Low-income workers just got a raise — which may or may not be a good thing 

Mo' money

click to enlarge Richard Skorman is in support. - FILE PHOTO
  • File photo
  • Richard Skorman is in support.

The best present for many Colorado workers didn't show up under the Christmas tree — instead it will appear on their first paycheck of 2017.

On Jan. 1, Colorado's minimum wage went from $8.31 to $9.30 an hour, the result of the November passage of Amendment 70, which will gradually boost the state's minimum wage to $12 an hour by 2020. The law also boosted the base minimum wage for waiters — who must make at least minimum wage when tips are factored in — from $5.29 to $6.28 an hour. Their base wage will increase to $8.98 an hour by 2020.

Colorado is among 19 states that are raising their minimum wage in 2017. The federal minimum wage has been $7.25 per hour since 2009.

In Colorado Springs, the boost is getting a mixed reaction. Steve Kanatzar is the owner of The Airplane Restaurant near the Colorado Springs Airport (as the name suggests, it is a restaurant in an airplane) and chairman of the Colorado Restaurant Association, which opposed Amendment 70. Kanatzar says it's not that he doesn't want to do right by his employees, many of whom have been with him for years. But he already pays much of his staff more than the minimum, and while waiters are generally paid the minimum, when tips are factored in they're his "highest-paid employees."

Since he now has to pay waiters more, Kanatzar says, he won't be able to boost the pay of his kitchen staff as much. And since the minimum is now higher, many of his employees who are now making more than the minimum will be close to bottom-level wages — meaning they will probably be asking for raises. That's a lot of pressure, he says, for a business that runs on tiny profit margins, as most restaurants do. And that doesn't take into consideration the fact that his vendors will need to pay their employees more, meaning that "my chicken is going to cost more."

Kanatzar says he'll deal with those increased costs the way many restaurants plan to: by increasing prices, decreasing employee hours, or cutting employees. He says he'll also look for ways to cut corners — for instance by buying cut onions instead of paying an employee to chop fresh ones. In low-income, rural parts of the state, Kanatzar says he expects some businesses will simply close.

What most people don't realize, Kanatzar says, is that on slow days he loses money.

"Sometimes servers make more than me," he says. "... My wife joked, she said when [the minimum wage] hits $9 an hour I'm going to work for you."

But not all local business owners think Amendment 70 is a bad thing. Richard Skorman, owner of the Poor Richard's complex of restaurants and stores in north downtown, says he already pays his workers more than minimum wage, and he thinks most small business owners do the same. It's chains, he says, that usually pay minimum wage, and forcing them to pay workers more is likely to make small businesses like his more competitive.

He sees other benefits as well: Workers making a living wage stay in a job longer, letting a business avoid the costs of training someone new, and customers often bond with long-term workers. There's also the moral argument that people ought to make enough to live off (though some counter that a minimum wage was not meant to be a living wage). And finally, Skorman says, there's the basic economic theory that people who have more money will spend it — often in businesses like his.

"We hope that [workers] have more money in their pockets," he says. "It's a good thing for us and small businesses everywhere."

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