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THE LOCAL ECONOMIC REACTION TO THE 2022 ARIZONA MINIMUM WAGE INCREASE

Posted On: 10/31/2024 / Payroll Services
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Home » Resources » Blog » The Local Economic Reaction To The 2022 Arizona Minimum Wage Increase

Arizona minimum wage has increased again to $12.80, rising by 65 cents. This change will take place effective January 1st, 2022, and could significantly impact an already-hot job market in Arizona going forward.

In addition to the job market, the Arizona minimum wage increase will also affect local economies, employers, and subsequent wage determinations. Read more on how this might change your businesses’ hiring, planning, and budgeting for 2022 and beyond.


Arizona Minimum Wage Continues to Rise after Prop. 206

In 2017, Arizona Proposition 206 created an incremental minimum wage scale that was set until 2020. In 2021, the minimum wage pay was to be flexibly adjusted based on the cost of living.

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After inflation and other factors contributed to the highly increased cost of living, it was decided that a 5.3% change up to $12.80 per hour would be the new Arizona minimum wage. This determination was made by the Arizona Industrial Commission and is a significant increase over the prior year’s flexible-scale raise of $.15.

This continuation in minimum wage increase adds to what many thought would be a debilitating economic effect in 2017 – but the sentiment is different in 2022.


Effects of Arizona Minimum Wage Increase in 2022

In 2022, the minimum wage of $12.80 isn’t seen as a primary reason for concern among business owners. Due to a shift in job demand and cost of living, most businesses – including industries that typically pay the minimum, such as serving and grocery jobs – are offering more than $12.80 with greater-than-required benefits.

This change has been difficult for some small businesses and sectors, but most companies seem to have been prepared well by their planning in 2017. There have been good economic rebound numbers in Arizona, and it has businesses to remain open in what small businesses still an undoubtedly tenuous time for employees and employers alike.

One of the most significant pain points for both parties is overall wage, however. The minimum wage increase has not been seen as a burden because there is a shortage of workers willing to work at that level. Some businesses are offering signup and retention bonuses in addition to the already inflated wage.

This means while the 2022 minimum wage increase is not likely to be a critical determining factor in hiring practices short term, it is still worth keeping track of its effect on your business’s projections long-term.

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Planning for the Next Arizona Minimum Wage Increase

Luckily for your financial projections, the minimum wage increase is a set number that you can update easily. However, there is far more than the base rate that you need to consider for the future.

The minimum wage increase may not significantly impact hiring at the moment, but it may impact specific high labor-volume contracts. Similarly, it may affect the quality of laborers or contractors that your company can afford for certain positions as wage increases affect all sectors of every industry. This puts a significant emphasis on knowing your financials inside-out to see where you can allocate more money for talent and limit potentially wasteful spending elsewhere.

Finally, this is the perfect time to seek professional assistance if your HR, financial, or payroll teams need outside help. With the cost of labor increases, a third-party service could end up saving you thousands long-term and can help get you the right employees at the proper wage.


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At PayTech, we offer level-headed analysis and trustworthy financial professionals that can help take your business to the next level. We’d love to discuss the ins and outs of labor laws, payroll projection, or any other points of need within your organization.

Contact us today! – ready your business for growth in an ever-changing economy and job market.