Colorado First State to Decrease Minimum Wage

Colorado making historic minimum wage changes

Photo from Picasa

Photo from Picasa

For the first time in decades a state’s minimum wage is decreasing. Starting in January of 2010, Colorado’s hourly minimum wage will fall 3 cents, to $7.25 an hour. This is the first decrease in any state’s minimum rate since 1938, the year it was introduced. The reason for the decrease is because Colorado is one of ten states that fix their minimum wage rate 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. Gary Foeller, a house painter in Denver, said, “Yeah—it’s only 3 cents an hour, but that 3 cents an hour adds up at the end of 12 months.” The three-penny difference is estimated to add up to about $62 a year for a worker with a 40-hour workweek. The change won’t have an effect on workers who combine hourly wages and tips like waiters, bartenders and waitresses.

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. Mike Trinh, owner of a Dairy Queen in the state, said he pays his workers $8 because his research has shown that anything less, and workers won’t stay. He said, “You have to be competitive if you want them to stay on and do a good job.” The unemployment rate is not pushing people to work for minimum wage as readily as early research suggested. Rather, most people in need of work are taking lower paying jobs, but proactively looking. 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 states cannot go below that number. Arizona, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington all have adjustable minimum wage rates and most tie the rate 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 the minimum requirement, it is still up for debate on how workers will be able 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?”

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