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Boulder County leaders say localizing minimum wage comes with risks, rewards

Cautious approach that considers all implications urged

Server Kristy Nguyen pours a draft beer for a customer at the Mountain Sun Pub and Brewery on June 5 in Boulder. Kevin J. Daly, proprietor of Mountain Sun Pubs & Breweries, a group of five restaurants with 350 employees in Boulder, Longmont and Denver, has long been a proponent of a higher minimum wage.
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Editor’s note: The story has been updated to reflect that the Boulder Chamber didn’t take a formal position on House Bill 1210, but in 2016 supported Amendment 70 to incrementally increase the state’s minimum wage.

A new Colorado law that allows municipalities to increase minimum wage within their jurisdictions beyond the state-mandated level is mostly generating a positive but cautious vibe among business and community leaders in Boulder County.

The Boulder Chamber did not take a formal a position on House Bill 1210 recently signed by Gov. Jared Polis, in 2016 but did support Amendment 70, which voters approved to raise the state’s minimum wage to $12 by 2020, said John Tayer, the chamber president and CEO.

“That was a significant decision by our board,” Tayer said, adding the board recognized the high cost of living in Boulder and the need to address the growing income stratification, which is a major economic issue, nationally and locally.

“We need to maintain a strong middle class workforce.” Tayer said. “But now is not the time to move on the initiative. We should understand the potential impact of the mandated minimum wage increases.”

Impact could include a significant burden for certain local businesses, he said.

“We have to be sensitive to their stability and our competitive position relative to surrounding communities,” Tayer said.

Local decision

The new law, which is rooted in the desire to help Colorado workers “afford the basic necessities of life,” returns to local government the authority to set a minimum wage. That authority was taken away in 1999. The enactment of local minimum wage laws, beginning in January, can help local governments “better address their unique needs,” the law states. “The cost of living can vary significantly from one community to another in Colorado.”

The law provides a tip offset for food and drink establishments, and allows “one or more contiguous counties and any municipality within each county” to establish a local minimum wage law. It permits local governments to increase local minimum wage incrementally with an annual increase of up to $1.75 or 15%, whichever is higher. The law also stipulates local scheduled increases to go into effect when the state’s minimum wage increase takes place.

Why Colorado’s law stands out

Colorado’s move is commendable and positive, said David Cooper, senior economic analyst with the Economic Policy Institute, a nonprofit, nonpartisan think tank in Washington, D.C. It’s the first state to undo the restrictions, he said.

There are 24 states where local governments are not allowed to set minimum wages locally, he said. He cited the example of the Missouri Legislature, which in September 2015 passed a law preempting local governments from adopting minimum wages above the state’s minimum wage, after St. Louis and Kansas City passed ordinances to increase minimum wage.

After a string of related court decisions, the St. Louis ordinance went into effect on May 5, 2017, raising the city’s minimum wage to $10. However, the state Legislature subsequently passed a new preemption law to undo the St. Louis increase. The governor allowed that bill to go into effect in July 2017, thereby lowering the city’s minimum wage back down to $7.70 until a statewide ballot measure last year raised the state minimum wage to $8.60 in January, Cooper said. It’s set to increase 85 cents annually each year until it reaches $12 in 2023. The minimum wage also will be automatically adjusted for inflation every year thereafter, he said.

Benefits of higher wage

In the last five or six years, many states and localities have raised their own minimum wages, as the federal minimum wage of $7.25 has not been raised since 2009, Cooper said.

“Raising minimum wage has clear benefits,” he said, such as putting more money in the hands of people, and addressing pay inequality with gradually structured increases.

“Wage increases in the past have happened without a substantial job loss,” Cooper said.

He referred to a 2013 study, which analyzed  884 Internet-based restaurant menus from inside and outside San Jose, Calif. (collected before and after the city implemented a 25% minimum wage increase in 2013) and showed restaurant prices rose by an average of 0.6% for every 10% increase in the minimum wage. The study by Sylvia Allegretto and Michael Reich showed almost all of the cost increase was passed through to consumers.

“Labor is one component of business costs,” Cooper said.

As wages go up, workers tend to spend more. “It creates a stimulative effect,” he said.

Surely, some businesses will struggle to pay the increased minimum wage, and some workers will lose hours, but” the net effect is unambiguously positive,” he said.

Cooper said often the opposition to a higher minimum wage is hinged on two arguments: It raises the cost of doing business, and ideologically government should not intervene in wage affairs, which are best left for marketplace to determine.

Rena Gallegos empties trash and recylcing containers at the East Boulder Recreation Center on Wednesday.Boulder pays a living wage to its employees, and janitorial and landscape contractors, and emergency medical services ambulance providers. In 2017, the city raised its living wage to $15.67 per hour.

Need for caution

Brad Golter, owner of Longmont Florist, said the state already increased minimum wage to $12 an hour, an increase that kicks in in January. He advises caution for local government to consider hiking it further without understanding the full impact of a $12 wage on small businesses.

