Colorado's minimum wage rises 26 cents
Colorado's minimum-wage workers will get an automatic 26-cent raise Thursday, when the hourly pay rate increases from $7.02 to $7.28 as mandated by the state's constitution.
The minimum wage for tipped employees, such as restaurant waitstaff and hotel doormen, will rise to $4.26 an hour, from $4.
The change may signal a good start to the New Year for entry-level employees, but business owners say it's another blow to them as they struggle to gain revenue in a slow economy.
"It's an incremental loss for restaurants. Many are afraid to raise their prices when the economy gets tight because we're the expendable income," said Steve Kanatzar, president of the Pikes Peak Chapter of the Colorado Restaurant Association and owner of The Airplane Restaurant, formerly Solos, on Fountain Boulevard.
For the past three years, the Colorado Department of Labor and Employment has adjusted the minimum wage annually for inflation, based on Consumer Price Index statistics for the Denver, Boulder and Greeley metropolitan areas.
The index increased 3.7 percent from the first half of 2007 to the first half of 2008, resulting in the wage change. Colorado's minimum wage has jumped 41 percent since 2006, when the constitutional amendment tying the minimum wage to inflation went into effect.
Colorado voters approved the ballot issue by a narrow margin, but El Paso County voters rejected the measure, and many continue to maintain that it is flawed.
Steve Bartolin, president of The Broadmoor hotel, said the law's inclusion of tipped employees - who often earn more than nontipped employees - and the stipulation that the rate is adjusted yearly make it "more than just a typical minimum-wage bill."
Thursday's increase will add $150,000 to The Broadmoor's annual payroll, he said, because the five-star and five-diamond resort has about 400 tipped employees.
The practice of ushering in the New Year with a new, inflation-based minimum wage is misguided, said Tim Miller, spokesman for the Washington, D.C.-based Employment Policies Institute, a nonprofit organization that studies entry-level employment.
"It might have made sense in 2006 when the economy was better. But to mandate it regardless of what's happening with the economy doesn't make sense," he said Tuesday.
Colorado is one of 10 states with its own inflation-based law, which Miller said creates "unintended consequences." According to research by his organization, Colorado's unemployment rate has grown 25 percent since last year's pay increase, almost 6 percent higher than states that don't index their minimum wage.
"Twenty-six cents an hour seems like a small amount, but when you put it in context, a business in Colorado Springs with 20 entry-level employees has a yearly increase in the cost of doing business" of thousands of dollars, he said. "With the economy as bad as it is, that's a substantial increase and why you see the lost jobs and cut hours."
But for minimum-wage workers, the extra $40 or so a month will boost their spending power, said Jim Kynor, vice president of operations for the Pikes Peak Workforce Center.
"It certainly will be welcome by those earning the minimum-wage level and seeing an increase in prices at the grocery store and elsewhere," he said.
Businesses should have prepared their budgets in advance for the additional payroll expense, said staff attorney Barbara Wyngarden of Mountain States Employers Council, a Denver-based nonprofit human resources organization with an office in Colorado Springs.
"We hope everyone is aware of this, but some may have overlooked it because they're overwhelmed with day-to-day operations of running their business and have had to deal with layoffs and how to move forward," she said.
With the pay change, companies need to update labor posters that are required to be displayed in public view, Wyngarden added.
COLORADO'S MINIMUM WAGE
2006 $5.15 an hour
2007 $6.85 an hour
2008 $7.02 an hour
2009 $7.28 an hour
The federal minimum wage is $6.55 an hour and will increase to $7.25 an hour in July.
