Denver hurts business, consumers by fast-tracking a minimum wage hike

The City of Denver has made headlines recently for its efforts to increase the city-wide minimum wage beginning in January of this year, ultimately raising rates from $11.10 to $15.87 per hour by January 2021. While well-intended, the rapid timeline for such a significant increase could create serious ripple effects for local businesses, employees and consumers.

The proposal aims to address the high cost of living in Denver, but it puts the city at risk of worsening the very problem it’s trying to solve. Many local businesses will need to make dramatic changes to adjust to this increase, which will inevitably result in reduced employee hours, job losses, and increased costs for consumers. This, in effect, will only exacerbate the cost of living issues in Denver.

But aside from the philosophical and policy disputes about the wisdom of mandating such wage increases on employers, the larger issue at hand for the Colorado Chamber of Commerce is the process by which the city is fast-tracking the proposal. This topic was heavily debated in the state legislature this year and lawmakers ultimately passed a bill that provided guardrails in the law to address concerns raised by employers and ensure that any changes were incremental.

With the passage of House Bill 1210, for the first time in Colorado, local governments were authorized to raise the minimum wage within their jurisdictions. While the Colorado Chamber opposed the bill on the grounds that it Loren Furman is the senior vice president of state and federal relations for the Colorado Chamber of Commerce.

creates a patchwork of wage rates across the state and will ultimately lead to increased prices for consumers, the business community worked closely with the bill sponsors to minimize negative consequences of the legislation.

After hearing from businesses all across Colorado, majority Democrats in the legislature amended the bill to require local governments to do outreach to employers, including chambers of commerce, and allow for changes to their minimum wage rates. This compromise allows employers time to implement the changes in the law, providing the predictability and gradual change needed to maintain operations.

According to the bill’s final fiscal note dated August 28, 2019, prepared by nonpartisan Legislative Council staff and provided to all legislators: “the fiscal note assumes that no local government will enact a local minimum wage law before January 1, 2021, due to the stakeholder requirements under the bill.”

By fast-tracking its minimum wage increases to January 2020, it gives businesses only a few months to prepare, which was not the intent of the Colorado General Assembly. This abrupt policy change would especially impact Denver small businesses, restaurants and retailers, many of which operate on very small profit margins.

The business community needs predictability from government to function. Mandating a steep minimum wage increase of $4.77 per hour in just 15 months — a 43% increase from the current rate — will have negative consequences for the local economy. We’re urging city officials to consider the intent of state legislators when contemplating such a proposal and give employers in the Denver community time to adjust to this significant policy change.