The minimum wage in Colorado would go from the current $8.31 to $12 an hour if voters pass Amendment 70, a measure on the November ballot.
Proponents say increased wages are necessary for workers to keep up with the cost of living, pointing out that in Metro Denver, housing costs have increased by 50 percent over the last five years. They add that more money for workers will grow the state's economy.
Opponents of the measure argue that jobs would actually be lost and businesses will close because they'll be unable to cover increased costs necessitated by the wage increase. Also, given the choice of bringing a new business to Colorado or to a state with a lower minimum wage, business owners will choose the latter, opponents say.
Debra Brown, business manager for Colorado Families For A Fair Wage, and Sonia Riggs, the president of the Colorado Restaurant Association, spoke with Colorado Matters host Ryan Warner.
This is part of a national week of conversation -- along with other NPR member stations -- called "A Nation Engaged." We're asking the question: what can be done to create economic opportunity for more Americans? Edited highlights and a transcript are below:
Debra Brown on who's impacted by the amendment:
So it’s really important also to point out that the total number of people affected are not just people making the bare minimum wage, but people who are making anywhere in that range up to $12 an hour. And that’s overall 480,000 hard-working Coloradans, over half of whom are women. So that’s like one in five women in the workforce, and it’s also 86 percent, nine out of 10 of these people are over the age of 20. So that’s just a little more about who the people are that will be impacted by this ballot initiative.
Sonia Riggs on who would be hurt if the amendment passes:
Well, unfortunately we think it’s going to hurt the very same people that it’s trying to help. And any job loss we really don’t think is acceptable. When you look at places like Washington, DC and Seattle, Washington, for example, when they raised their minimum wage to $10.50 an hour, the first six months they saw 1,400 restaurant jobs go away. That doesn’t help those people. And like you had mentioned, price increases are another big thing. We surveyed our members about a year ago in a very similar minimum wage increase, and 89% of them said that they would increase prices, 72% of them said that they would reduce staffing hours, and 71% said they would reduce staffing levels overall. And that is why we’re not seeing that those very same people that the proponents are trying to help, we’re actually not seeing them be helped in some of these other cities that had already passed the minimum wage.
Brown on applying the minimum wage across the state:
We have to keep in mind is that the cost of living is going up across the state. We also like to point out in 2006 when the minimum wage was raised last, that there were 6,000 jobs added to the economy in rural areas specifically. There were over 34,000 jobs added state-wide, and generally we, you see this type of growth. The truth of the matter, though, is living in a, the cost of living in a rural community has also increased, and that exceeds what people can pay. People who put in a full day’s labor should be able to clothe themselves, to feed themselves, and that’s what this proposition does. It’s a gradual increase so that businesses all over the state, and including rural communities, can adjust so that their workers can pay their bills.
Riggs on alternatives to increasing the minimum wage:
Well, we’re saying that there are maybe better solutions rather than putting small businesses out of business, like the earned income tax credit, like a workforce development. We’re, right now we have a program that’s in more than 30 high schools around Colorado, and we’re teaching those skills to people to give them that opportunity to get their foot in the door and work their way up.
Read the transcript:
Ryan Warner: This is Colorado Matters from CPR News. I’m Ryan Warner. The minimum wage in Colorado would grow to $12 an hour in voters pass Amendment 70 this election. It is currently $8.31. Today a debate, the first of several you’ll hear of measures on the statewide ballot. Debra Brown is business manager for Colorado Business for a Fair Minimum Wage, which is in favor of raising the minimum wage, and Sonia Riggs is against the measure. She’s president of the Colorado Restaurant Association. And ladies, welcome to the program.
Sonia Riggs: Thank you.
Debra Brown: Thank you for having us.
RW: Debra, briefly, how would the wage increase work? What are the mechanics of it?
DB: Yeah, so as you mentioned it’s currently $8.31, so it’ll go up to $9.30 in January of 2017, and then it’ll increase by $0.90 until it reaches $12 in 2020. And it’ll then be adjusted annually so the minimum wage keeps up with the cost of living rather than falling behind.
RW: All right. So $12 by 2020. And from that point on COLA adjustments, cost of living adjustments?
