January 2, 2012 by staff
Minimum Wage, The new year brings with it a decent bump in pay for about 74,000 Colorado workers earning the minimum wage. Colorado’s minimum wage increases 3.8 percent, or 28 cents, to $7.64 an hour effective today. That’s the biggest increase since the state linked its minimum wage to inflation back in 2006.
For an employee making that wage full-time, the increase translates into an extra $582 a year.
“The idea is to keep the purchasing power of the minimum wage constant over time relative to consumer prices,” said Rich Jones, director of policy and research at the Bell Policy Center in Denver, which advocated for the linkage.
Another 17,000 workers in the state earning just above the minimum are expected to get increases so they can stay ahead of it, Bell estimates.
“It becomes a domino effect all the way up if you have a compensation policy where you keep a consistent spread,” said Patty Goodwin, director of surveys at the Mountain States Employers Council.
That said, employers usually don’t set overall pay increases based on changes in the minimum wage, she said.
Employers the council surveyed project an average pay increase in 2012 of 2.2 percent, Goodwin said.
Some employers, however, have frozen wages since the recession in 2008, lowering the average.
The most frequent pay increase reported is 3 percent, an increase in line with those seen in the years before the recession, Goodwin said.
“These minimum-wage increases represent bright spots on an otherwise bleak economic horizon,” said Christine Owens, executive director of the National Employment Law Project, which advocates for higher minimum wages.
One reason is because workers at the lower end of the pay scale tend to spend any extra pay they receive, boosting overall economic activity, she said.
Although minimum-wage jobs are often associated with teenagers, more adults are finding themselves taking those positions to get by.
Eight out of 10 workers in Colorado who earn the minimum wage are 20 or older, according to an Economic Policy Instituteanlysis of census data.
Westminster resident Kelly Wiedemer, 46, is in that group. She was making $31 an hour until she lost her job as a financialanlyst in the summer of 2008.
After her unemployment benefits ran out, Wiedemer took a cashiering job in October at a gas station convenience store.
“Having experienced this working-poor thing for the first time, the wage increase makes a huge difference,” she said. “It helps to offset lost spending power.”
Wiedemer said food prices in particular have gone through the roof.
“This is a step in the right direction, but it is not a living wage by any means,” she said. “It helps low-wage workers from falling further behind.”
Colorado is one of eight states that link the minimum wage to inflation. Arizona, Florida, Montana, Ohio, Oregon, Vermont and Washington are the others. The federal minimum wage is $7.25 an hour.
The Colorado Department of Labor and Employment uses the Denver-Boulder-Greeley Consumer Price Index for the 12 months ending in June to set the minimum wage for the following year. In 2010, the state’s minimum wage actually went down 4 cents an hour because of slight deflation.
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