Editor's note: As part of our continuing election coverage, we're taking a closer look at amendments and propositions that will be on the Colorado ballot in November. Yesterday, we examined Amendment 70 by way of an interview with a spokesman for the campaign, as featured in the post "Why You Should Vote Yes for Amendment 70 to Raise the Minimum Wage." Today, we hear from one of the main figures in the effort to defeat the measure.
Amendment 70 is a constitutional amendment to raise the minimum wage from its current $8.31 hourly rate to $12 by 2020. Proponents say doing so will help low-wage workers — some of whom have to choose between paying rent and putting food on the table — but will not harm businesses.
Tyler Sandberg, campaign manager for Keep Colorado Working, the leading group opposing the amendment, begs to differ. According to him, the proposal is unfair to businesses in rural communities and will hurt teens looking for a first job. His coalition argues that small businesses, especially, will have to raise prices and cut the hours of their employees in order to comply with the law.
The transcript of our conversation is illustrated with photos from Keep Colorado Working's website and Facebook page. We've occasionally inserted links and bracketed references for purposes of fact-checking and clarification.
How would you describe your coalition?
Keep Colorado Working is a coalition of 78 small business and rural-community advocates — anything from the Denver Hispanic Chamber of Commerce to all 47 chapters of the Colorado Farm Bureau, the Trinidad and Las Animas chambers, the Grand Junction chamber. The unifying characteristic is that they represent small business and rural communities.
What does your organization object to about Amendment 70?
We object to Amendment 70 because it's a flawed measure that's going into our constitution forever, and we don't think flawed policy belongs in the constitution. And even their highest-profile supporters, Mayor Hancock and Governor Hickenlooper, have leveled criticism of the amendment's language. Mayor Hancock criticized the lack of a tip credit [in a paywall-protected Colorado Statesman piece], because that's going to hurt independent restaurants. Governor Hickenlooper has said it's going to hurt the agriculture industry, it's going to hurt rural Colorado [and] it's going to hurt independent restaurants. So we have a measure that is flawed.
We sought compromises back in March. Not Keep Colorado Working — we didn't exist as a coalition back then — but the Colorado Restaurant Association. They asked, 'Why don't we go to $10.10?,' as President Obama had advocated as part of his platform. They asked, 'What if there was a bigger tip credit?' to allow less harm to independent restaurants. And also, that's going to mean getting rid of waiters and waitresses or cutting back on hours, because it's too high of a cost for restaurants. They also asked about a rural rate. Governor Hickenlooper has said there ought to have been a geographic exemption here, because the economy in a place like Walsenburg is not similar to what's happening in downtown Denver, and it's not fair to ask businesses in rural communities to pay a 44 percent increase that may be affordable in downtown Denver but isn't affordable in rural communities.
What we're objecting to is the language in this one-size-fits-all measure. It's a poorly drafted measure that does not appreciate the complexity of Colorado's vast economic disparity. Colorado has the twelfth-highest disparity in the country when it comes to the difference in the cost of living across the state. It does not reflect the complexity of the state, so it doesn't deserve a permanent place in our state's constitution, where it cannot be fixed.
Look at states like New York and California, that are raising their wage gradually, year by year. They have language in their law where, if there's a recession, they can pause the increases to help protect the jobs. They can protect the jobs that are still there by pausing any increases and not cause further job losses. That's not available here. In Oregon, there are three rates: one for Portland metro, one for major counties and one for rural areas. Also in Oregon, smaller businesses have more time to get to the wage than do corporations or larger businesses. So all these different states around the country that have implemented higher minimum wages have at least done so recognizing their states have complex economies and you can't have a one-size-fits-all measure.
Because of that — because Amendment 70 doesn't recognize those complexities, and even though high-profile supporters like Mayor Hancock and Governor Hickenlooper have criticized it — flawed policy does not belong in our constitution.
If I understand you correctly, your coalition isn't saying there should be no minimum wage, and neither does it say there should be no minimum wage increase. Is that correct?
We support the minimum wage increase that's already in law. Colorado is one of the very few states in the country with a law whereby the minimum wage goes up by inflation every single year [Initiative 42]. We already have that on the books, passed by voters in 2006. Our minimum wage has actually gone up 61 percent in the past ten years [minimum wage is currently $8.31 per hour, up from $5.15 in 2006], and it will continue to increase every single year even if Amendment 70 fails.
A lot of our member organizations have been excited to get behind a bipartisan effort to get wage increases. But when they saw how this one was written, they said, "We can't get behind this one, because there are too many serious flaws that are going to harm rural communities and small businesses."
