Colorado making historic minimum wage changes

For the first time in decades a state’s minimum wage is decreasing. Beginning in January of 2010, Colorado will be decreasing it’s minimum wage by 3 cents per hour, to $ 7.25 per hour. This is the first decrease in any state’s minimum rate since 1938, the year it was introduced. The decrease is because Colorado is one of the ten states that peg their minimum wage to the rate of inflation. The goal is to align minimum wage pay with the cost of living. The state’s consumer price index declined by 0.6% in 2009 and that calls for the change in minimum wage.

Three cents can add up

The consumer price index for the state of Colorado was changed by lowered fuel prices. In Colorado the drop is minimal at 3 cents, but it is still cause for concern to the millions of hourly workers trying to make the most of their paychecks. Denver based house painter Gary Foeller said, “Yeah—it’s only 3 cents an hour, but that 3 cents an hour adds up at the end of 12 months.” The difference of three cents adds up to around $ 62 per year for a full time worker. The change won’t affect those who get wages plus tips, like waiters, waitresses and bartenders.

The government’s response

Most Colorado officials state that though there is a change in legislation due to the consumer price index, many businesses most likely won’t be decreasing minimum wage. Though there are no official studies to substantiate the claim, Char Haavind, spokesman for the Colorado Department of Labor and Employment said, “We anticipate most employers will keep paying their current wage.” Throughout the state about 4% of the workers are hourly.

Employers weigh in

Despite the federal minimum wage being $ 7.25, most employers are reporting that the wage is not enough to keep workers. An owner of a Dairy Queen franchise in Colorado, Mike Trinh, pays his workers $ 8 because he knows that if he pays less, he won’t be able to keep anyone on staff. He said, “You have to be competitive if you want them to stay on and do a good job.” The rate of unemployment isn’t pushing people to work for minimum wage as easily as it had been thought. People needing work are taking lower paying jobs, but not proactively looking for them. Trinh added, “If your wage is too low, there is no loyalty at all. The minute workers find a job offering a nickel or dime increase in pay, they leave.”

The one safeguard in minimum wage

The one safeguard in setting the minimum wage is that the federal minimum wage is $ 7.25 and because that is the floor, states can’t dip below it. Florida, Missouri, Nevada, Arizona, Oregon, Ohio, Vermont, and Washington all have minimum wages that are adjustable, and fix them to inflation. Thankfully it is the federal minimum wage that is saving people from an overall decline in wages. For example, in Florida the consumer price index is also falling, but taking down the minimum wage in line with it would mean the minimum wage rate would be $ 7.21, which is too low for federally accepted standards. Despite a floor being set, it’s up to debate on how people are going to manage. Foeller added, “It is impossible to make it on minimum wage now. It’s $ 7.25 an hour. How can you survive on that?”