With Denver poised to raise the city's minimum wage to more than $15 an hour, some business groups in Colorado are concerned how raising wages could affect businesses in the city.
Denver Mayor Michael Hancock and Councilwoman Robin Kniech last month announced the proposal that would raise the city’s minimum wage to $13.80 starting Jan. 1 and $15.87 starting Jan. 1, 2021.
“Wage stagnation is a national challenge and has meant pain and a lack of opportunity for too many people for too long,” Hancock said in a statement. “But Denver is leading the way to higher wages and a more inclusive and equitable economy. A raise for Denver's workers would mean families can better support themselves and better afford the city that they helped build.”
But business groups in the state are concerned the quick rollout of the higher minimum wage would catch many businesses in the state’s largest city off guard.
The Colorado Chamber of Commerce is concerned that the proposal’s fast-tracking could have a “ripple effect.”
“By fast-tracking its minimum wage increases, the City of Denver is giving businesses only a few months to prepare – which was not the intent of the Legislature,” said Loren Furman, the Chamber’s senior vice president of state and federal relations. “This abrupt policy change could have serious consequences for local businesses, employees and consumers.”
The state legislature paved the way for Denver’s proposal by passing House Bill 1210 during the last session. The new law allowed local governments to establish their own minimum wage. Denver in April approved an incremental $15 minimum wage increase for city workers.
Tony Gagliardi, Colorado director for the National Federation of Independent Business (NFIB), acknowledged that Denver has the right to raise the minimum wage, but that it could affect other local governments and economies in the metro area.
“This is Denver’s right, they have a right to raise their minimum wage and so does any other local government,” Gagliardi said, noting that NFIB opposed House Bill 1210 out of concern it would create a patchwork of different minimum wage rates throughout the state.
Gagliardi said NFIB hopes the Denver City Council and the mayor will take into consideration the surrounding areas before passing the increase.
“The way you move people out of poverty and allow people to purchase their first home or move up is by empowering them with job skills and employment opportunities,” he said. “When you raise the minimum wage you’re actually limiting the employment opportunities.”
Businesses do that by either limiting hours or reducing positions, Gagliardi said.
The Colorado Restaurant Association also opposes the city’s minimum wage proposal, citing how quickly wages would be hiked.
“It would be hard for any small business to swallow, but in the case of restaurants specifically, 95 to 97 cents of every dollar spent in a restaurant goes directly to the people, the place, and the food,” Sonia Riggs, the association’s CEO, said. “That doesn’t leave a lot of room for additional costs.”
The group is also concerned the law would exacerbate pay disparity among restaurant staff.
“This proposal requires full service restaurants to give their highest earners a 50 percent increase in their hourly wage,” Riggs said. “Furthermore, since diners tip on a percentage of their check, they’ll see tips increase as well when restaurants inevitably raise prices … making the disparity issue even worse.”