RW: Okay. According to a 2015 report by the U.S. Department of Labor, there were approximately 22,000 people in Colorado making at, basically, the minimum wage. That’s less than 1 percent of everyone in this state who has a job. Given this small number of people it impacts, why do you think passing this amendment is important?
DB: So it’s really important also to point out that the total number of people affected are not just people making the bare minimum wage, but people who are making anywhere in that range up to $12 an hour. And that’s overall 480,000 hard-working Coloradans, over half of whom are women. So that’s like one in five women in the workforce, and it’s also 86 percent, nine out of 10 of these people are over the age of 20. So that’s just a little more about who the people are that will be impacted by this ballot initiative.
RW: So you’re saying don’t look at just the folks who make the minimum wage, look at those folks in the area between what is currently the minimum wage, $8.31, and $12, where it will eventually go?
DB: Right. We’re talking a lot of households that are going to be impacted; 130,000 are parents with full-time jobs living in poverty with their children. And to answer your question about why it’s good, this is a gradual increase that will give businesses time to adjust. And at the end of the day, when workers have more money in their pockets, especially low wage workers, they invest that back in the local economy. They don’t offshore that money, they don’t put it in 401(k)s. They spend it right back in the local community, which leads to a bustling economy.
RW: But if you raise the minimum wage, don’t prices increase, say, at restaurants or stores? And therefore, someone who earns a higher minimum wage goes to that store and faces higher prices as a result?
DB: So most of the data shows that the increase is pretty negligible, less than 1%. And on average a 10% increase in the wage results in less than a 1% increase in restaurant prices. So, for example, in San Francisco after they raised its minimum wage by 31%, the cost of a $50 meal at a table service restaurant was $1.40 higher, and the cost of its $2 fast food hamburger was twelve cents higher than in neighboring Alameda county, which did not raise minimum wage.
RW: So you don’t dispute that prices will increase, but you don’t think that it will happen to such an extent as to negate raising the minimum wage?
DB: Yeah. There’s no question about it. At the end of the day, workers will end up way better off. And most businesses have more customers than employees. So that’s why we have a large contingency of support from businesses from across the state and in a variety of industries that understand that raising the wage is also better for business. When consumers have money to spend, they spend it locally and those businesses benefit. They also benefit in several ways, which I think we’ll talk about a little later.
RW: Indeed. We’ll dig into this. We’re also going to talk about where your campaigns are getting support from. But first, Sonia, last week in a visit to Denver, US Labor Secretary Thomas Perez said the Obama Administration was fully behind Amendment 70. Gov. Hickenlooper told me that he was sympathetic to raising the minimum wage, and an independent poll found 55% of voters were in favor of this. What is it that you believe they are missing?
SR: Well, unfortunately we think it’s going to hurt the very same people that it’s trying to help. And any job loss we really don’t think is acceptable. When you look at places like Washington, DC and Seattle, Washington, for example, when they raised their minimum wage to $10.50 an hour, the first six months they saw 1,400 restaurant jobs go away. That doesn’t help those people. And like you had mentioned, price increases are another big thing. We surveyed our members about a year ago in a very similar minimum wage increase, and 89% of them said that they would increase prices, 72% of them said that they would reduce staffing hours, and 71% said they would reduce staffing levels overall. And that is why we’re not seeing that those very same people that the proponents are trying to help, we’re actually not seeing them be helped in some of these other cities that had already passed the minimum wage.
RW: But if some minimum wage increase might lead to higher prices, at least some higher prices, and perhaps some job loss, are you saying that you should never raise the minimum wage?
SR: Well, the minimum wage is a starting wage, first of all. It’s not meant to support a family of four. It’s a minimum wage that gives people the opportunity to get their foot in the door with a job, learn valuable skills, and work your way up. And it already does increase every year with the Boulder-Denver-Greeley CPI index. It has, it was put in the constitution in 2006, and every year the minimum wage already increases. So even if this ballot initiative fails, the minimum wage will increase in January 2017.
RW: Right. Let’s be clear that the current minimum wage does increase with the cost of living.
RW: Yeah. You talked about layoffs, for instance, in Washington, DC. Goodness, isn’t the Denver, metro Denver restaurant market, at least, booming? Can’t restaurants afford something like this?
