Colorado minimum wage may drop as living costs fall

DENVER — Colorado's lowest-paid workers could make even less money next year. That's because the state has an adjustable minimum wage that may become the first in the nation to drop slightly along with the cost of living.

Colorado is one of 10 states — including Washington — where the minimum wage is tied to inflation. The indexing is thought to protect low-wage workers from having flat wages as the cost of living goes up.

But because Colorado's provision allows wage declines, the minimum wage could actually drop 3 cents an hour next year. If the wage is reduced by state labor officials in September as expected, it would be the first minimum-wage decrease in any state since the federal minimum-wage law was passed in 1938.

It's a small drop, but the prospect has Colorado's minimum-wage workers fearing times are about to get worse.

"I'm just scratching by now," said Denver's Raul Ramirez, 42, who works two minimum-wage jobs, selling ice cream from a cart in the summer and shoveling snow in the winter.

Ramirez said he takes home about $900 a month and can't imagine how he could get by on less.

"I work seven days a week," he said. "I can't do any more."

An estimate released last week by the U.S. Bureau of Labor Statistics showed Colorado's cost of living fell 0.6 percent from July 2008 to July 2009. The drop, attributed to falling fuel prices, means Colorado's minimum wage of $7.28 an hour could go down in January, though it can't go lower than the federal minimum wage of $7.25.

Colorado labor officials concede the 3-cent drop is probable, because the amendment passed by voters says only that the wage "shall be adjusted annually for inflation, as measured by the Consumer Price Index used for Colorado." But a spokesman for the state labor department said the drop won't be certain until an official announcement due by late September.

Advocacy groups that pushed for the inflation indexing anticipate a drop and are already turning to employers with appeals not to cut their wages next year.

"Every single penny helps. When you're surviving on the minimum wage, it makes a huge difference," said Lorena Garcia, director of the Colorado chapter of the 9 to 5 National Coalition of Working Women. The group helped push for the amendment to the state constitution that links the minimum wage to the cost of living.

Other states with adjustable minimum wages are Arizona, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington.

The minimum wage in Washington state is $8.55 an hour. Initiative 688, approved by Washington voters in 1998, requires the state to make a cost-of-living adjustment to the minimum wage each year based on the federal inflation numbers. The state code is written "to maintain employee purchasing power." The rate is calculated in September and takes effect in January. The latest figures available for the Seattle area show the cost of living dropped 0.7 percent between June 2009 and June 2008.

The minimum wage isn't expected to drop in Washington or any other state next year. Most states that tie the wage to inflation make no provision for lowering the amount, so the minimum wage stays flat if the cost of living falls.

In other states with adjustable wages, the cost of living hasn't dropped, or the wage is already at the federal minimum.

In Florida, for example, a declining consumer price index would put the wage at $7.21. But that's less than the federal minimum wage of $7.25 an hour, so paychecks won't change for Florida minimum-wage workers.

Advocates who pushed for Colorado's adjustable minimum wage said they didn't intend for the wage to fall — but they say the provision that lets the wage fall was crucial to persuading Colorado voters to approve the amendment in 2006.

"This was how the law was designed, to be somewhat flexible," said Ben Hanna, Colorado organizer for the Association of Community Organizations for Reform Now (ACORN). Hanna pointed out that the declining cost of living means the Colorado minimum wage would still have the same buying power if it goes down a few cents. Besides, he said, most of the estimated 50,000 to 70,000 Coloradans earning the minimum wage likely wouldn't see drops.

"I can't imagine many employers would see this as an opportunity to lower wages," he said.

Information about Washington state's minimum wage was reported by Seattle Times staff