What would raising the minimum wage actually do? Amendment 70, explained

What would raising the minimum wage actually do? Amendment 70, explained

Mike Chea is constantly calculating.

The security guard at the Colorado Convention Center makes $12 per hour – a wage he says dictates nearly every aspect of his life and keeps him always thinking about money.

He’s perpetually making plans about what he’s going to feed his four kids for each meal, how much time his eldest daughter will have to watch her three younger siblings while he’s at work, and what time he’s going to get home. He worries about how many hours he’ll be able to spend with his wife each week. And he stresses out about how much sleep he’ll get each night.

It’s a balancing act with a stupefying number of variables. And the numbers game exhausts him.

Here’s what might surprise you: Chea is not among Colorado’s lowest-income earners. He makes well over current $8.31 minimum wage. His compensation rate is 44 percent more than the required minimum for workers in Colorado.

Recent research shows that Coloradans find it nearly impossible to subsist on less than $12 per hour and that having a family makes even $12 insufficient. Chea works as much as he can, but can’t always manage to make ends meet.

His challenges give a glimpse into what’s at stake in the minimum wage fight in Colorado. This year, Coloradans are voting on a ballot measure, Amendment 70, that would increase the wage to $12 by 2020 by amending the state constitution. Here’s some context – past and present – about the issue.

  1. Who set Colorado’s minimum wage?

Voters agreed on Colorado’s minimum wage, which is currently $8.31 per hour, in 2006.

That year, a ballot measure called Initiative 42 was narrowly approved by referendum. It increased the minimum wage to $6.85 per hour and required incremental, inflation-based increases each subsequent year.

The state has used the same system ever since. Though tying the minimum wage to inflation usually means yearly increases, it doesn’t always. In 2009, inflation declined — and, thus, so did the 2010 minimum wage.

Tying the minimum wage to inflation rates has another drawback, too. Regional price differences mean that inflation-based wage increases don’t always cover a family’s needs in any given geographical region. Prices are higher in Aspen, for example, than they are in Alamosa, yet workers in both areas can be paid the same wage.

Mike Chea lives in Littleton, where a Colorado Center on Law and Policy report showed that a family with two children needs two adults to make at least $18 per hour in order to be self-sufficient. Chea and his wife, who makes $13 per hour working in childcare, have four children. They’re barely making it work.

  1. Who’s trying to raise the minimum wage?

A coalition of labor groups and economic justice advocates has been working for the past few years to change the state minimum wage so that it keeps pace with the cost of living rather than inflation.

Felicia Griffin, executive director of the Front Range Economic Strategy Center (FRESC), told The Colorado Independent that members of an informal group of anti-poverty organizations called The Everyone Economy began to talk about the minimum wage years ago. Griffin said it became a major topic of discussion in 2014.

In the 2015 legislative session, Democrats advanced two separate bills that would have affected the minimum wage — one by allowing cities to set their own wages, the other establishing a ballot initiative to reach a statewide $12.50 minimum by 2020. Both measures were killed in the Senate.

In the 2016 session, state Sen. Mike Merrifield pushed forth legislation that would have allowed municipalities to enact their own minimum wages, thereby adjusting for the fact that cost of living varies dramatically by county in Colorado. That bill failed in the Senate as well.

After the bill’s failure, anti-poverty groups, labor unions and economic policy advocates formed a coalition to give the people of Colorado a way to raise the wage directly — with, you guessed it, a ballot initiative. Those groups combined to create Colorado Families for a Fair Wage, the effort that qualified the issue for November’s ballot and is now working to convince voters to pass it.

Amendment 70 would change the state constitution to increase the minimum wage by 90 cents per hour beginning January 1, 2017, and adding 90-cent increments until it reaches $12 per hour in 2020. From that point forward, it will again be tied to inflation.

Volunteers for People with Colorado Families for a Fair Wage are currently knocking on doors, dropping mail pieces and buying digital and television ads, trying to push the measure to victory Nov. 8th. Campaign finance filings with the Secretary of State show that supporters have received nearly $4 million this election cycle, mostly from out of state. Its largest donor is the Palo Alto-based Fairness Project, followed by Brooklyn-based Center for Popular Democracy.