SR: Well, restaurants in the Denver and Boulder area absolutely can. And in fact many of them are paying already, I’m hearing, $15 or $16 an hour for a dishwasher because that’s what the market will bear in this area. But the same is not for rural communities. Look at Limon and Pueblo. I was just out in Pueblo about a week ago, and I didn’t see any construction cranes. They’re, these rural communities are having a much harder time coming back from the recession, and that’s a big concern. That’s one of the reasons that the Colorado Farm Bureau, for example, is on the side opposing this initiative, because they’re very worried what it’s going to do to their rural farmers.
RW: Is it possible, Debra, that this is too one-size-fits-all? That it’s, it better fits the areas of the state that are booming, and is less of a good fit for those that are not?
DB: We have to keep in mind is that the cost of living is going up across the state. We also like to point out in 2006 when the minimum wage was raised last, that there were 6,000 jobs added to the economy in rural areas specifically. There were over 34,000 jobs added state-wide, and generally we, you see this type of growth. The truth of the matter, though, is living in a, the cost of living in a rural community has also increased, and that exceeds what people can pay. People who put in a full day’s labor should be able to clothe themselves, to feed themselves, and that’s what this proposition does. It’s a gradual increase so that businesses all over the state, and including rural communities, can adjust so that their workers can pay their bills. And also, we have to also look at the other side of it when there are businesses that aren’t paying their workers a wage that they can feed themselves and clothe themselves, then those workers have no choice but to turn to the social safety net. And so that puts an increased burden on tax payers not only in rural areas, but the business owners in those rural areas around the state.
RW: Is what I hear you saying, you’re paying in one way or another as a tax payer?
DB: And a business owner.
RW: Sonia, could you survive on the minimum wage?
SR: You know, I did have minimum wage jobs when I was younger. Let’s talk about the minimum wage worker.
RW: Yeah. How would that be today?
SR: Right. Well, two-thirds of minimum wage workers are under the age of 30, and two-thirds of them are also part-time by choice. So I think that the point is minimum wage is not meant to be for supporting a family of four. It’s an entry-level job for people that don’t have skills. You get your foot in the door, you learn those skills, and you work your way up. And those types of jobs will be going away as we have already seen, and that’s a real big concern.
RW: And so those folks should just scrape by, you’re saying?
SR: Well, we’re saying that there are maybe better solutions rather than putting small businesses out of business, like the earned income tax credit, like a workforce development. We’re, right now we have a program that’s in more than 30 high schools around Colorado, and we’re teaching those skills to people to give them that opportunity to get their foot in the door and work their way up.
DB: So that’s an interesting argument, and I think at the end of the day there are always going to be low wage jobs, and there will always need to be people working those low wages jobs, and that those people working those low wage jobs should be able to clothe themselves and feed themselves. It doesn’t, I mean, you can give people job improvements and whatnot, but there’ll still be people working those minimum wage jobs, and if they can’t take care of themselves, then again, that cost gets offset to the business owners that are already operating on that margin, and to tax payers.
RW: I had mentioned earlier that in our conversation with Governor John Hickenlooper recently he was leaning toward supporting this. But one reservation he had dealt with the tipped wage. And I’m just wondering if we might explore that for a bit here, Sonia. This is something that restaurants in particular, I think, are concerned about?
SR: They are because under this measure the tipped wage increase in 70% over the next three years and two months. And what’s already difficult for restaurants is they have a hard time because oftentimes their servers make more than managers, and now those people getting a 70% increase, it makes it more difficult to pay higher wages to the folks that they call in the back of the house, which are like the cooks and the dishwashers. And let me just give you an example of how the math works here. For --
RW: And let me just be clear about what the tipped wage is.
RW: Obviously employees who earn tips make a different minimum wage.
SR: They make $3.02 an hour less than the regular minimum wage. And if they don’t make up that money in tips, the employer has to pay them that money themselves.
RW: Oh, right. And under Amendment 70 there is not a change to the tipped wage, correct? So you’re saying that for those workers this is an even larger increase.
