Colorado Minimum Wage Increase, Initiative 42 (2006)
The Colorado Minimum Wage Increase Initiative, also known as Initiative 42, was on the November 7, 2006 ballot in Colorado as an initiated constitutional amendment, where it was approved. The measure increased the minimum wage to $6.85 per hour and provided for it to be adjusted annually based on the Consumer Price Index. The amendment also prohibited more than $3.02 per hour in tip income from being used to offset that minimum wage.
Initiative 42 led to a decline in Colorado's minimum wage on January 1, 2010, from $7.28 to the federal level of $7.25. Colorado is one of 10 states that tie the state's minimum wage level to inflation. Since there was a slight deflation in 2009, the minimum wage in Colorado automatically declined.
Election results via:Colorado Secretary of State Elections Department
Text of measure
|“||An amendment to the Colorado constitution concerning the state minimum wage, and, in connection therewith, increasing Colorado's minimum wage to $6.85 per hour, adjusted annually for inflation, and providing that no more than $3.02 per hour in tip income may be used to offset the minimum wage of employees who regularly receive tips.||”|
Summary and analysis
The Colorado Legislative Council is charged with providing a summary and analysis of each measure on the Colorado ballot. ("The state constitution requires that the nonpartisan research staff of the General Assembly prepare these analyses and distribute them in a ballot information booklet to registered voter households.")
To describe Amendment 42, they said:
States can set a higher minimum wage than the federal one. Colorado's minimum wage is currently set at the federal amount of $5.15 per hour. Although federal law also allows cities to enact a higher minimum wage, state law does not allow cities to enact minimum wage laws separate from that of the state.
Which workers typically get paid the minimum wage? Nationally, nearly three-quarters of those paid $5.15 per hour or less work in service jobs, mostly in food preparation and serving. Some workers can be paid less than $5.15 per hour because they receive tips or other compensation in addition to their hourly wage. Also, there are several jobs that are not covered by the minimum wage. The most common of these include certain farm workers, part-time babysitters, some seasonal and recreational employees, newspaper delivery persons, and salespeople who regularly work away from their employer's place of business.
The federal government publishes wage data for workers paid by the hour. This data overstates the number of workers affected by Amendment 42 because it includes workers not covered by minimum wage laws. Also, it understates the earnings of some workers because it does not include tips and other compensation. According to 2005 wage data, about 106,000, or just under 5 percent, of Colorado workers were paid less than $6.85 per hour, the wage rate set in Amendment 42. About 72,000 of these workers were paid between $5.15 and $6.85 per hour, 9,000 were paid $5.15 per hour, and 25,000 were paid less than $5.15 per hour. Many of the workers earning below $5.15 per hour likely received other compensation that pushed their total earnings above $5.15 per hour
How does Amendment 42 change state law? Amendment 42 increases Colorado's minimum wage from $5.15 per hour to $6.85 per hour beginning January 1, 2007. Furthermore, the proposal adjusts the wage by the rate of inflation each year. For workers who regularly receive tips, the minimum wage increases from $2.13 per hour to $3.83 per hour. This wage will adjust each year so that it will always be no more than $3.02 less than that for workers who do not receive tips. For example, if inflation is 3 percent in 2007, in 2008 the minimum wage would increase to $7.06 for most workers and $4.04 for workers who receive tips.
How many states have higher minimum wages than the federal one? As of August 2006, 23 states and the District of Columbia had adopted a minimum wage greater than the federal minimum wage. Of those, four are adjusted annually by the rate of inflation. Washington State has the highest minimum wage. It is currently set at $7.63 per hour and adjusts for inflation each year.
- See also: Fiscal impact statement
The fiscal estimate provided by the Colorado Legislative Council said:
Local government impact. The fiscal impact of the amendment on local government has not been estimated, though expenditures would increase for those local governments that currently pay workers at or near the minimum wage. Any change in local tax revenue cannot be quantified at this time.
Groups supporting the measure included:
- Coloradans for a Fair Minimum Wage
- America Votes For A Fair Minimum Wage
- Colorado Progressive Action Issue Fund
- Civic Participation Campaign/Mi Familia Vota Committee For Working Families
- Bell Ballot Action
- People For The American Way Voters Alliance of Colorado.
Arguments in favor
Supporters argued that:
- "Raising the minimum wage ensures that more Coloradans working full-time will earn an income above the poverty level. Currently, a full-time worker earning $5.15 per hour makes about $10,700 a year. Amendment 42 raises this amount by a third, to about $14,250. The annual income considered to be poverty level is $9,800 for a one-person household and $13,200 for a two-person household. Up to an estimated 138,000 Colorado workers could benefit from Amendment 42, including low-income workers earning just above the proposed minimum. Some of these workers' wages are the only source of their family's earnings."
