Why A $15 Federal Minimum Wage Will Help Colorado Workers
By Chris Stiffler, Senior Economist
Highlights
- Even though Colorado voters have approved a minimum wage in excess of the Federal wage, the current $15 per hour plan to gradually increase the federal minimum wage would increase wages for more than 550,000 Coloradans by 2025.
- The proposed federal changes in the wage level restore the purchasing power of the minimum wage to levels not seen since the late 1960s.
- Workers who earn low incomes tend to spend—rather than save—a high percent of their income. This increase in wages can increase local economic activity.
Minimum Wage in Colorado
In 2006, Colorado voters added Article XVIII, section 15 to the state constitution. This amendment raised the minimum wage to $6.85 an hour from the previous level of $5.15, which was the federal minimum at the time, and required the state minimum wage to be adjusted annually for inflation.
In 2016, Colorado voters passed Amendment 70, which raised the minimum wage to $9.30 in 2017 from $8.31 in 2016 and required the state minimum wage increase by $0.90 a year until it reached $12.00 in 2020.
Colorado’s minimum wage is moving back to its historic high. The chart below shows the state’s inflation-adjusted minimum wage since the early 1960s. The real value of the minimum wage hit its peak when the federal minimum wage went up in 1968 to $1.60— the equivalent of $14.47 in 2021 dollars. Colorado’s minimum wage of $12.32 in 2021 is still below the peak value, but Colorado’s minimum wage has gained back the real value it lost in the 1980s and 1990s.
The proposed $15 per hour wage will exceed Colorado’s minimum wage starting in 2024 when the Federal wage goes to $14 per hour. (see below)
Increasing the minimum wage to $15 an hour will affect non-Denver metro areas more than Denver. The following table includes the percentage of jobs paying less than $15 an hour in various regions in 2019 (the most recent data available).
To get an idea about where $15 per hour compares to current available wage data: In 2019, over 27 percent of Colorado jobs (filled by 736,000 workers) paid less than $15, compared to 13.1% of Colorado jobs (filled by 350,000 workers) that paid less than $12 per hour.
Statistically, that means if the minimum wage went from $12 per hour to $15 per hour in 2019, it would have more than double the number of workers getting a raise from a minimum wage increase, from 350,000 to 736,000.
