Minimum Wage Increase Could Also Mean Increased Headaches for Businesses
The Colorado constitution mandates that the minimum wage within the state be adjusted annually for inflation. On January 1, Colorado's minimum wage officially went up to $8.23 -- 23 cents more than last year's $8 an hour minimum.
But that $1.84 a day can add up to a major expense for employers. There are some who argue that raising the minimum wage is detrimental to businesses, and could force them to raise the prices of goods and services in order to cover the higher costs. On the other side of the argument, people who support raising the minimum wage say that it will raise the standard of living for those who work minimum-wage jobs; that $1.84 a day also adds up for them.
For Lee Goodfriend, co-owner of Racines, hikes in the minimum wage for tipped employees can create problems. Tips are not counted 100 percent toward the minimum wage, so on a good night tipped employees can be taking in more money than hourly wage employees. "Cooks make less money than servers who make tips," says Goodfriend. "I think they should make comparable money."
As a former server herself, Goodfriend knows how hard the job is, and she says she wants everyone in the restaurant business to be making good money. But she has also been a restaurant owner for 31 years, and needs to think about how to pay all of her employees fairly. Around 55 of her 120 employees are tipped workers. All of her wage workers make "well over" minimum wage, she says.
When the minimum wage for tipped employees rises, that suppresses raises for non-tipped workers, Goodfriend says: "I don't think people realize how unfair it is to the other workers."
Back in October, Racines raised menu prices, which Goodfriend says the restaurant tries very hard to avoid. When business is slow, she adds, they're more diligent with expenses and make any staff cuts very carefully.
Sonia Riggs, president and CEO of the Colorado Restaurant Association, says a growing trend in the restaurant business is to save money by replacing workers with technology wherever possible, creating fewer jobs. "Seven out of ten people who work minimum wage jobs are under 25," she says, adding that young people will find it harder to get entry-level jobs as restaurants find it harder to pay all their employees more.
The minimum wage in Colorado has been rising annually since 2007, when it was $6.85. On January 1 of each year, the minimum wage increases based on the Boulder/Greeley/Denver Consumer Price Index. Last summer, businesses knew what the new minimum wage would be for 2015, Riggs says.
Goodfriend worries that the continued racheting-up of the minimum wage could affect the future of the restaurant business. "It either needs to be fixed, or be changed," she says. Have a tip? Send it to email@example.com.
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