New Minimum Wage Rules Expected to Impact Local Businesses -By Beth Dodd

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In spite of the fact that the far majority of Teller County voters said no, Colorado electors approved an increase in the minimum wage in the November 8 election.

The opinions of Teller residents vary on how this will affect the regional economy, but many small local business operators say this will have a negative impact on local commerce. Other than such major industries as gaming, mining, health care and government services, Teller County abounds with mostly small businesses.

Colorado’s Amendment 70 will raise the minimum wage from $8.31 per hour to $12 per hour in annual increments from January 1, 2017 through January 1, 2020. Right now the minimum wage in Colorado is $8.31 per hour. It will go to $9.30 in 2017, $10.20 in 2018, $11.10 in 2019, and $12.00 in 2020. That’s a 44 percent increase in four years. After that, annual cost of living adjustments can be made. The current federal minimum wage is $7.25.

Amendment 70 also increases the minimum wage for tipped workers like waitresses and bartenders. Employers can credit $3.02 of an employee’s tips toward the minimum wage, meaning they can pay tipped workers $5.29 an hour as long as they earn at least $3.02 in tips an hour. The new amendment does not raise that tip credit amount as the minimum wage increases, which means that employers would still only be able to count $3.02 an hour in tip money toward the $12 minimum wage requirement in 2020, even if their employees earn more in tips than that.

Debbie Miller, president of the Woodland Park Chamber of Commerce, thinks that the new law will impact businesses here in Teller County and throughout Colorado. She believes the area will see reductions in the services businesses are able to offer because they will spend more money on fewer employees. It is also possible that consumers may see price increases at restaurants and retail shops.

According to a story in The Denver Post, the Colorado Restaurant Association asked its members in 2015 about their response to a minimum-wage hike like the one that just passed. Of the 220 restaurants that responded, nine out of 10 expected to increase prices, seven out of 10 anticipated cutting employee hours or the number of workers, and one out of five planned to close locations.

Local businesses will also have to cope with a change in federal law. New rules for payment of overtime come into play on December 1, 2016. The new rules raise the salary threshold for white collar salaried workers to be eligible to earn overtime from less than $455 per week to less than $913 per week. They also automatically update the salary threshold every three years, based on wage growth over time.

“Businesses will really have to study their bottom line budget and look at how they are going to address these two issues,” claimed Miller. She believes that many business owners have already set their 2017 budgets, and will have to find ways to adapt quickly.

Possible benefits of the increase in minimum wage according to Miller include employees with more money to take home and more money to spend in the community. This could generate more tax revenue for local governments.

“Businesses will have to decide what they can offer and still stay in business,” Miller added. “They will have to be uniquely adept at looking at their budget and how they do things.”

Several local business owners, including operators of restaurants, raised a red flag about this proposal during earlier political forums, such as one organized late last summer by state representative Polly Lawrence. At this meeting, small business owners cited this as a business killer, a trend that will result in higher prices. Elijah Murphy, co-operator of the Historic Ute Inn, stated that local consumers will end paying the price of this change.

But Laurie Glauth, owner of Mountain Naturals Community Market in Woodland Park, views the new law differently. She thinks the increase in the minimum wage could be highly beneficial in the long term and is the right thing to do in spite of cost increases in the short term. Glauth and her business partner Jan Greene employ nine part time and full time employees.

“When a person works 40 hours a week and can’t cover the basic costs of living, it shows that something is wrong with our economic system,” said Glauth. “Your best rate of return comes from investing in people.”

Glauth contends that customers like to see longevity in a business’ staff. Higher wages result in slower turnover of personnel, reduced training costs, and an increase in employees’ self-worth and motivation. The pressure to increase minimum wage has been increasing for a long time, and savvy business operators have already expected and planned for it. Colorado consumers voted for the wage increase and should be expecting to pay a little more. However, a challenge due to the increase in minimum wage is that the cost of unemployment insurance is based on pay, and that cost will now also go up.

“We need to look around and be smarter about how we consume,” said Glauth. “We waste a lot of money. We can use it to pay a higher wage and better someone’s life. It betters the community, and we all thrive.”

Colorado isn’t alone in spearheading an effort to change the minimum wage. Arizona, Washington, and Maine also voted to raise their minimum wage to $12 per hour on November 8.