This exact same measure is on the ballot in Arizona and Maine. [There are marked similarities between the measures, but they're not identical.] It's all funded by a group called the Fairness Project out of California, which is a labor-union outfit. [Ballotpedia lists the Fairness Project as second among donors to Amendment 70 in Colorado, giving $511,132 as compared to $650,000 from the Center for Popular Democracy Action Fund.] And we have a problem with out-of-state labor unions trying to put their agendas into our constitution. If you're from Colorado, you know there's no way a family-owned Mexican restaurant in Alamosa will be able to pay the same starter wage as a big corporation in Cherry Creek. People from Colorado get that. But this was written by out-of-state special interests trying to jam their agendas into our constitution, and that's something we have a big problem with.
Does your coalition have a problem with some increase in the minimum wage beyond the rate of inflation?
I can't speak for all 78 organizations, but the Colorado Restaurant Association actually filed some of their own measures — going to $10.10 and then increasing by inflation every year. They filed measures that had a bigger tip credit to help protect independent restaurants. [The proposals can be accessed at the linked page on the Colorado Secretary of State's website.] Waiters and bartenders are often the highest-paid people in the restaurant. The way Amendment 70 is written, all the raises go to the waiters and bartenders, but a lot of our restaurant owners tell us they want to pay their cooks more, and dishwashers — the back of the house. Some of them are making more than minimum wage, more than $12, but they'd like to see them get more. It's hard to make a living making $15 an hour in Denver, so they'd like to give them even more. But the way this is written, it forces restaurants to pay their highest-paid staff more, to the detriment of their lowest-paid staff.
We absolutely support raising the minimum wage by the rate of inflation every year, and some of our member organizations support raising it more than that. But all of that was rejected out of hand. And as a matter of fact, Patty Kupfer, the campaign manager for the disingenuously named Colorado Families for a Fair Wage — and I say that because most of the money is coming from out of state, so it's not exactly Colorado families who are behind this — she said to the Durango Herald a couple of weeks ago, "The other side always accuses of us really having a goal of $15 an hour, and they're right. That is our goal." That's simply not affordable for rural Colorado. So our coalition isn't opposed to increasing the minimum wage. We're not opposed to having a minimum wage in the first place. We're opposed to the way Amendment 70 goes about it.
Before he was pressured politically to support it, Governor Hickenlooper spent a month talking to the local media, leveling extensive criticism about this substantive measure and about how it failed to encapsulate the type of policy that would actually be appropriate to Colorado. And to do that and then stick it in the constitution, where it can never be fixed? What if we put it in and then, all of a sudden, the economy goes into a tailspin, into a recession? There's literally nothing we can do to fix it. We'll just have to stand by and watch whatever negative repercussions happen. And that's not the way to write economic policy.
Do you feel the measure should have gone through the legislature? Was that your preference?
The unions really messed things up in 2006 when they put [Initiative 42] in the constitution, because economic policy doesn't belong in the constitution. The constitution is the place for broadly held principles: our freedoms, our rights. It's not a place to be working out the details of economic policy. But if they were to put it in the constitution, to change the current amendment, they should have done it in a way that reflected the necessary complexity of economic policy, because they're affecting five million people's lives. They have this sense that it will just be taking money from big corporations and handing it to low-wage workers, and that's not what's happening. Big companies can afford it. We're not fighting this by saying, "The big companies of the world are going to be harmed." No, it's the small businesses, the family businesses. They'll be the ones that will take the brunt of this measure. And that's not fair to them. Why are you treating a Walmart in downtown Denver the same as you're treating a family owned sporting-goods store in downtown Walsenburg? That's not fair, that's not right, and that's not what we should be putting into the constitution.
How are you trying to get the word out about your viewpoint on this amendment? And who is funding your coalition?
It's really a David-and-Goliath battle: small business versus big labor. We're trying to fundraise the best we can, and we're getting $500 at a time from a pizza restaurant on Main Street, $1,000 from a Mexican-restaurant chain that happens to have two or three restaurants in Colorado. We're raising money bit by bit to try and get our message out. And when voters first hear about this, we'll admit that there's polling out there that shows a small lead for the amendment, because people out there emotionally want to help low-wage workers — and we do, too. But we think this isn't the way to do it. It's not fair; it's going to have an unfair impact on rural communities, because they're treating them exactly the same as businesses in the booming Denver economy, even though many of them are in places that are still in recession. So we're trying to get the word out.