SR: So there’s not a change to the tip credit, which means the tipped wage itself is increasing. It’ll go up to $8.98 an hour. Right now it’s $5.29. It’ll go up to $8.98 an hour in just over three years. And the reason that is a huge impact on restaurants are, specifically on restaurants, is because that 70% is really difficult. On an average $15 meal, about $5, and oftentimes more than that, goes to salaries and wages, and only $0.60 goes, comes into the owner as profit before taxes. Now take that $5 portion of that $15 meal and increase it anywhere between 44%, which is what the regular minimum wage is --
RW: A lot of numbers here. Okay.
SR: -- and 70%, they don’t have that money. That, they don’t have the money. If they already did, I mean, if they knew how to do that they would already be increasing prices, but law of supply and demand, as prices increase, demand goes down.
RW: Do you think that if there had been some consideration of the tip credits that the Restaurant Association might have gotten behind this?
SR: I don’t know that we would have gotten behind it as a supporter, but we probably would have been neutral.
RW: Debra, how do you respond to this notion that the credit for tipped employees is not changing here?
DB: So I want again put it in perspective. There are over 50,000 Coloradoans who are working as waiters and waitresses. They make a median wage, including tips, of $9.02 an hour. So I think we have this conception of wait staff that they’re making bank, making more than managers, but in terms --
RW: You might picture the fanciest restaurant you’ve been to.
DB: Right, right. And so the median wage, again, is $9.02 an hour. And so it’s really important that we are lifting all boats together, including the workers. That’s why we have broad support from restaurants across the state from counter service, like Illegal Pete’s, to sit-down dining, Ore House in Durango. We have a wide contingency of support. And the thing that some of our business owners like to say, like Edwin from Zoe Ma Ma, he says "We are smart, creative, and resourceful. When our electricity bills go up we figure out a way to deal with it." The costs especially in restaurant industry is variable. There is a lot of things that impact their costs. And good, smart business owners adjust. And they will stay in business and thrive, and we can get into the research in terms of the overwhelming body of research that shows the impact of actual job loss versus growth in states where they raise the minimum wage.
RW: Yeah, let’s, why don’t we look at that after a break? So we are talking on the show today about Amendment 70, which will be on your ballot. This is a state-wide amendment, and it would raise the minimum wage eventually to $12 an hour. So back in just a moment. It’s Colorado Matters from CPR News. You’re back with Colorado Matters from CPR News. I’m Ryan Warner. Today we’re debating Amendment 70 to raise the minimum wage in Colorado. Joining us, Debra Brown, she’s Business Manager for Colorado Business for a Fair Minimum Wage, which is in favor of Amendment 70. And Sonia Riggs joins us as well, President of the Colorado Restaurant Association. So Debra, Americans for Prosperity says that if this amendment passes, 90,000 jobs will be lost in the ensuing six years. I will say that the Bell Policy Center in the Colorado Fiscal Institute have pushed back against that number. I think a really critical question here is what will happen to employment? Weigh in on that from your perspective, Debra.
DB: So, if you actually look at the wide body of research on raising the minimum wage, the studies indicate little to no job loss and even job increase, especially looking at studies where you take a municipality that has raised the minimum wage and compare it to the economic growth in neighboring municipalities. And there’s a wide body of research that supports that. The specific study that you cited, there’s several problems with it. It does not use the biggest, the best and most respected methodology, and we also think it’s questionable that the think tank that funded the study, the, that is married to the lead consultant of the opposition campaign. It also is in conflict with the data put out by the Congressional Budget Office that predicts minimal amount of job loss nationally. And the portion of job loss that that 90,000—
RW: When they looked at raising the minimum wage nationally, you’re saying?
DB: Right, yeah. So they basically studied over decades of research of what’s happened when the minimum wage has been raised in different places, different states, different municipalities, and what the impact on that has been on the economy. So, for example, there was a study done called Minimum Wage Effects State Borders and it compared all neighboring counties in the U.S. located on different sides of a state border with different minimum wage levels between 1990 and 2006. That’s a long range. And they found no adverse employment effects from higher minimum wages. The Institute for Research on Labor and Employment’s spatial—another study also found that it doesn’t even impact teen employment, analyzed 1990 to 2009 period.
