Colorado making historic minimum wage changes
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 per 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 consumer price index of the state 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. The dip is minimal in Colorado – only 3 cents – but if you make a low hourly wage, and trying to make it on what little you get, 3 cents adds up. 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 no studies substantiate the claim, the spokesman for the Colorado Department of Labor and Employment, Char Haavind, said, “We anticipate most employers will keep paying their current wage.” Throughout Colorado, roughly 4% of workers are paid hourly.
Employers weigh in
Despite the federal minimum wage being $ 7.25, many employers say it isn’t enough to keep workers around. 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 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. 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 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 per hour. How can you survive on that?”