We have three TV ads that are running right now. One of them tells the story of Alfonzo Nunez. He and his family have owned a Mexican restaurant on East Colfax in Aurora for the last 42 years. This is going to cost him $72,000 — and that's with only three and a half full-time waiters. It's about 150 hours a week that he hires waiters to come in; that's less than four full-time employees. And it's going to cost him $72,000 over the next four years. Well, the problem with that is, based on the profit margin of an average full-service restaurant, he's going to have to increase his sales by $2 million to cover that gap. And for a small, tiny, family owned restaurant on East Colfax in Aurora, if he could increase sales by $2 million, he'd be doing it already. It's going to force him to potentially lay off staff, cut hours, raise prices. And in an economically depressed area, raising prices isn't something easy to do, because people in that area aren't going to be able to afford it. Going out to eat in that area is a luxury for families, and when the prices get too high, families are going to curtail that, and that's going to hurt business at restaurants. Businesses are going to have to cut staff or cut hours.
The second story we're telling is about Janelle Sullivan. She's the owner of Hot Pots, a paint-your-own-pottery studio on Main Street in Littleton. It's a family-owned business, she's had it for thirteen years — and she's always had these camps for little kids, six or seven years old, about pottery. Some of the girls who first came to the camps thirteen years ago are now working for her as eighteen- or nineteen-year-old teenagers. She says she'd love to pay them all $15 an hour, but she simply can't afford to, because the profit margin's not there for paint-your-own pottery. She has this staff so she can be a working mom, so she can pick up her kids from school. If she's got a sick kid, she won't have to worry about shuttering the shop; someone will be there to keep the shop open and the business going. If she has to lay off some of this staff, when she has to go pick up a kid at school or at a soccer tournament, she's going to have to close her doors for a couple of hours — because she literally won't be able to afford having staff on at that rate. And that's not fair. She's hiring teenagers, she's hiring first-time employees. There should have been a teen rate, a starter-employee rate, because businesses are less likely to invest in unskilled labor, in fifteen-year-olds, at $15 an hour. That's what's happening in South Dakota. They raised the minimum wage, but they're going back to the ballot this year to lower it for teenagers, because they feel the impact has been to cut off teenagers from their first job.
The third story we're telling comes from Diane Schwenke. She's the president of the Grand Junction Chamber of Commerce. She talks about how this isn't fair to rural communities. To force the same rate on small, family-owned businesses in rural communities that operate on way slimmer margins isn't fair. They're struggling to survive right now. In Denver, you see cranes and construction and you have the sense that the economy is doing so great across Colorado. But if you go to Walsenburg, if you go to Pueblo, if you go to certain communities that are outside the metro area, you realize there are a lot of places that aren't doing so well. If you force a nearly 50 percent increase in their labor cost, they won't be able to make up the difference. That's going to mean laying off the exact same low-wage workers this is supposed to help.
You mentioned that the other campaign rejected your coalition's proposals and suggestions. Could you tell me more about the outreach efforts?
This is prior to my involvement — late February or early March. Members of our coalition, including the Colorado Restaurant Association, got wind of a ballot measure being prepared about minimum wage. And mind you, the proponents of this measure never reached out to any chambers of commerce, never reached out to rural organizations, never sought input from people who know these businesses and know these economies better than most. They asked for a meeting, and it took a couple of weeks for the AFL-CIO and SEIU operatives who were kind of spearheading the effort to agree. But eventually they met in late March, and by the time they did, the deadline for the ballot language was only a week or ten days away. It was pretty clear they weren't interested in negotiating. But we sat down at the meeting and said, "Can we get a compromise on the tip credit?" They refused to compromise on that. Then we asked for a rural rate, we asked about $10.10, because just two years before, President Obama, in his State of the Union address, he advocated for a $10.10 minimum wage. So we said, "Why don't we go with that?" Because that's a lot more affordable, and research has shown that minimum wages that are about half of the state's median wages are better for the economy, and median wage in Colorado is about $20 an hour. But that was rejected out of hand.
So the CRA, by themselves, in a last-minute scramble, filed three or four different measures just to have as a backup. They were basically about the tip credit, because for the restaurant industry, the tip credit is the most important aspect. They did it that way because they only had a week to get it done, but they ultimately came to the conclusion that their membership couldn't afford the million dollars or so it was going to cost to get on the ballot in order to promote a $10.10 measure, as well as to fight against the $12, one-size-fits-all, no-tip-credit compromise measure. That's because restaurant owners on average only make a 4 percent profit margin. On a $15 meal, the owner only makes sixty cents in profit before they pay taxes. They operate on very thin profit margins, so they decided instead that "we're going to fight the $12-an-hour amendment...."
