Arizona’s minimum wage will increase 30 cents to $7.65 for the 2012 calendar year, making it 40 cents higher than the federal minimum wage.
The increase is a result of Proposition 202, also known as the Raise the Arizona Minimum Wage for Working Arizonans Act, which was approved by state voters in 2006. The Act established a minimum wage for Arizona and provides for annual increases based on increases in the cost of living.
By law, the federal consumer price index for all urban consumers, U.S. city average (CPI-U), for goods and services during the 12 months ending each August 31 is the benchmark for whether the Arizona minimum wage will increase the next calendar year. The CPI-U increased 3.8 percent between August 2010 and August 2011.
The increase represents a 30-cent-per-hour raise over the current Arizona minimum wage of $7.35 per hour. That’s the largest increase since the voter initiative took effect on January 1, 2007. For a full-time minimum wage worker, the increase amounts to an additional $624 before taxes per year.
Only slightly more than 10 percent of Arizona workers actually earn the minimum wage. Most minimum wage workers in Arizona are employed in service industries.
According to the Arizona Department of Administration, the state’s median wage in 2010 was $15.89.
Dinita James is editor of the Arizona Employment Law Letter and a partner in the Phoenix office of Ford and Harrison.