Business

Minimum wage hike’s impact a work in progress

Effects of new law remain modest for now, may not be felt in full for years

Posted

The minimum wage increase that took effect in Colorado at the beginning of the year is having a minimal impact so far on the south metro Denver business community, according to several proprietors and industry experts.

While some employers are evaluating how to best account for the added expense of paying workers nearly an additional $1 per hour, the bigger and more common quandary is how they will absorb the cost as the minimum wage rises an additional $2.70 over the next few years.

On the retail and fast food fronts, many locations in the south metro area — which has a higher cost of living than much of the state — already pay a market rate above the new minimum wage of $9.30 per hour.

In Parker, the Twisters Burgers and Burritos restaurant starts employees at $10.25 or $10.50 per hour. District Manager Gary Hatfield said that in other locations, he can fill positions at minimum wage.

“It hasn’t affected the business yet,” Hatfield said, comparing possible effects of the minimum wage hike to market forces like increased food costs. “You’d have to (study the effects) over a long period of time.”

The new law is apparently having little impact to date in Englewood as well.

“I talked to members of the chamber and I didn’t talk to one business owner who pays minimum wage,” said Randy Penn, Greater Englewood Chamber of Commerce executive director.

He said a new Chick-fil-A that will open soon in the city is hiring dozens of workers at well above minimum wage.

In Littleton, the Panda Express restaurant is advertising for employees with starting pay of $10 to $12 per hour.

On New Year’s Day, the first of four increases the state will see over the next four years took effect, raising the wage from $8.31. Under the new law, by 2020, Colorado’s minimum wage will reach $12 per hour, following 90 cent increases in 2018, 2019 and 2020.

Jack Strauss, an economist at the University of Denver, said fast food restaurants in Highlands Ranch, where he lives, pay $10 to $12 per hour. He said that with the area’s low unemployment rate, most businesses are forced to pay higher wages.

“Denver is a booming city,” he said.

A dilemma for some

One area organization that does pay some of its employees minimum wage is Goodwill Industries of Denver.

Prices at the nonprofit group’s stores won’t increase, but Goodwill has delayed expanding employee service programs, such as rent and utility assistance packages, according to Leslie Peabody, vice president of human resources.

“On the flip side, we’re definitely on the side of the power of work,” Peabody said. “We’re happy about the (new law), it’s just taking a bit of change and flexibility about what we can provide.”

Carolyn Livingston, communications director for the Colorado Restaurant Association, said restaurateurs may be reluctant to speak publicly about it, but said she has heard from some that they are adjusting their businesses.

“Some people have already increased their prices,” she said.

Livingston said that other restaurateurs are looking at cutting back on employee hours.

CRA opposed the minimum wage increase during the campaign, but the law, Amendment 70, passed with 55 percent of the vote in November.

“The thing folks don’t understand with restaurants is they only make 3 to 6 percent profit margin,” Livingston said.

Amendment 70 also raises the minimum pay for tipped employees, like wait staff, maintaining it at $3.02 below the regular minimum wage. Livingston pointed out that this will make the tipped minimum wage higher as a percentage of the regular minimum wage than before.

“The tipped minimum wage is going up 70 percent in four years,” she said. “That’s a lot.”

Peabody said the “skyrocketing” cost of living in and around Denver led to higher turnover with Goodwill’s staff. She hopes larger paychecks will mitigate that.

“We definitely saw that $8.75 an hour was just not going to cut it for our employees in the Denver metro region,” she said. “We weren’t paying a livable wage.”

Littleton resident Michael Kessler, who owns Sanyork Fair Trade in Denver, agrees.

“We feel that $10 or under an hour is not a living wage, especially in this economy and in Colorado,” said Kessler, whose company imports goods from Latin America. He said that all of his employees already make more than $12 per hour.

Sheridan resident Jose Ortiz, 18, said he works for minimum wage at a company in Lakewood, which he declined to identify, and welcomes the wage hike.

“Every little bit helps,” he said.

What’s next?


Kessler was one of the business owners who signed on to the Business for a Fair Minimum Wage campaign in favor of Amendment 70.

Strauss, the DU economist, said that modest minimum wage hikes are unlikely to have large effects on food prices in Denver, but said that effects could be felt in parts of the state where the economy is not as strong, such as Pueblo or rural parts of the state.

While activists around the country have been calling for a $15-per-hour minimum wage for several years, Amendment 70 was crafted as a compromise, with its supporters saying they recognize that $12 per hour in Denver is different than $12 per hour in Pueblo.

Weldy Feazell, the Town of Parker’s director of business retention and marketing, said only one business owner has approached her concerning the increase, and that person didn’t even know what to make of it.

“They said, `as a human being, of course I want people to make more money, but I’m not sure how it’s going to affect my business,’ and that was it,” Feazell said.

In addition to the restaurant association, many chamber of commerce groups, including the South Metro Denver Chamber, opposed the wage hike.

“What we heard from our members was the cost of providing that additional wage is going to be cumbersome on small business and possibly detrimental on their ability to have employees,” said Bob Golden, South Metro Denver Chamber president and CEO.

But, like Hatfield, Peabody said it will take time to fully understand the effect Amendment 70 will have on the bottom line. She said Goodwill is preparing to adapt.

“Every four years, there could be a change in policy just based on the presidential elections,” she said. “You’re always kind of changing based on what can happen in the marketplace or the political arena. We just have to make changes and adapt.”

Comments

No comments on this story | Please log in to comment by clicking here
Please log in or register to add your comment