Arizona's minimum wage hike is tied to inflation. Hence, the "real" rate since the last significant hike (around 2020/2021) shows prices rose significantly (around 26-30% in Phoenix by mid-2025), meaning the wage increased to keep pace with the actual cost of living, not a fixed percentage; for instance, the wage hit $15.15 in 2026 due to roughly 3-4% annual inflation, but overall costs for families have jumped much higher, with real salaries actually falling despite nominal gains due to these high inflation periods.
Key Inflation Figures & Timelines (Phoenix Metro Area)
Since August 2019, Cumulative inflation reached about 30.2%, costing typical households an extra $1,525 monthly by mid-2025. By late 2024, a family would have needed to spend an additional $45,204 on the same goods and services in 2019, according to the Common Sense Institute. Recent Trends (Mid-2025): Inflation cooled significantly, with August 2025 recording only 1.4% headline inflation and 1.7% core inflation, but this followed years of much higher rates, such as the peak of 13% in August 2022, notes the Bureau of Labor Statistics.
Minimum Wage Connection
Arizona's minimum wage automatically adjusts with inflation (CPI), meaning wage increases (like the jump to $15.15 in 2026) directly reflect these rising costs, ensuring a "real" increase in earnings relative to living expenses.
The "Real" Impact
Despite minimum wage increases keeping pace with the CPI, periods of high inflation (especially 2021-2023) eroded purchasing power; by early 2025, real wages in Arizona had fallen 6.6% from their April 2020 peak, meaning workers could buy less with their higher nominal wages, according to the Common Sense Institute.
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