A minimum wage increase for Jonathan Kenworthy is not about splurging for concert tickets, or suddenly springing for a vacation. As a Grand Junction, CO pizza delivery guy, the 33-year-old Kenworthy appreciates January’s $0.99 per hour wage boost in Colorado for much more prosaic reasons.
“At the end of the day, everything goes back to bills,” Kenworthy said. “In my current economic situation, I’m pretty much living paycheck to paycheck. It basically makes it easier for me to afford my life’s necessities a little better than before.”
The view on wages from the Western Slope changes, though, when it’s an employer talking.
Michelle Gillilan, who owns D&M Meats in Fruita with her husband, said the Jan. 1st wage boost and three more to follow by 2020 have forced their packing business to cut overtime hours for skilled employees, raise prices and pay higher invoices from suppliers who are also raising their prices because of expanded labor costs.
When many Coloradans vote, Gillilan said, “they just don’t realize the true costs. They just don’t get it” when it comes to small businesses, employees and basic economics.
Groundbreaking research is showing that past lower wages created inequities in obesity rates and mental health among minimum wage workers.
The two perspectives on the early results from Colorado’s Amendment 70—passed with 55 percent support on last November’s state ballot—span the equity and employment issues that have defined the minimum wage debate for decades. Economists and academic researchers will now watch carefully for wider statistical evidence to back the majority’s view that raising wages will lift workers out of poverty and improve the overall economy, even if costs rise for some employers and consumer goods and services see a rise in prices.
“We’ve always felt this is just a first step,” said Michelle Webster, manager of policy and budget analysis for the Colorado Center on Law & Poverty (CCLP), a Colorado Trust grantee. CCLP was part of a coalition of progressive groups backing Amendment 70 during last year’s campaign.
One group of statistics that researchers will watch ties physical health directly to wages. Groundbreaking research is showing that past lower wages created inequities in obesity rates and mental health among minimum wage workers, writes J. Paul Leigh, PhD, a professor of health economics at University of California, Davis. Gradual erosion in the buying power of the minimum wage in previous decades of stagnation can account for up to 10 percent of the increase in average body mass in the U.S. since 1970, according to a paper Leigh cited for the Economic Policy Institute. Though the researchers want to dig deeper, one theory to explore is whether those working for the minimum buy more high-calorie, poor-nutrition fast foods because they are the most affordable.
Leigh also cited a British study showing mental health improvements in workers who received a 1999 wage increase, when compared to control groups whose wages stayed the same.
Colorado’s latest minimum wage campaign took hold at a time when employment levels in the state are high, but lower-wage workers and social-justice supporters see compensation as relatively stagnant. Colorado’s state-set minimum wage was adjusted for inflation and set at $8.31 in 2016, above the federal minimum of $7.25, but scheduled for only incremental increases in the near future with inflation largely tamed.
Progressive groups, citing one study of productivity, argue the minimum wage should have been $21.72 by 2012 if hikes had kept pace with workers’ more efficient contributions to the economy. Charts by the White House Council of Economic Advisors (during the Obama Administration, in 2014) show the inflation-adjusted buying power of the minimum wage reached a peak in 1968 and is a third lower now.
The November 2016 victory for Amendment 70 increased the Colorado minimum wage to $9.30 on Jan. 1. Pending increases in the amendment will move the base to $10.20 in 2018; $11.10 in 2019; and $12 in 2020. After that, the minimum will once again be adjusted upward with inflation but, unlike the previous law, will not be adjusted downward if the Consumer Price Index falls.
Minimum wage for tip-friendly jobs such as restaurants moved from $5.29 to $6.28, and will also move up each year.
Some employers who support higher wages are also struggling to factor in the new minimums without hurting employees. Heather Griffith owns Young People’s Learning Center, the oldest privately owned child care center in Larimer County, serving 150 families in the school year and 250 in the summer.
Griffith said she pays everyone above minimum wage, but that when the minimum moves up, she has to compete harder for entry-level employees with a wider range of retail or fast-food businesses. Staff salaries will be 48 percent of her costs next year; she had committed to a 5 percent boost in wages over the next three years, but also told parents their fees would rise 5 percent.
Griffith has convened meetings of child care center operators in northern Colorado to talk about costs and other challenges, and said “I think many agreed this [minimum wage hike] is long overdue. I think there is also deep concern about parents not being able to make this work, and turning to unlicensed care.”
Parts of Colorado have such high costs for housing and other services—including Denver, Boulder and some mountain communities—that even the pending $12 minimum wage is not enough to live on in those areas, Webster said. Yet the legislature in 1999 blocked local communities’ ability to set a minimum higher than the state.
The coalition will work through the legislature to strike that provision in favor of local control, likely in 2018, Webster said.
“There’s still a tremendous amount of work to be done for low-wage workers,” she said.
Michael Booth is a Writer in Denver, Colorado. Reproduced with permission of The Colorado Trust (www.coloradotrust.org).
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