In 2019, the state of Colorado passed HB19-1210 which allows municipalities the ability to set their own minimum wage for employees. Last year, Boulder County opted to raise its minimum wage and invited its municipalities to join it. However, Longmont, Boulder, Lafayette, Louisville and the town of Erie opted not to increase the minimum wage until further information was gathered. On Tuesday night, the Longmont City Council heard the findings of a study on the economic impacts of raising the minimum wage.
Colorado’s minimum wage was increased to $14.42 from $13.65 in 2023. Tentatively, the state plans to raise the minimum wage again on Jan. 1 to $14.81. On Jan. 1, this year Boulder County increased the minimum wage in unincorporated areas to $15.69 intending to reach $25 an hour by 2030. Denver will increase its minimum wage rate to $18.81 an hour from $18.29 on Jan. 1.
These plans to increase the minimum wage formed the basis of the five-city consortium’s analysis. The study was based on four possible scenarios. The first two were designed to show what the impacts would be if Longmont attempted to match unincorporated Boulder County’s goals. The first of these plans would match the goals as soon as possible while observing the state’s laws that wages can not increase more than 15% and have to be implemented on Jan. 1 of the following year. The second plan would reach the $ 25-an-hour goal by 2035 but more slowly than the county.
The remaining two scenarios followed the same basic plan but based it on Denver’s minimum wage goals.
When conducting surveys and focus groups in Longmont, city staff determined that most local businesses already pay above minimum wage. Of those who participated only 30% of the businesses had employees that received minimum wage. In most cases, according to Sandi Seeder, assistant city manager, unskilled employees may start with compensation at minimum wage but have their wages increased within 30-90 days after training.
Dr. Andrew Dyke, economic analyst with ECOnorthwest, conducted the study on behalf of the consortium. In his research, he found that municipalities across the country have been able to tailor policy to local conditions in ways that “large negative economic consequences are not necessarily associated with the minimum wage increase,” he said. Dyke also found that the research indicated that increasing the minimum wage has not shown a significant impact on employment.
Projects forecast that the largest impact would be seen by teenagers and young adults who typically occupy minimum-wage jobs. If Longmont opted for the most aggressive pursuit to match Boulder County goals about 8% of workers would see increased earnings. The more gradual Boulder County option would impact around 2% while the Denver options would range from 3.5% to 0.9%. In all, raising the minimum wage would impact roughly 1% of the local workforce, Dyke said.
The assessment indicated that an increase in minimum wage according to these scenarios would reduce poverty by 1.5% which accounts for the increased wages and reductions due to job losses and increased business costs, Dyke said. The impacts would get bigger by 2035.
Minimum wage increases could increase prices by less than 0.1% and lower the local gross domestic product by 0.1% by 2035. Some industries such as child care would be more impacted than others, Dyke said.
“Cost increases associated with a minimum wage increase would likely have larger effects on municipal budgets,” according to Dyke. In Longmont, the budget impact for the city as an employer over the next decade would be $10,687,817 for the aggressive Boulder County option, $7,012,642 for the gradual Boulder County option, $6,528,310 for the aggressive Denver option and $3,879,964 for the gradual Denver option.
Dyke’s assessment recommended that if the city of Longmont were to adopt one of the four scenarios it adopt meeting Boulder County’s goal of $25 per hour gradually by 2035. This would allow officials time to evaluate the process in a few years and adjust as would be necessary. The assessment also suggested that once the city reaches its goal in 2035 it continue to increase the minimum wage based on the regional Consumer Price Index for All Urban Consumers.
Councilmembers Shaquita Yarbrough and Sean McCoy suggested the city host more focus groups and community discussions. McCoy suggested the community vote on the decision.
Mayor Joan Peck expressed caution on the Boulder County option because there is not an “off-ramp.” She has concerns about potential natural disasters or another pandemic causing a large burden on businesses in the future and with the county’s plan the city would be locked into reaching a goal rather than responding to local needs.
Council members listened to the presentation followed by input provided by residents and business owners during the Public Invited to be Heard portion of the meeting. The council did not provide specific direction for staff upon the conclusion of the meeting and nothing has yet to be scheduled on a future agenda.
