Local Minimum Wage (September 2022 Update)
$19 per hour. Is your business ready to absorb this new cost driver?
At their most recent Work Session on September 6, 2022, the Fort Collins City Council once again considered a proposed ordinance to establish a local minimum wage. A vote on the ordinance is scheduled for first reading on November 15 followed by a second reading on December 6. If passed, local employers will be required to implement the new wage standard effective January 1, 2023.
Four of the six councilmembers present indicated support for annual increase schedule that would accelerate the recently announced statewide minimum rate of $13.70/hour to at least $15.45 as of January 1. With annual increases limited by state statute, the target rate of $19/hour would be achieved as of January 1, 2026 with annual adjustments thereafter tied to the Consumer Price Index.
In recognition of the extraordinarily tight window in which employers would need to respond – without noting the time of year in which such major adjustments will take place – Council did voice support for delaying enforcement until 2024.
The Fort Collins Area Chamber of Commerce strongly objects to any intrusions upon private employer-employee relationships. Not only is this proposal being considered without benefit of an economic analysis that tests the impacts of the proposed scale and schedule, the impact to a City organization that employees approximately 2,500 workers has not yet been evaluated.
With many of the approximately 1,000 seasonal and part-time positions currently offering a wage of less than $19, the City must demonstrate the strength of their own convictions as a matter of principle and leadership before imposing its will upon the private sector.
With little exception, the private sector has responded to labor market dynamics in offering higher wages and enhanced benefits. To create new regulatory burdens for operating with our community not only dismisses the positive impacts of job creation and preservation, but asserts a higher level understanding of the complexities of human resource management than employers themselves.
Numerous studies have been cited within a report presented to Council by Economic & Planning Systems that suggests many of the adverse consequences identified by the business community are unfounded. However, the report does not test the limits of such findings in an environment where wages increase 15% annually. Nor does it provide valuable insights as to the effects of wage compression and automation. These are significant impediments that will limit future employment opportunities for people looking to enter the workforce or develop new skills.
The Chamber is further concerned about enforcement mechanisms. At present, no department, expertise, or infrastructure exists to monitor, arbitrate, or enforce a local wage law. The City and County of Denver employs a department of 22 FTE, according to City staff, as the only other jurisdiction that has adopted a local minimum. Even if the City is able to stand-up its own department within the next 12 months, will employees be allowed to pursue their own legal remedies should they feel aggrieved?
Ongoing, what would prevent this new department from seeking additional oversight authorities?
At a time in which the City has already signaled the imminent need for additional revenue to fund operational needs, pursue major physical infrastructure improvements, and underwrite climate change objectives, indications of softening economic conditions merit a more penurious approach to managing our community finances.
Let your councilmember know where you stand on this issue! Here’s how you can make your voice heard.
- The market has already responded to economic forces by offering higher wages and enhanced benefits. A local wage standard is an unnecessary intrusion upon employer-employee relationships.
- Small business is least able to absorb costs associated with new regulation while often providing job opportunities to young people and those returning to the workforce through part-time and entry-level jobs.
- Accelerating the pace of automation through artificially elevated wage requirements is counterproductive to diversity, equity and inclusion objectives of the City.
- Council does not yet understand how raising wages by 15% per year will impact eligibility for public benefits such as childcare, housing subsidies, food and healthcare subsidies. The City does not have the expertise or financial resources to backfill lost benefits that exceed the limited advantage of a higher hourly wage.
- Minimum wage should not be conflated to mean ‘living wage’. Most minimum wage jobs are held by people that do not have dependents nor rely on that job as the sole source if income. Instead, these positions are held by entry-level and part-time workers seeking to additional income to support a chosen lifestyle.
- Expanding bureaucracy to address a problem that only exists at the margins will further burden residents of the community with higher taxes and decreased economic mobility.
- Council is once again charging forward with ‘values-based decision making’ with minimal consideration of unintended consequences. Why is data no longer considered relevant to a thoughtful conversation?
Source: Fort Collins Area Chamber of Commerce
September 14, 2022