PHOENIX (AZFamily) — Arizona’s minimum wage increases annually, and the minimum wage in Flagstaff is much higher.

Since voters passed Prop 206 in 2016, the state’s minimum hourly wage has gone from $8.05 in 2016 to $14.70 in 2025.

Meanwhile, Flagstaff’s minimum wage for 2025 is $17.85 or $16.85 for tipped workers.

Workers say it’s needed with the high cost of living, but local businesses say it’s hurting them.

A new study by Northern Arizona University’s Economic Policy Institute released in January shows the wage increase has cost the community 4,000 jobs, either through layoffs or lack of job creation.

Regina Salas with the Coconino County Workforce Development Board said the minimum wage has caused costs to rise.

“Generally speaking, it has also contributed to bringing the cost of living in Flagstaff even higher across the board,” Salas said.

Owen Kyle and Brady Henderson work downtown, and while their pay has gone up, so has their rent and other costs.

“The price of food and everything else has also gone up,” Kyle said. “So I’d say it helps in the same sense that you need to combat inflation, but it’s still expensive to live here.”

Owner of Mozelle’s Bakery, Andrea Knot, said they’ve had to cut their staff in half.

“We’ve had to raise prices to pay for our wages,” Knot said. “We did have 12 employees; we are now down to five.”

The study shows positive impacts on hospitality and retail at the entry-level, but several businesses have also gone out of business.

“Then a major manufacturing in Belmont closed, displacing 63 workers,” Salas said.

Knot said it’s often area businesses that take the brunt of it.

“Several local businesses closed, and I would say 95% of those stated it was because of minimum wage,” she said.

Business owners and workers said they don’t know what can be done, but something needs to change.

“I don’t know what the right direction would be,” Kyle said. “If this is a step in the wrong direction, I don’t know. But I understand you need to raise the minimum wage to combat inflation.”

See a spelling or grammatical error in our story? Please click here to report it.

Do you have a photo or video of a breaking news story? Send it to us here with a brief description.

Copyright 2025 KTVK/KPHO. All rights reserved.