- "An increase in the minimum wage is overdue. The federal government has not raised the minimum wage for nine years. Each year it becomes more difficult for minimum wage workers to buy necessary goods and services because of the rising cost of living. The buying power of the minimum wage is the lowest it has been for over 50 years. The proposed minimum wage of $6.85 restores the wage to near its average buying power over the last 50 years. Adjusting the wage for inflation guarantees that the wage will not lose its buying power in the future."
- "Raising the minimum wage could benefit both businesses and workers by increasing worker morale and productivity, as well as reducing turnover and absenteeism. Further, some evidence shows that states that have minimum wages above the federal level have had favorable employment growth, including in industries that typically pay lower wages. This evidence shows that an increase in the minimum wage in these states has benefitted low-income workers without harming the economy."
$1,168,997 was contributed to the campaign in favor of a "yes" vote on Amendment 42.
Significant donors included:
|America Votes for a Fair Minimum Wage||$280,000|
|American Federation of Teachers||$200,000|
|Patricia A. Stryker||$150,000|
|Civic Participation Campaign||$150,000|
|New Orleans ACORN Democracy Campaign||$34,000|
|Colorado State Conference of Electrical Workers||$25,000|
|Colorado Education Association||$20,000|
|Ballot Initiative Strategy Center||$6,000|
Groups opposing the measure included:
- Respect Colorado’s Constitution
- The Hospitality Issue PAC
Opponents argued that:
- "Raising the minimum wage may hurt the economy. Requiring businesses to increase the pay of non-tipped minimum wage workers by 33 percent and tipped minimum wage workers by 80 percent will push up wages of other workers and increase overall labor costs. Some evidence shows that businesses respond to an increase in the minimum wage by raising prices or by hiring fewer workers, or both. An increase in the minimum wage could be particularly difficult for smaller businesses and restaurants with fewer financial resources. The government does not need to require businesses to pay their workers more; businesses already pay nearly all Colorado workers more than the proposed minimum wage."
- "Some evidence shows that increases in the minimum wage cause employers to hire fewer less-skilled and inexperienced workers. These workers would then miss the opportunity to earn an income and gain the skills and experience that would allow them to earn higher wages in the future. Also, businesses forced to pay higher wages may offer fewer benefits, raises, and training opportunities. Further, many minimum wage workers do not live in low-income households or earn the minimum wage for long. Instead of increasing the minimum wage for all workers, existing programs and tax benefits can help low-income workers in need."
- "Since changes to the state constitution require voter approval, putting the minimum wage in the state constitution will make it difficult to respond quickly to future economic and labor conditions. Also, adjusting the minimum wage each year for inflation could contribute to continuing higher prices for Colorado consumers. Further, businesses will be required to pay workers higher wages each year regardless of their qualifications or performance and the financial condition of the business or the economy."
$2,545,241 was contributed to the campaign in favor of a "no" vote on Amendment 42. Since some of the committees that opposed Amendment 42 also played a role in other ballot measures on the 2006 Colorado ballot, it isn't possible to definitely know how much of the funds they raised went specifically to oppose Amendment 42.
Donors of $50,000 and above were:
|Colorado Restaurant Association||$1,448,751|
|National Restaurant Association||$223,000|
|Harman Management Corp.||$62,000|
In October 2008, a group of restaurateurs from Pueblo, Gunnison, Yuma, Crested Butte, Salida, Sedalia and La Junta filed a lawsuit against the amendment seeking to have it declared unconstitutional and nullified. The basis for their lawsuit was that the language of the amendment linked minimum wage hikes in the state to "the Consumer Price Index used for Colorado." The lawsuit said there "is no CPI 'used for Colorado" but, rather, a CPI for regions, such as a 13-state Western area that included Colorado, and an index for the Denver-Boulder-Greeley area.
Because of this, the lawsuit said there is "no data whatsoever relating to any rural areas of Colorado and no data from any of the areas in Colorado within which plaintiffs' businesses are situated." They also said, "the rate of inflation and cost-of-living is lower in the areas where plaintiffs do business than in the Denver-Boulder- Greeley metropolitan areas."
|Laws • History|
|List of measures|
- Colorado 2006 ballot measures
- List of Colorado ballot measures
- 2006 ballot measures
- History of Initiative & Referendum in Colorado
- Colorado Blue Book on Initiative 42
- History of Initiative 42
- November 7, 2006 ballot measure election results in Colorado
- Colorado State Legislative Council, "Ballot History," accessed February 25, 2014
- Associated Press, "Colorado's minimum wage becomes 1st in US to drop", December 31, 2009
- State Minimum Wage Laws
- Secretary of State elections office, "2006 Amendments and Referenda," accessed January 7, 2014
- 2006 Colorado Blue Book, "Arguments for and against Amendment 42," accessed February 25, 2014
- Follow the Money, "Donors for and against Amendment 42," accessed February 25, 2014
- Follow the Money, List of donors to "No on 42"
- Rocky Mountain News, "Wanted: A healthy dose of skepticism", October 4, 2008