Minimum-wage workers in Arizona are starting the new year with a pay raise.
The 15-cents-per-hour boost is automatic under the state’s voter-approved minimum-wage law, bringing the new wage to $6.90 per hour. In each consecutive year, wages will be adjusted based on increases in the cost of living.
Voters approved Proposition 202 by a 2-to-1 margin in November 2006. The initiative boosted the state’s bottom-tier wage from $5.15 an hour to $6.75 per hour at the beginning of this year.
With the new raise, a person working 40 hours per week at the minimum can expect to make $276 per week, or $14,352 per year.
The minimum-wage hike will benefit workers at the bottom rung of the workforce, while presenting some financial challenges to employers, especially with the slowing economy, said Don Wehbey, senior economist with the Arizona Department of Economic Security.
“In Arizona, there has generally been a lot of upward pressure on wages, so it’s not likely that someone who worked for minimum wage stayed there very long,” he said.
“But if someone comes in making what you’re now making … it pushes the whole wage structure upward. It puts the pressure on employers to raise everyone’s income so they … don’t demotivate people on their staff.”
The resulting pressure to raise overall wages could prompt some layoffs, but the additional cost more likely will be covered through increased productivity and cost containment, Wehbey said.
The hike will help many Arizonans cover increased costs for food, fuel and health care, he said. The proposition was sponsored by labor unions. Following the election, Alicia Russell, treasurer of the Arizona Minimum Wage Coalition, said the strong showing proved that voters agreed workers need a higher wage.
The Arizona Chamber of Commerce was among the opponents, which also included representatives of the hospitality industry and small-business owners.
“Our feeling is that this is just another case of a law being enacted without considering the consequences that go along with that law,” said Ann Seiden, chamber spokeswoman.
“It sounds great, but the cost is going to be picked up somewhere along the way. It is going to be picked up by consumers, and there will be some job losses.”
Supporters emphasized that raising the minimum wage would affect more than just teenagers, as the majority of Arizona workers earning less than $7 per hour were adults.
Seiden said there will be fewer jobs available for individuals with little or no skills or training, because higher base wages will require higher levels of training.