While Denver officials unanimously approved a three-tiered plan to raise the minimum wage for Colorado’s largest municipality to $15.87 by the start of 2022, there is less agreement in the state’s third-largest city. The council’s management and finance policy committee voted 2-1 not to advance the plan to the council, though its author, councilwoman Alison Coombs, confirmed afterward in an email to Denver Business Journal that she plans to push the idea forward to council on her own.
In addition to raising the wage to a higher level than Denver did, Coombs’ plan comes in a very different economic atmosphere than that in which Denver’s was passed. Rather than the record-low unemployment levels of late 2019, hers comes after employers in the state lost 342,300 jobs because of the coronavirus pandemic — 61% of which had not been restored as of the end of July — and tens of thousands of businesses have closed or are closing.
Local business leaders cited the current conditions Tuesday as several came out to speak against the idea. Aurora Chamber of Commerce President/CEO Kevin Hougen said the plan will have repercussions for employers, such as the elimination of some low-skilled workers to pay higher salaries to others, and Business Advisory Committee Chairman Garrett Walls said further cost increases at a time when revenues are plummeting will lead to more business closures.
“Why in the world is this being discussed right now? Most business owners have had their teeth knocked in by Covid,” said Walls, a vice president at an Aurora property-management firm. “It’s incredibly concerning that we are implementing a cost increase on business owners from the expense side when most business owners are not even positive that they will make it and have the doors open on January 1st.”
Coombs sought to counter those arguments by pointing to studies showing that increases in the minimum wage lead to greater worker productivity, decreased turnover and a boost in aggregate household spending, as low-income workers spend a greater percentage of their pay. She noted that 81,000 city workers will have higher salaries by 2027 because of the law and noted that the majority of them will be women or people of color.
“The concern that it would harm the ability of small business to function does not bear out in studies that have been done,” said Coombs, a residential program manager for adults with intellectual and developmental disabilities. “There are a number of positive impacts to these types of increases that spread all across the economy.”
Under the proposal, Aurora would raise its minimum wage 5% above the current $12 state level to $12.60 at the start of next year, then another 5% in 2022. Then, the floor hourly wage would rise 10% a year between 2023 and 2026 and final 3% to $20 in 2027, after which it would increase by the level of the consumer price index.
Since Denver passed its minimum-wage hike in November, no other city has advanced a similar hike about state levels, Colorado Municipal League Executive Director Kevin Bommer confirmed Tuesday. Gov. Jared Polis signed a bill just last year allowing for local governments to raise their minimum wage above the state’s.
Much of the debate in committee Tuesday surrounded whether the low-income residents intended to benefit from the move in a city where 29% of people put at least half of their pay toward housing costs actually would take home more money than they do now.
Councilman Dave Gruber pointed to a study from Seattle showing that after that city hiked its minimum wage to $15 per hour, employers cut jobs, particularly for younger and unskilled workers who were at the bottom of the pay skill. Councilman Juan Marcano, the only committee member to back Coombs’ proposal, responded that while hours were cut for workers, their base pay remained at the same level because of the higher wages — a statement that Gruber said was not his interpretation.
Councilman Curtis Gardner, using city staff reports, estimated the effect of the law on Aurora’s budget would be about $500,000 per year for the next two years at a time when officials have estimated a revenue shortfall of $25 million this year and $31 million for next year. Gardner also warned that while employers may raise pay for low-income workers, they are likely to do it by cutting other benefits because there is a good chance their revenue won’t be going up at the same pace as the minimum wage in the near future.
“I think a minimum-wage proposal is really a short-sighted way of looking at how businesses have to compensate their employees,” Gardner said.
Coombs, who is likely to see more support on the council as a whole than she did on the committee, complained to Gruber that she was given little notice about bringing potential supporters to the hearing and, therefore, did not line up favorable testimony for Tuesday. She said in the email to DBJ that would not be the case when she gets the issue scheduled for a full council study session.
“I look forward to a more robust discussion at the study session when we are able to bring in presenters on both sides of this issue,” she wrote.