RW: Right. Sonia, what would you say about employment? What are you hearing from restaurant members?
SR: Well, first of all, I would say to say that the Congressional Budget Office said there was gonna be little impact is just not true. There—it said—they said 500,000 jobs would be lost around the country. We know, when we surveyed our members, that 72% of them said that they would either, either have to cut staff hours or cut actual staff jobs. And, in fact, one member I talked to, who’s a woman restaurant owner in south Denver, she has 85 employees and her bussers make an average of eighteen to twenty two dollars an hour, her servers make thirty to thirty five dollars an hour. She’s done the math for her restaurant and said she’s gonna have to lay off fifteen employees. There’s a reason that the Restaurant Association is very concerned about this. They want to keep people employed, and they want to give people a great customer experience. And they don’t want to increase prices.
RW: But, wait, that’s not saying—she’s not paying minimum wage.
SR: She—well, servers typically make $5.29 an hour, so this would be a 70% increase on that.
RW: In part because of the lack of that tip credit is why she’s saying it.
SR: Right. Exactly. So those people—she’s paying them $5.29 an hour, but they’re actually making a much higher wage.
DB: Can I—so you mentioned the $500,000, and that’s across—
RW: 500,000 jobs.
DB: Sorry, thank you. Across the entire U.S., but let’s just remember this is an economy that’s comprised of 145 million jobs. So that’s a job loss of three percent nationally. So, again, how does that translate to 90,000 jobs here in Colorado alone?
RW: So I want to go to Paul Seaborn. He’s a professor at DU’s Daniels College of Business. He teaches the minimum wage and he says raising it might hurt employers to some degree and might lead to fewer low-wage jobs. But, conversely, keeping the minimum wage too low hurts workers.
Paul Seaborn: Nobody—literally, you know, no one knows the perfect number for Colorado’s minimum wage and that’s unfortunate, but it’s the reality. So I think, I would encourage the voters to get beyond that general uncertainty to think about whether this particular proposal seems to them like a balanced and a fair proposal.
RW: And so what he’s saying there is this is really a question for each voter about whether Amendment 70 strikes the right balance. How did you decide on eventually twelve dollars an hour? Why is that the figure that this arrives at, Debra?
DB: So, again, we wanted to come up with something that was gradual, that would give businesses time to adjust.
RW: Right, it’s gradual. Why twelve dollars?
DB: Twelve dollars is an amount that voters were in favor of. We did wide polling and there was large support for twelve dollars. It also has to do with the cliff effect. When you raise above that to fifteen, people would lose access to certain benefits, like their childcare credits and such, so twelve was really kind of the magical number that felt right for Colorado and also made sure that we were protecting workers from the cliff effect.
RW: Those kinds of losses. I want to follow the money here a little bit. Debra, through August, almost two million dollars was contributed to your campaign, but despite the name Colorado Families for a Fair Wage, 88 percent of that money has come from outside of the state. How do you account for that discrepancy?
DB: So, Amendment 70 is a Colorado-grown effort. There’s no question about it. Our leaders have been working for more than two years on the infrastructure and some of our backers are national organizations, so that money is—
RW: It looks like a lot of them are.
DB: Coming in from out of state, but they have local affiliations. For example, our NEA, our National Education Association, these educators are the ones who are in the classrooms, who see what happens when kids come to school hungry. They’re fighting for this because it impacts their ability to be good teachers when their kids come to school hungry. So it’s a Colorado-grown effort, there are lots of local organizations that have national alliances that are contributing because it’s that important of an issue.
RW: Sonia, while Elway’s Restaurant and Hacienda, Colorado have donated to a political action committee opposed to Amendment 70, your biggest donor according to our reporting is Virginia-based Workforce Fairness Institute. Who else is supporting your side?
SR: Well, the—actually, the largest donor is the Hospitality Issues Political Committee, which is made up of a lot of restaurants that have given—contributed to our organization. So it’s primarily, if you look at the dollar amounts, from small businesses, just that people are giving $500, $1,000, whatever they can give.
RW: Alright, but you do have some big donors, correct?
SR: We have one, one big donor.
RW: Just the one. And tell me who they are? Just say a little bit more about them.
