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Arizona is one of the many states that have passed a law to gradually raise the minimum wage. For small business owners in the state, this is an essential topic.
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.
What is the minimum wage in Arizona?
The new minimum wage in Arizona will increase to $12.80 on January 1, 2022, up from $12.15 per hour the previous year. This will be $1.55 more than the federal minimum wage. Some cities in Arizona are raising their minimum wages faster than the state. Flagstaff and Tuscan, for instance, are raising their minimum wages to $15 an hour. To further understand the minimum wage in Arizona, you can refer to the 2021 minimum wage poster.
While many states increase the minimum wage in accordance with the cost of living or inflation, Arizona minimum wage from 2017 through 2022 was dictated by a schedule laid out in the 2016 Fair Wages and Healthy Families Act.
Minimum Wage in Arizona
| January 1, 2018 | $10.50 |
| January 1, 2019 | $11.00 |
| January 1, 2020 | $12.00 |
| January 1, 2021 | $12.15 |
| January 1, 2022 | $12.80 |
How is Arizona’s minimum wage changing in the future?
In accordance with the 2016 proposition, Arizona increased minimum wage to $12 in 2020, $12.15 in 2021 and subsequently $12.80 in 2022. The Arizona minimum wage in 2023 and beyond will adjust based on inflation and cost of living.
Will there eventually be a $15 minimum wage in Arizona? In some parts of the state, it’s already getting closer. 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, the Arizona minimum wage will increase based on inflation (a function of the Consumer Price Index).
Flagstaff Minimum Wage Schedule
| 2018 | $11 |
| 2019 | $12 |
| 2020 | $13 |
| 2021 | $151 |
| 2022 | $15.501 |
1This wage or $2.00 more than the state minimum wage, whichever is greater. 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?
As the Arizona minimum wage is set to increase over the next few years, it’s time to get prepared. Here are some things to put on your to-do list for avoiding mistakes many new business owners make:
- Know your stuff: Make sure you are doing research and staying up to date with upcoming changes with the minimum wage in Arizona. 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. It’s also important to know the differences for salaried employee payroll vs. hourly employees.
- 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. Learn about affordable small business pricing for payroll services, which go a long way to help organize your employee costs.
- Make smart hiring choices: You want to ensure you’re hiring the right people to begin with. After all, the cost of replacing employees is high, 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. The first step is to get a free EIN, which you will need to input in whichever payroll system you choose. Systems like Square payroll software have many helpful payroll features, including automatic payroll.
- Stay up to date: It’s crucial to the health of your business that you stay informed about current events. Seek out information on anything that may affect your bottom line, such as our COVID-19 small business resources and protect your business’ future.
As always, to make sure your business is prepared and stays in compliance (such as getting an EIN) with applicable wage laws, you should discuss Arizona’s minimum wage laws with your trusted accountant and lawyer.
