Colorado's Minimum Wage Becomes 1st In US To Drop
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DENVER — Colorado's minimum wage will drop slightly in the new year – the first decrease in any state's minimum wage since the federal minimum was adopted in 1938.
Colorado's wage is falling 3 cents an hour, from $7.28 to the federal level of $7.25. That's because Colorado is one of 10 states that tie the state minimum wage to inflation. The goal is to protect low-wage workers from having unchanged paychecks as the cost of living goes up.
But Colorado's provision also allows wage declines, and the state's consumer price index fell 0.6 percent last year, so the minimum wage is going down.
The lower consumer price index, attributed to lower fuel prices, would have forced the wage down 4 cents an hour, But no state can go below the federal minimum of $7.25.
Thirteen other states and the District of Columbia will keep a minimum wage higher than the federal minimum, according to the U.S. Labor Department. Alaska will join them Friday when its minimum wage rises 50 cents to $7.75.
Colorado's drop is small – but those among the estimated 48,000 residents earning the minimum shook their heads at the possibility of pay cut.
"It is hard to make it, hard to get by," said John Mullen, 50, an out-of-work construction worker waiting for a bus on a bitterly cold New Year's Eve in Denver. Mullen said he remembers making minimum wage at a factory and having enough for small comforts.
"You'd get paid every Friday, have enough money to go catch a poker game or take your girl out to a dinner," Mullen said. "But the law is the law. What can you do?"
Others said that even a tiny drop for the lowest-paid workers will be felt.
"Yeah, it's 3 cents an hour. But that 3 cents an hour adds up at the end of 12 months," said 59-year-old Gary Foeller of Denver, a house painter who hasn't worked in weeks but usually earns more than the minimum wage when he has a job.
The 3-penny difference would amount to about $62 a year for someone who works 40 hours a week and doesn't take time off. The decline won't affect tipped workers, such as waiters, who already have a base salary below $7.25 an hour.
State labor officials insist that few employers paying minimum wage will drop workers' wages, though they had no figures or estimates.
"We anticipate most employers will keep paying their current wage," said Cher Haavind, spokeswoman for the Colorado Department of Labor and Employment.
About 4 percent of the state's 1.2 million hourly workers earned minimum wage in 2008, state officials said.
At a Dairy Queen restaurant in suburban Centennial, owner Mike Trinh pays his six year-round employees and eight summer workers $8 an hour. Anything less, and the workers don't stay, he said.
"You have to be competitive if you want them to stay on and do a good job," Trinh said.
Other states with adjustable minimum wages are Arizona, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington. But the minimum wage isn't expected to drop in any other state next year. Most states that tie the wage to inflation make no provision for lowering the amount, so the minimum wage stays flat if the cost of living falls.
In other states with adjustable wages, the cost of living hasn't dropped, or the wage is already at the federal minimum.
In Florida, for example, a declining consumer price index would drop the wage 4 cents to $7.21. But that's less than the federal minimum wage of $7.25 an hour, so paychecks won't change for Florida's lowest-paid workers.
Foeller, the Denver house painter, said he hopes employers won't drop wages, especially for adult workers.
"It's impossible to make it on minimum wage now. How can you survive?" he said.
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On the Net:
State minimum wage laws: http://www.dol.gov/whd/minwage/america.htm
Federal price index for Colorado: http://www.bls.gov/ro7/cpiden.pdf
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KRISTEN WYATT 12/31/09 04:01 PM ET Associated Press