Arizona raises minimum wage by $1.05, but will it help? An economic expert weighs in

A new year and a new minimum wage in Arizona.

It’s $13.85 an hour now, but can wage growth keep pace with inflation? The owner of Cocina Adamex in Phoenix talks about how he dealt with labor costs after the new owner took over last summer.

Luckily, the staff stayed and wages didn’t change. In fact, workers are already earning slightly more than the new minimum wage.

Adriana Zapata is a true small business owner.

“We have all our pastries, fresh every day, traditional products like marranitos,” she said.

She considers the employees of Cocina Adamex to be her family. Literally. Many of them are their relatives.

“Keeping their wages above minimum wage is a big goal for us,” Zapata said.

Arizona’s minimum wage is now up $1.05 compared to 2022 – we are one of 26 states to increase the minimum wage in 2023.

Zapata has always paid a starting salary of around $14 an hour at Cocina Adamex and says work is the biggest expense.

“Depending on what day of the week it is, how much business we expect, so we’re constantly monitoring our labor costs,” Zapata explained.

She is happy to say that she has had no staff turnover.

“It’s really almost not a living wage”

“It’s really about retaining people and keeping them from moving on to the next best job,” said Rick Merrit, president of Rick Merritt, Elliot D. & Pollack Company, an Arizona-focused real estate and business consulting firm.

He says employers have already had to increase wages to retain talent and that the new minimum wage will not have a major impact on those living alone.

“It’s really almost not a livable wage at this point unless you have a spouse who also works. You have two minimum wage jobs so you can probably make ends meet, but as an individual it’s very, very difficult,” Merrit said.

According to RentCafe, the cost of living in Arizona is 7% higher than the national average. Housing is 18% higher than this average.

Zapata knows the minimum wage won’t stop there.

“For my business to thrive, my employees need to come, be happy, feel good, and be a part of our success,” said Zapata.

Inflation has really made businesses adapt, especially restaurants like this one. Salad prices had skyrocketed last month, reports show, and that was one ingredient they scaled back.

For Zapata, she says raising menu prices is the last resort.

City in northern Arizona Flagstaff just raised its minimum wage to $16.80 an hour.

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