Polls are showing that their work will likely pay off. An August Magellan Strategies poll of 500 likely Colorado voters showed that 55 percent of respondents supported the measure, 42 percent were opposed and three percent were undecided.

More recently, a September joint project between Colorado Mesa University, Rocky Mountain PBS and Franklin & Marshall College showed that 58 percent of respondents favored Amendment 70, with 36 percent opposed and seven percent undecided.

The amendment’s proponents also point to robust national support for raising minimum wages. They were buoyed by Governor Hickenlooper’s endorsement in September. He had waffled on the issue in the past, but ultimately gave his nod by linking an increased minimum wage with a stronger economy.

  1. Why $12 per hour instead of $15?

Felicia Griffin of FRESC said that Colorado Families for a Fair Wage’s decision came from polling data that showed that a $12 ballot measure would have the greatest likelihood of passing. “We simply don’t have the power to [raise the wage to $15 per hour]”, she said. “Folks need a raise. We need to be moving in the right direction.”

But critics say that $12 simply isn’t enough, and smaller subgroups continue to work for $15 an hour. Denver janitors, for example, signed a new contract in June that will guarantee them a $15 hourly wage by 2020.

Chea is part of an SEIU campaign to raise security workers’ wages to $15 per hour. He sees this as a modest increase. “We have big names like Donald Trump come through, and for the amount of responsibility they put on us, we are paid very little,” he said .

Griffin doesn’t disagree, and acknowledges that $12 per hour is simply not enough in some Colorado regions. “In places like Denver, people are getting priced out of their homes,” she said. “We just need to give folks help to make ends meet.”

  1. Who’s against a minimum wage increase?

The coalition working against Amendment 70 is called Keep Colorado Working. It is composed of a diverse group of business interests, including various chambers of commerce, the Colorado Business Roundtable and the Colorado Restaurant Association.

Their primary argument against raising the minimum wage is that it leads to job losses. The logic is simple: If you force employers to pay their workers more, there won’t be enough money for everyone. Firms will then have to raise prices, which could hurt business and lead to layoffs. But this line of thinking has been increasingly questioned in recent years.

“The economics profession has changed its mind a bit about the minimum wage,” said RIch Jones director of policy and research at the Bell Policy Center in Denver. “Since the mid-90’s, a bunch of states have raised the minimum wage above the federal wage, and that has created a natural experiment, and a lot of research has been done that has looked at what happened in those different jurisdictions.”

Jones referenced a study from the University of Massachusetts that compared the effect of a greater minimum wage in one county relative to neighboring counties and found little or no impact on job losses there.

Still, opponents often argue that small businesses and rural communities will be disproportionately harmed by an increase in the minimum wage because they have fewer collateral resources to absorb a wage hike.

Colorado Families For a Fair Wage spokesman Timothy Markham said that those fears are exaggerated because the amendment just isn’t bold enough to merit that kind of alarm. “Our proposal is very modest, and it’s phased in over three years,” he said. He also points to the fact that when Colorado raised its minimum wage in 2007, Colorado’s economy grew, adding 73,000 jobs, 6,000 of which were in rural parts of the state.

Markham also notes that the opposing sides met early in 2016 in an effort to find a compromise, and those behind Keep Colorado Working did not express concern for rural Colorado or for small businesses in those meetings. “I’m sure they just saw polling that said that’s what works,” Markham said.

Keep Colorado Working declined to comment on the impacts of a minimum wage increase for this story. Filings with the Secretary of State show that the group has received about $1.5 million this election cycle. It has received considerable out-of-state support as well, with $850,000 from the Virginia-based Workforce Fairness Institute.

The group has recently been touting a study from the Common Sense Policy Roundtable that found the amendment would decrease wage and salary incomes by $3.9 billion per year due to unemployment. But critics say that CSPR’s ties to the oil and gas industry and the Koch brothers undermine the credibility of its research.