SR: They’re actually a group that’s trying to protect work—they’re trying to protect jobs from big labor unions and that’s exactly where the proponents’ funding is coming from, out-of-state, large labor unions.
RW: Do you both agree on who minimum-wage earners are? Because at the beginning of the conversation, when Debra was explaining who they were, you were nodding in what appeared to be disagreement, Sonia.
SR: Well, that’s correct. I honestly don’t know how they can get their numbers, because according to the Bureau of Labor Statistics, half of minimum wage workers are under the age of twenty-five and nearly two-thirds are under the age of thirty. And two thirds of minimum wage workers are part-time and I understand there are exceptions. There are always exceptions to a rule. There may be some people out there that are older, that don’t fall into that category. But minimum wage is just that. It’s the starting wage is another way of looking at it. It’s for jobs where you do not require any skills. You get your foot in the door, you learn those kinds of—those skills on the job, and then you work your way up.
DB: Can—first of all, I think it’s offensive to say that there are non-skilled jobs. We have minimum and low-wage workers who are working jobs like nursing assistants, pre-school teachers, EMTs and caregivers for the elderly and disabled. These require a high level of skill, as do working in restaurants. You, of all people, should know that. And we are looking at the amount of people who will be impacted by this legislation—I’m sorry, by this ballot initiative. So we’re looking at not just the people making the minimum wage right now, but the people who will be lifted up entirely by this ballot initiative. At the end of the day, $300 a week is the minimum wage and nobody can live off of that. And the amount of people who will be helped and who are impacted by that, 86% are over the age of twenty. That’s nearly nine out of ten. And again, it’s not low-skilled workers. These are people who are providing valuable jobs to our community.
RW: Debra, won’t the market take care of this to some extent? That is to say, if there is a lot of competition for workers in a given field, then employers are forced with—to deal with the reality of that and increase their wages. Why not trust the market in this regard and the already-in-place minimum wage that’s tied to the cost-of-living?
DB: That’s a great question. So if you look at it, over the past decade, the actual income of workers has only gone up by 21%, but the cost of housing alone has more than doubled. So it’s really, the minimum wage as it is is just not keeping up with the cost-of-living here in Colorado.
RW: But if the market dictates a higher wage than the minimum wage, I’m saying.
DB: Unfortunately what’s happening right now with the free market is employers that aren’t paying their employees enough to get by are forcing us taxpayers and business owners that are paying a livable wage to compensate that. So that’s not free market, that’s corporate welfare. There is no—if the free market were working properly, then employers would be required to make their employ—pay their employees so they could take care of their basic needs.
RW: Alright, Debra, we gave you the first word. Sonia, we’ll give you the last, and perhaps if you’d like, address that market question for me.
SR: Well, I believe that the market absolutely should have a bearing on what the minimum wage is. Like I said, you’re seeing people hire dishwashers for fifteen dollars an hour in Aurora. But Limon, the same is not true for Limon and Pueblo and Brighton even, and—
RW: And yet there’s never been a minimum wage in Colorado that’s geographically-specific, has there?
SR: There has not, but what you’re seeing in some of these other states is that there are, there are other alternatives like larger businesses who have to pay a higher wage than, say, a small business of relatively few employees. And we’re not seeing that here. Or, in some cases, you’re seeing that rural, a rural wage different than an urban wage and it’s just not the case here. So I think it’s unfortunate that this one-size-fits-all approach is just not the way to help these people.
RW: You heard there Sonia Riggs, president of the Colorado Restaurant Association, which opposes Amendment 70 to raise the minimum wage to twelve dollars an hour by 2020. Debra Brown is business manager for Colorado Business for a Fair Minimum Wage, which is in favor of the measure. And this is part of a national week of conversation at NPR and member stations, called A Nation Engaged. We’re asking this week what can be done to create economic opportunity for more Americans. Our coverage of the minimum wage doesn’t stop here. Coming up, in just a few days, CPR’s Megan Verlee will catch up with some employers. And if you are a low-wage worker, we’d like to hear from you. You can share your experience through our public insight network at cprnews.org. And we’ll be right back with Colorado Matters from CPR News.