Across the country, more than 40 local governments have put into place a minimum wage that is higher than their state’s minimum wage.
Now Denver has done so, too, passing a new law that requires employers to bump hourly employees to at least $12.85 on Jan. 1, which is 85 cents higher than the state minimum.
The measure adopted by the City Council requires employers to give their minimum-wage workers a second raise to $14.77 at the start of 2021, and a third to $15.87 in 2022.
After that, the new law mandates that the minimum wage in Denver be adjusted annually for inflation using the Consumer Price Index.
While Denver was the first Colorado city to raise its local minimum wage, it’s not hard to imagine that other cities will follow suit, especially in light of the ongoing labor shortage.
As you might expect, Apprentice Personnel watches minimum wage debates closely.
While employees welcome the pay raise, plenty of businesses, particularly restaurants, worry about wage increases that ultimately force them to cut back on personnel.
“There are restaurateurs out there where the increased cost that this will bring for them is more than their profit,” said Nick Hoover, a spokesman for the Colorado Restaurant Association. “There are only a few things that a restaurant can do and most restaurants have already reached the limit of what they can charge for their product.”
Under the new law, tipped restaurant workers by 2022 will make $12.87 an hour in addition to tips, which can add about $20-$40 an hour to a server’s take-home pay.
In the latest example of the Law of Unintended Consequences (did we need another?), we should note that while servers will benefit from the wage hike, those who staff the kitchen, many of whom already make around $15 an hour, may not see a raise.
That’s why the Colorado Restaurant Association is considering pushing for a larger tip credit than the current $3.02 per hour as the minimum wage rises.
Some of this should feel familiar to employers; Colorado’s minimum wage has been gradually increasing nearly every year since 2007.
Still, there are steps you can take to make sure your business is ready for anything. Among them:
- Evaluate your staffing: Take a look at your hourly, weekly, and monthly sales to determine if your current staffing levels are appropriate. Maybe you do need more full-time employees. Or maybe your increases in sales are confined to certain times of year and you should consider hiring temporary, seasonal help.
- Hire the best: Hiring the right people is always important, but doubly so when you operate a small business. So take your time and cast a wide net when recruiting new employees. (Apprentice Personnel can help on this front, too.)