When Proposition 206, the “Fair Wages and Healthy Families Act,” passed in 2016, it raised Arizona’s minimum wage from $8.05 per hour incrementally each year to $10, $12, $14.35, and now, in 2025, $14.70 hourly. And, as many economists predicted, it drove many smaller businesses to lay off thousands of younger workers, and some larger employers (McDonald’s, for example) have found other ways to reduce their workforce through technology, such as using self-service kiosks and robots.

Despite arguments claiming that higher minimum wages raise the living standards of the workforce, the opposite is true. While some workers will see rising paychecks from the law, many actually lose their positions. The net effect is that entry-level positions traditionally held by younger workers (high-school-aged, part-time college students, seniors working for extra money) go to older or more experienced workers. In turn, it reduces the experience level of workers, further eroding opportunities for first-time and younger workers – employers are less likely to hire inexperienced workers at higher pay levels.

In 2021 and 2022, Arizona saw unemployment numbers in the high 6% to 7% range. Although it is difficult to determine whether the impact was due to Prop 206 or the economy in general, from a macroeconomic standpoint, the minimum wage ruling likely impacted those numbers. At the very least, small business owners likely were the most negatively impacted.

Minimum wage has become a political hot-potato issue in recent years, making it unclear whether the new, more conservative legislature will intervene. Pressure from pro-business lobbies could prompt new action. However, lawmakers would need to be willing to buck popular, albeit under-informed, opinions about wage controls. Given Gov. Hobbs’ low popularity ratings, it’s equally unclear whether she would veto an attempt to ameliorate the Prop 206 wage rates at the risk of upsetting donors.