The minimum wage, which is currently $8.31 an hour in Colorado and $7.25 at the federal level, has been a target of labor activists and low-income workers for years because it hasn’t kept pace with the cost of basic necessities like, well, housing. Colorado’s minimum wage works out to a little more than $17,000 a year for a full-time worker.
Amendment 70 would gradually increase Colorado’s minimum wage to $12 an hour by 2020, with annual cost-of-living increases after that.
Here’s the language you’ll see on your ballot:
Shall there be an amendment to the Colorado constitution increasing the minimum wage to $9.30 per hour with annual increases of $0.90 each January 1 until it reaches $12 per hour effective January 2020, and annually adjusting it thereafter for cost-of-living increases?
What does that mean?
This is pretty straightforward. The minimum wage is the lowest legal wage an employer can pay. The federal minimum wage was last changed in 2009 to $7.25 an hour, and it does not go up with inflation. States and cities can set their own higher minimum wage; however, Colorado state law does not allow cities to set their own minimum wage. Colorado’s minimum wage was set at $6.85 in 2007 and goes up and down with inflation. It’s currently $8.31.
It gets a little more complicated for tipped workers, as anyone who’s waited tables knows. Employers can take $3.02 an hour off the minimum wage on the assumption that it will be made up with tips. So the tipped minimum wage in Colorado is $5.29 an hour.
Amendment 70 would increase the minimum wage by 90 cents each year, starting Jan 1. 2017, until it reaches $12 an hour on Jan. 1, 2020, with cost of living adjustments each year after that.
Would that turn the minimum wage into a living wage?
The Colorado Center on Law and Policy maintains a “self-sufficiency wage” calculator that shows what people in different parts of the state and in different life circumstances need to earn just to cover their basic costs without relying on public subsidies and benefit programs.
This isn’t a measurement that you can use to set actual wages because it wouldn’t be fair to pay someone more or less because they were married or had children, but it gives a good sense of how far — or not — wages go. In some rural counties, a single adult could get by on $9 or $10 an hour, but in no county can a person raising children get by on that much. And in many parts of the state, even $12 an hour won’t cut it. And that’s at 2015 cost of living, not 2020 cost of living.
But is a “living wage” the standard by which we should be judging the minimum wage?
Opponents of raising the minimum wage argue that many low-wage workers are teenagers and young adults in entry level positions who will work their way up to higher wages and more responsibility in a few years. They don’t need a living wage because they’re not maintaining themselves or households, and by the time they are, they’ll be earning more anyway. If people are struggling to make ends meet, a better solution would be more job training programs and increasing the earned income tax credit.
That last solution is essentially asking other taxpayers to subsidize low wages.
What are the downsides to raising the minimum wage?
Opponents argue that raising the minimum wage will hurt the very workers it is designed to help because employers will either fire people or cut their hours to keep their labor costs the same or not add new positions. Costs may go up for goods and services in industries that can’t cut labor costs, they say.
They particularly object to how high the tipped minimum wage will be — almost $9 an hour by 2020 — when many servers make well above $12 already and to the fact that Amendment 70 raises wages by the same amount all over the state when the cost of living varies considerably. They point to states like Oregon and New York that are implementing tiered minimum wages with higher rates in urban areas and lower rates in rural areas. New York’s law also allows small businesses to phase in the higher wages over a longer period of time and allows the legislature to discontinue the wage increases if they seem to have a negative effect on employment or the broader economy.
(They generally don’t mention that New York’s rural areas will have a $12 an hour minimum wage by 2020 and that Oregon’s rural counties will have a minimum wage of $12 an hour by 2021, one year after Colorado, with even higher minimums the urban areas.)
“It treats small businesses and rural communities the same way as big corporations in wealthier areas. It’s going to hurt rural communities whose local economies can’t afford this,” Sonia Riggs, president of the Colorado Restaurant Association, said at a recent Denver Metro Chamber forum. “Not every city in Colorado is building construction sites all over the place like we see here in Denver.”
In an appearance on Colorado Public Radio, Riggs estimated two-thirds of those who earn minimum wage are younger than 30 and two-thirds (not necessarily the same two-thirds) work part-time by choice.
Her organization is particularly opposed to raising the tipped wage to nearly $9 an hour. She said many servers already earn between $16 and $22 an hour with tips and 40 percent of tips go unreported. Why should restaurant owners who operate on slim margins be forced to pay more?
Supporters of the increase say the median wage for restaurant servers is closer to $9 an hour. (I’ve certainly worked in the type of underwhelming establishment where you look at the empty dining room and see your hourly wage heading south of the legal minimum with each passing minute. Time to roll some more napkins.)
Some economists think the minimum wage increase would actually be good for the economy.
Alexandra Bernasek, a professor of economics at Colorado State University, said most credible studies show either no effect on employment or an increase in employment. Turnover goes down when workers make more, which actually decreases costs to employers over time. In fact, many employers have already increased wages above the minimum wage now that unemployment is so low. They need to do it to keep good employees around.
And low-wage workers spend almost everything they make, so the more money they have, the more money they put back into the economy, Bernasek said.
An estimated 480,000 people in Colorado earn somewhere between the current minimum wage and $12 an hour. Roughly 130,000 of them are parents raising children on those wages, and 86 percent of them are 20 or older, that is, adults responsible for themselves.
“The evidence from the vast research on this issue is clear,” she wrote in an email. “Those who oppose an increase in the minimum wage if they base their argument on research tend to focus on a few outlier studies and not on the evidence from the vast majority of studies. They also rely on an inappropriate model of how labor markets work, and they play to a particular rhetoric that anything that increases wages = costs to employers, must necessarily be bad for business. The facts just do not support arguments against a modest increase in the minimum wage in Colorado phased in over a number of years.”
Bernasek was one of 20 Colorado economists who signed a letter in support of the minimum wage increase. Some small business owners also support the increase so that they’re not at a competitive disadvantage when they pay their workers more.
Who supports the minimum wage increase?
Labor unions like the AFL-CIO, UNITE HERE, Service Employees International Union and the American Federation of Teachers support. National labor unions have put a lot of money into the yes campaign. A range of liberal policy groups like the Colorado Center on Law and Policy and the Bell Policy Center, as well as advocacy groups like 9to5 Colorado support it.
Gov. John Hickenlooper has lent reluctant support, while U.S. Labor Secretary Thomas Perez put the support of the Obama administration behind it.
Many faith-based groups support the increase as well.
Who opposes the minimum wage increase?
The Denver Metro Chamber of Commerce and many other chambers of commerce, the Colorado Association of Commerce and Industry, the Colorado Restaurant Association, the Farm Bureau, the Colorado-Wyoming Petroleum Marketer’s Association, the Tavern League and many other business groups oppose it.