The East Valley's lowest-paid workers will see another bump in their pay in the new year.
On Thursday, the Arizona Industrial Commission will increase the state's minimum wage from $6.90 to $7.25 an hour. That will put the state's rate above the federal rate, which won't reach $7.25 until July.
This will be the third time the minimum wage has increased since a 2006 law established a state minimum wage and required the commission to provide annual cost-of-living increases based on the U.S. Department of Labor's Consumer Price Index.
Before 2007, Arizona's minimum wage was based on the federal rate of $5.15 an hour.
Arizona AFL-CIO was part of a coalition that backed the ballot initiative in 2006 to increase the state's minimum wage.
"We believe that anybody who works full time should not live in poverty," said Dana Kennedy, Arizona AFL-CIO's communications director. "We believe the increase in minimum wage is one way to offset that. Arizona is now a little bit more competitive to the neighboring states."
The Employment Policies Institute, a nonprofit organization that studies public policy issues involving entry-level employment, believes the increase will lead to higher unemployment in Arizona.
"Most economists say it has a negative impact on the least-skilled members of society," said Rick Berman, the institute's general counsel. "When you raise the minimum wage in a down economy, it only exaggerates the impact and forces employers to make even more drastic changes, and that's what we're experiencing now."
The 2006 law placed Arizona's minimum wage "on autopilot" instead of in the hands of state lawmakers, he said.
"Legislatures never raise the cost of doing business when sales are going down," Berman said. "You don't want to do it at a time when businesses are looking to cut back on costs wherever possible."
Since 2006, the state's minimum wage will have increased by $2.10, and for a business with 20 entry-level employees, that increases its costs by more than $85,000 a year, he said.
"That's an enormous amount of money and most small businesses don't make that kind of money at the end of the year," Berman said.
The Arizona AFL-CIO believes there is no strong evidence that raising the minimum wage results in job losses.
"Any money that workers do get, they spend it," Kennedy said. "The more that low-wage workers make, that's more that they actually put back into the economy. And the reality is, not that many workers actually make the minimum wage. Most Arizona companies pay above the minimum wage anyway."