Arizona households earned an average of $59,246 in 2018, according to a new report from the United States Census Bureau. While that number is about $2,700 less than the average American household, it represents a 2.4% increase in Arizona household income from 2017 to 2018, the seventh largest increase in the country. 

Among the contributing factors to the uptick was Arizona’s minimum wage increase, which increased from $10 per hour to $10.50 per hour in 2018. 

“The minimum wage and a tighter labor market are both factors,” George Hammond, an economics professor at the University of Arizona in Tucson, told the Arizona Republic. “Employers are having to compete harder for workers.”

On the other hand, one of the key drivers of Arizona’s lower-than-average household income is the comparatively low income of those living in the Phoenix area, where the median household income is $64,427. While that’s higher than in most other parts of Arizona, it’s substantially lower than other large cities across the country. Phoenix is the fifth largest city in the U.S., but has only the eighteenth highest median income of the top-25 largest cities. 

Arizona’s unemployment rate, which was at 5% in August and is higher than the national figure of 3.7%, also contributes to its lower household income, as does its acute level of income inequality and 14% poverty rate, which is above the national average of 11.8%.

The state is producing new jobs at a steady rate, and added about 57,000 jobs from August 2018 to August 2019, according to the Arizona’s Office of Economic Opportunity, but the number of workers searching for jobs has also increased, which has kept the unemployment rate steady. 

That’s a result of both more workers moving to Arizona and more people deciding to re-enter the workforce and search for employment, Hammond told the Arizona Republic.

The state’s median household income could go up again, as the state’s minimum wage rose to $11 per hour this year and will increase to $12 per hour in 2020, with annual increases based on inflation after that.