They're going to say, "They didn't ask for this and this." But look at the measure itself. There's literally no compromise in it. There's no tip-credit compromise, there's no rural rate, there's no small-business rate, there's no teen rate, there's no training rate....
This can't be an emotional response. You have to have a rational response, because millions of lives are affected. And they refused, because they got their marching orders from the national unions.
What else would you like to add about this measure?
We need to look at the history. Washington, D.C., raised the minimum wage to $10.50 in 2015 and to $11.50 in 2016 — a gradual increase, as is happening all around the country. Nowhere is going from $7 to $15 overnight. They're all doing it at about a dollar a year. And the D.C. restaurant industry, in the first six months of 2015, lost 1,400 jobs. That's the biggest in the D.C. restaurant industry in fifteen years. They didn't even see that much loss during the 2008 recession. So when you go too far, when you price things at more than the economy can afford, you literally price people out of jobs. Wendy's is now in the process of installing kiosks at 6,000 restaurants around the country — so no longer will you order from a person who's being paid $10 an hour or $11 an hour. That job is literally going to go away forever. Tens of thousands of people who might have held that Wendy's counter job will never have that opportunity, because Wendy's has figured that with minimum wages rising so high, it's cheaper for them to install kiosks.
You've literally started to price people out of the market, and we want to make sure people have jobs — and when you go too far, you harm them. The City of Seattle, the exact same thing happened. D.C. and Seattle, I believe they're the only places in the country that have gone over $11 an hour. In Washington, the University of Washington did a study, it was commissioned by the City of Seattle. Not ideological, not partisan. They just wanted to know what happened after we raised the minimum wage. The university discovered that 1 percent of minimum-wage workers that were in the county were unemployed — 1 percent lost their jobs outright. And the rest of the low-wage workers who didn't lose their jobs lost so many hours — not anecdotally, but on average — that they saw no more net income. So despite getting about $1.50 more an hour, they saw no increase in their bank account at the end of the week, because the amount their hours were cut nullified the entire wage increase.
Small businesses only have so much money for labor. And small businesses, when they run out of money, they have to start cutting employees, cutting hours. We told that to these proponents. We told them, "This is complicated. It's not just wave your magic wand and all of a sudden these workers are getting better pay." If that was possible, we would have done that already, if we could have helped low-wage workers with no negative repercussions. If minimum wage increases had no negative impacts, let's raise it to $50. They claim there are no negative repercussions, but it flies in the face of actual reality.
We pleaded with them to come up with a measure that didn't actually harm workers, and they didn't care, because they're being funded by national unions with their own agendas that are trying to get into our constitution. And Colorado, of all the [minimum-wage] ballot measures that are happening around the country, it's the only one that's trying to go into the constitution. This stuff does not belong in our constitution, because if something goes wrong, we cannot fix it. This belongs in a deliberative process. It should be a bipartisan compromise, or at least a compromise that includes people who represent small business and rural communities. We already have a law where the minimum wage goes up every single year because of the rate of inflation. So we already have a solution on the books in Colorado, and all recent history shows us that if you go too far and don't write things in a thoughtful manner, you end up hurting the low-wage workers you're trying to help while also hurting small businesses.
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There's something else that's really important: In Seattle, 200 restaurants have now stopped tipping. And why that's really important for waiters and waitresses and bartenders is because when you tip them, that's their property. They can't be forced to share it with the restaurant owner; he has no legal right to it. He can't even suggest they share it with other people on the staff — only people who normally refuse tips, like bussers. But in Seattle, because of the wage increases, 200 restaurants have now stopped tipping. They've gone to a server charge, but the server charge is no longer the property of the waiter. It's the property of the restaurant owner, and they can choose to give literally nothing to the waiter. They can choose to just give the waiter a $15 salary, and they can use the server charge for anything they want: for rent, overhead, to pay the cook. Customers probably think it's a tip to the waiter, but it's not. And now you've harmed low-wage workers. A third of American adults get their first job in the restaurant industry, and half of them work in a restaurant at some point in their lifetime. It's great for working moms who can work the 11 to 2:30 shift and make a couple hundred dollars and still be able to pick up their kid from school. It's really important for college kids who are trying to keep their insane tuition bills affordable. Well, if you're being paid an hourly wage, those shifts aren't making up any money now, because you can't make any extra money off your own hard work and ingenuity.
The labor unions want to do this. They want to have unionized workers in restaurants making an hourly wage, because you can easily get dues out of them. And waiters and bartenders aren't going to declare tips so unions can take their dues out of them. This is ultimately an out-of-state ploy on behalf of the unions to try and increase the membership and increase the dues to the detriment of the very same low-wage workers they claim to represent.