PHOENIX - For about three years, Katherine Castillo has worked as a hotel housekeeper earning Arizona's minimum wage of $7.80 an hour.
That hasn't been enough to pay her bills and attend college, which she says has been her dream.
"I want to go to school, but I have to pay bills. It's expensive," Castillo said.
Under a law Arizona voters approved in 2006, Castillo and others earning minimum wage will receive a 10-cent-per-hour increase to $7.90 starting Jan. 1. For tipped workers, the state minimum wage will rise from $4.80 to $4.90 per hour.
It will mark the fourth straight year that Arizona has had a higher minimum wage than the federal hourly rate of $7.25, which has remained the same since 2009.
Under the law, Arizona's must increase the minimum wage if the state's cost of living increases as determined by the Consumer Price Index for Arizona. There was a 1.5 percent increase in the cost of living in Arizona since last year, according to Karen Axsom, director of the Industrial Commission of Arizona's Labor Department.
Of the 1.47 million Arizona workers paid at an hourly rate in 2012, 68,000 received the minimum wage or lower in 2012, according to the U.S. Bureau of Labor Statistics.
As of Jan. 1, 2013, 19 states and the District of Columbia had a minimum wage surpassing the federal minimum wage.
Rebekah Friend, Arizona AFL-CIO executive director and secretary/treasurer, said the law sets the bar for how the state values its workers.
"In 2006, you could be working 40 hours a week and still be below the poverty wage," she said. "That is not what this country is based on."
Friend also said that raising the minimum wage stimulates the economy because of the way minimum wage workers tend to spend their money.
"The people that are living on those wages are not putting huge chunks of their salary into 401(k)'s or retirement investment plans," she said. "They're basically living week to week so they are putting the money right back into the economy."
However, Rick Murray, CEO of the Arizona Small Business Association, said the law hurts the state's workforce because it goes against the ideals of a business where wages depend on the demand of a certain skill.
"I'm against the fact that the minimum wage is mandated by the government when it should be market-driven," he said.
Steve Chucri, president and CEO of the Arizona Restaurant Association, said that raising the minimum wage forces higher operating costs on the food industry can lead to layoffs.
"A dime here and a nickel there may seem innocuous to most people," Chucri said, "but restaurants cannot simply raise menu prices. It's too competitive of an industry."
Brad Flahiff, director of development at Barnett Management Co., which operates Burger King franchises in Arizona, said that constantly increasing the minimum wage hurts employees as well as employers.
"It harms the people who are doing better and those who either don't have those skills yet or are not performing at the same level," he said. "And yet we are forced to reward them the same way."
Castillo, the housekeeper, said 10 cents more an hour, which adds up to $4 more a week for a full-time worker, isn't enough to help her do more than survive.
"So far, I have been able to make ends meet, but I don't feel happy," she said.