It’s been 17 years since the federal minimum wage was raised, though that could soon change if U.S. Sen. Ruben Gallego, D-Arizona, has his way.
The junior senator from the Grand Canyon State rolled out his plan to bankroll the first wage increase since 2009, with his 32-page “Saving the Middle Class and Restoring the American Dream” middle-class jobs plan coming out this week. Gallego is proposing to raise the minimum wage gradually in phases starting in 2027. By 2030, the wage would be $20 an hour. The current rate is $7.25 under the Fair Labor Standards Act.
But critics warn the wage hike could end up in losses of jobs in a world where customers are already placing their orders at kiosks at McDonald’s.
According to an estimate from a conservative nonprofit research organization, the Employment Policies Institute, Gallego’s plan would cut 2.3 million jobs nationally. The institute noted California Gov. Gavin Newsom’s $20 fast food minimum wage, which the Legislature passed, cost the state thousands of jobs. The state’s minimum wage for other jobs is $16.90 an hour, although the wage is higher for certain healthcare workers. The minimum wage in the city of Los Angeles rose on July 1 to $18.42 an hour.
Gallego is arguing that people need to earn least $20 an hour to meet the growing cost of living. His plan projects that raising the minimum wage to $20 an hour would raise Arizonans’ annual wages by just over $2,400.
While Gallego’s team did not make the Phoenix native available for an interview with The Center Square before deadline, he did discuss it on NBC News over the weekend.
“I always felt like, you know, if I put 40 hours’ worth of honest work together, I would have enough to support my family, and then feel comfortable enough to go to a movie,” he told NBC News. “That’s not happening anymore, and so that’s the most important focus of this plan.”
Gallego’s plan has drawn an immediate reaction from the state he represents in the nation’s capital.
Among those is Danny Seiden, CEO of the Arizona Chamber of Commerce & Industry.
During an interview with The Center Square, Seiden said Gallego’s plan, which would also impose a 10% excise tax on data center gross receipts and end all tax deductions for data centers to pay for the raise, is misguided.
“I think the market is much better suited to do this than a politician in Washington, D.C.,” Seiden told The Center Square. “And I think the market would tell you there’s actually been labor shortages, and they’re way above minimum wage. There are all kinds of special signing bonuses paid trying to get these workers trained.”
Gallego’s proposal also has drawn heavy skepticism from people like Jon Riches, vice president for litigation at the Goldwater Institute in Phoenix.
Riches told The Center Square that attempts to raise the minimum wage typically have the opposite effect on workers, driving up unemployment rates and depreciating wages in the long run.
Others, such as Mike Huckins of the Greater Phoenix Chamber, see Gallego’s proposal as well-intended but ultimately fruitless. He told The Center Square the senator’s plan would do more harm than good.
“We can raise living standards without closing the door on entry-level workers, because they’re the ones that are most likely going to get hurt by those kinds of policies,” said Huckins, the chamber’s senior vice president of public affairs and information technology operations. “So, we think the better path better path on this is to improve skills, improve housing, improve childcare – all those things that right now are a little bit of a barrier to getting people to work and to advancing their careers.
Growing union membership
Another key part of Gallego’s plan is to triple union membership by 2035 by automatically certifying a union with more than 50% of workers who have signed authorization cards and expanding opportunities for entering union career fields.
According to the U.S. Bureau of Labor Statistics, Arizona’s unionized employee rate (4.1%) was the tied with Idaho for the sixth lowest rate nationally in 2025, ahead of Utah (3.8%), South Carolina (2.7%), Arkansas (2.8%) North Carolina (2.5%) and South Dakota (2.3% each).
Longtime economics scholars, such as Kelvin Wong, a clinical associate professor at the W.P. Carey School of Business at Arizona State University, understand where Gallego’s proposal is coming from.
Still, even with Arizona’s unionized labor force near the bottom of the pack nationally, analysts such as Wong believe that such a decision could lead to a wave of unintended consequences.
“From an economics standpoint, the minimum wage kind of has trade-offs,” Wong told The Center Square. “You have the fairness issue, where you are helpful to people that are earning low wages, and you can provide a better, living wage for them.”
The trade-off is a loss of jobs, Wong said.
Where Arizona stands
Right now, Arizona’s $15.15 minimum wage ranks 10th nationally, more than double the federal standard, according to Common Sense Institute of Arizona’s 2026 Job Killers Report. That standard is tied to the Consumer Price Index, meaning the wage standards increase as inflation does.
Katie Ratlief, the institute’s executive director, said the report’s findings make it clear that wage hikes hurt, more than help, the average worker.
“I think minimum wage issues in Arizona are often passed at the ballot box, and they pass because people want their neighbors and their kids and their friends to have jobs where they can make enough money to afford to live and achieve the American dream,” Ratlief told The Center Square. “That makes complete sense.
“The problem is when you’re setting wage policy at the ballot box, or in this case, even worse, out of Washington, D.C., there will be collateral damage and that damage, generally, ends up being entry level workers, teenagers and people who are just trying to get on that first rung of the economic ladder,” Ratlief said.
Economists like Wong see the appeal of using the bully pulpit as a way to drag salaries back in line with inflation, especially in an election year. He also cited the fact that roughly 1% of Arizona workers, per his estimate, are currently making the federal minimum wage of $7.25 an hour, meaning the impact might be intangible for most workers.
“I do think it makes sense for politicians to propose ways that kind of say, ‘Hey, we’re looking out for you, and here’s how we’re going to do that – by suggesting a raise in the federal minimum wage’,” Wong said. “So, to me, it seems like a good strategy, and addressing that is a huge issue right now in this country.”