EIS Solutions and Starboard Group, PR outfits with many oil and gas clients, work closely with CSPR and helped staff the nonprofit. Additionally, CSPR has reportedly received funding from the Koch-backed Americans for Prosperity, and its board members include Lem Smith, the former Director of U.S. Government and Regulatory Affairs for Encana, one of the largest fracking companies in Colorado.

It doesn’t end there. CSPR’s chair and funder Kristin Stromm is married to EIS Solutions Director Josh Penry, leading some to believe it is just an extension of EIS. Former EIS media officer Dustin Zvonek, who is now the state director of Americans for Prosperity, was CSPR’s media officer before making the switch to EIS.

Mike Chea is dubious that raising workers’ wages would inevitably lead to job losses. Every day, he watches events take place at the Convention Center that bring in enormous amounts of money, and he doesn’t see why a bit of that couldn’t be diverted to the people who keep the venue safe.

“Security is looked at as a non-profit part of the organization,” Chea said. “If an event manager brings Comic-Con, they see $20 million,” he said — but security guards don’t get bonuses for such high-profit events. “The only time security [gets any attention] is when something terrible happens.”

Further, some economists say that higher wages make workers more loyal to their employers. Chea thinks that the Convention Center would greatly benefit from increased devotion from workers — he estimates that about 15 of the complex’s security workers have quit in 2016.

“Sometimes, we don’t have enough help to keep all the wheels turning,” he said.

  1. If cost of living varies regionally, wouldn’t it make sense to set the minimum wage regionally?

Senator Merrifield certainly thinks so. He tried to accomplish exactly that during the last legislative session. In giving cities the ability to raise their minimums above state levels, he argued, people could receive the funds they need to succeed in their particular region. This issue is especially prominent in the Denver area and in resort communities like Telluride and Aspen. Some reports have shown that workers in resort towns must live hours away from their workplaces because of prohibitive housing and grocery costs.

Merrifield’s effort was unsuccessful due to a 1999 law that banned cities from setting their own minimum wages, which was passed in response to an effort by Denver that year to raise its own wage.

Other cities nationwide, including Seattle and New York City, have tried to improve wages for struggling workers. Seattle’s minimum is currently $15 per hour, and New York is on track to reach $15 by 2019.

Denver may not have reached New York’s cost of living, but Chea says that Denver’s population boom in the past few years has prompted people he knows to consider moving.

“I have friends and family that are talking about leaving Denver to go to other parts of the state,” Chea said. “Denver has gotten really big in a really short amount of time, but the wages have not.”

  1. Are there better ways to help low-income families?

Some critics against a minimum wage increase have argued that an expanded earned-income tax credit (EITC) would work better than an increased minimum wage. The Bell Policy Center’s Jones concurs that it’s a good policy. “It does help low-income workers move above the poverty line, and we should be looking at both options,” Jones said.

However, Jones sees a couple of issues with relying on the EITC to lift people out of poverty. The first is that it heavily favors low-wage workers with children. “If you’re a single low-wage worker, the EITC phases out at such a low level that very few people actually benefit from it,” Jones said.

Jones also believes that employers, not taxpayers, should be responsible for improving their workers’ lives. “When people employ a lot of low-wage workers, they profit, and they ask other taxpayers to pay for it if all you do is expand the EITC,” Jones said.

Chea says his employer, the Colorado Convention Center, has behaved in belligerent and even threatening ways to keep its security workers from receiving the wage they feel they deserve.

When asked if the Convention Center has threatened to fire people for unionizing, Chea said they had.

“Verbally, not written or anything like that, because it’s illegal,” he said.

  1. What’s it like to live on less than $12 per hour?

Each of the 500,000 Coloradans (about 1 in 5) who live on less than $12 an hour has a story about how such a wage impacts their lives.

For Chea, it means serious health challenges. The stress of his job, combined with the stress of constant uncertainty, has eroded his physical and mental health. He also experiences emotional stress: He loves his kids deeply, and it’s painful to try to explain their financial limitations.

Said Chea: “Sometimes, my kids want to go see a movie or go get a Slurpee, and it’s hard to explain to them why we can’t do some of the stuff other kids get to do.”

 

Photo Credit: Allen Tian, The Colorado Independent

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Eliza Carter

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