A bump in the minimum wage can mean fewer entry-level positions, he said. Business owners might be forced to reduce hours for employees or eliminate jobs, Golter said.

A potential price increase to offset a wage increase is an option, but that can alienate price-sensitive customers, he said.

He said he thinks local governments should not be in a hurry to set their own minimum wage.

Golter plans to speak with Longmont City Council, to educate people about possible implications of the new law and become more involved with the Longmont Area Chamber of Commerce.

The Longmont Area Chamber of Commerce in April wrote a letter to Sen. Mike Foote, D-Lafayette, and to Polis sharing its reservations about the measure allowing local control of minimum wage, Chamber CEO Scott Cook said.

The letter, which Cook shared with the Daily Camera, states, “Longmont employers fear job and worker migration. Longmont employers could be forced to compete with businesses andlocal governments that have set their wages higher than our employers can afford. Reversely, our businesses may have to compete with businesses whose local governments have not set their wages as high as in Longmont.”

In a tight labor market more regulations can be exasperating, Cook said. A small business owner operating in multiple municipalities could experience payroll complexity if every locality were to set its own minimum wage. It would be similar to issues small Colorado businesses have faced with the collection of  new destination based sales tax, he said.

Most chamber members already are paying their employees more than the prevailing minimum wage, Cook said.

Jennifer Paris, owner of Jennifer Paris Agency, an insurance business in Longmont, sees the new law as an opportunity for a dialog between cities and businesses. Living in Longmont has become expensive, she said. She’s heard from other business owners that they would find it difficult to pay more to their employees if local authorities decide to take up the issue.

“Minimum wage is a complex issue,” Paris said.

Conversation about affordable living

Boulder Mayor Suzanne Jones thinks the law is a step in the right direction.

“A high minimum wage is essential to maintain a diverse and vibrant community, Jones said. A conversation about minimum wage has to be centered on affordability and mobility, for people to be able to live and work in the community.

The local minimum wage hike also needs to be affordable for small businesses owners, Jones said. It’s imperative they become part of discussion as well. Ideally, it should be done at a regional level, Jones said.

Jones hopes the next city council takes up the local minimum wage issues, or that it becomes a talking point for this year’s council elections.

Boulder already pays a living wage to its employees, and janitorial and landscape contractors, and emergency medical services ambulance providers, Jones said. In 2017, the city raised its living wage to $15.67 per hour.

It took effect with the 2018 budget, said Jane S. Brautigam, Boulder city manager. “We will be having a discussion about the living wage at the city council meeting (Tuesday), where staff will be recommending an increase in living wage to be included in the 2020 budget,” she said.

Kevin J. Daly, proprietor of Mountain Sun Pubs & Breweries, a group of five restaurants with 350 employees in Boulder, Longmont and Denver, has long been a proponent of a higher minimum wage.

A living wage is necessary for a healthy society, he said. A recent New York Times story links higher minimum wages with improved health outcomes in society, Daly said.

A high minimum wage helps reduce employee turnover,  product waste and employee theft, particularly in the restaurant business, he said. A low employee turnover helps keep down employee hiring and training costs, Daly said, adding “happier employees provide for happier customers.”

If education and health care could be free in the United States, then a higher minimum wage would not be an issue, Daly said. “Our system is not working well. We need to take a holistic view.”

Kevin Daly at the Mountain Sun Pub and Brewery in Boulder on June 5. Daly, proprietor of Mountain Sun Pubs & Breweries, a group of five restaurants with 350 employees in Boulder, Longmont and Denver, has long been a proponent of a higher minimum wage. A living wage is necessary for a healthy society, he said.

Minimum wage in the United States in 2019

  • In 2019, 18 states began the new year with higher minimum wages. Eight states (Alaska, Florida, Minnesota, Montana, New Jersey, Ohio, South Dakota and Vermont) automatically increased their rates based on the cost of living, while 10 states (Arizona, Arkansas, California, Colorado, Maine, Massachusetts, Missouri, New York, Rhode Island and Washington) increased their rates due to previously approved legislation or ballot initiatives.
  • New Jersey in February enacted a measure that will gradually increase the minimum wage rate to $15 by 2024.
  • Illinois in February enacted legislation that will phase in a minimum wage increase to $15 by 2025. The measure also adjusted the youth wage for workers younger than 18 (it will gradually increase to $13 by 2025) and created a tax credit program to offset labor cost increases for smaller employers.
  • Maryland’s Legislature overrode a gubernatorial veto to enact a measure that phased-in a minimum wage increase to $15 by 2024 (with a delayed schedule of rate increases for smaller employers) and eliminated the tip credit and the state subminimum wage for employees younger than 20.
  • New Mexico in April enacted a measure that will raise the state minimum wage to $12 by 2023. The measure also established a training wage for high school students and slightly increased the tipped minimum wage.

National Conference of State Legislatures

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