Check your budgets and cash flow in detail and create a hiring plan that you can afford. The good news is that minimum wage increases are posted a long way out, so you can look over several years and create a conservative employee growth plan. You may also think about hiring other types of workers — like seasonal workers in the winter or summer — to supplement your staff at busy times, instead of hiring full-time employees.
- Make smart hiring choices: Unemployment in Arizona is down to 4.9 percent, which is above the national average but still quite low. If you’re noticing that there are smaller pools of good applicants, then you want to ensure you’re hiring the right people to begin with. After all, employee turnover can be costly both in terms of time and money. You’ll save in the long run (and have more money for your growth) if you take time in hiring and training your employees.
- Update your technology: Making operations more efficient can save you money and time in the long run. So think about ways that technology can help reduce those costs. For example, you might automate payroll instead of doing it yourself every few weeks.
As always, this article doesn’t constitute legal advice, so discuss Arizona’s minimum wage laws with your accountant and lawyer to make sure your business is prepared and compliant.
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