Arizona getting set for minimum wage increase in 2018

PHOENIX — Arizonans at the bottom end of the income scale are going to be getting a bit more in their paychecks this coming week.

As of Monday, the new state minimum wage will be $10.50 an hour for most private sector employees. That’s 50 cents more than the current figure — or a bit more than $1,000 a year, before taxes.

It also will now be $2.45 an hour more than in 2016, the year voters approved a multi-step plan to eventually get the state’s minimum up to $12 an hour by 2020.

How many of the state’s 2.8 million workers will be affected remains unclear. The Arizona Office of Economic Opportunity has no figures of the number of workers currently earning less than $10.50.

But doing some extrapolation of 2016 data, state economists said that, theoretically speaking, slightly more than 500,000 workers should be affected by the January 1 change, a number they admit is “probably an overestimate.’’

There’s also the fact that any bump to the bottom likely pushes up the wages of those making $10.50 or more as employers must provide an incentive for existing workers to stay.

What is clear is the first step, implemented at the beginning of 2017, did have an impact, particularly in the leisure and hospitality industry which, generally speaking, pays the least among all segments of the Arizona economy.

Last month the average hourly earnings for those in this sector was $15.06. That compares with $14.36 a year earlier, a 4.9 percent increase.

By contrast, average wages among both manufacturers and financial services employers are up just 1.7 percent in the past year.

There are, however, some exceptions to that. Wages paid in the state’s professional and business services are up year-overyear by 7.8 percent.

What also is clear is employment in bars and restaurants, the segment of the economy with the largest share of lower-wage workers, continues to increase.

An analysis by Capitol Media Services finds the number of people working last month in bars and restaurants was 241,900.

That’s 5.3 percent higher than a year earlier. It also far exceeds the 1.9 percent year-over-year increase in all private sector employment.

But Steve Chucri, president of the Arizona Restaurant Association, argued the higher wages have had

an effect — and the health of the industry overall does not reflect what’s happening to individual establishments.

“Don’t mistake that because more restaurants are opening and that hiring might be up that that means everything’s good and fine,’’ he said.

He pointed to the announcement last week by Corner Bakery that it was closing three of its

Phoenix-area locations and firing all the workers. Jim Long, CEO of parent company Blue Mountain Cafes said in a prepared statement that higher minimum wages in Arizona were a contributing factor.

But a fourth cafe in downtown Phoenix remains open, as does one in Tucson. And Chucri conceded there may be other factors that have led to some restaurants closing their doors.

“Competition is fierce in this industry,’’ he said.