Colorado Election Update: Employers Will See Increased Minimum Wage; ColoradoCare Initiative Fails

Colorado employers will see increases to the state’s minimum wage over the next four years, but will not have to pay additional payroll tax to support a state-chartered universal insurance system.  On Tuesday, Colorado voters passed Amendment 70, which will gradually increase the state minimum wage—currently at $8.31 per hour—to $12.00 per hour by 2020 (the “Minimum Wage Amendment”),[1] but voted down Amendment 69, which would have created ColoradoCare, a state-chartered universal insurance system that would have required employers to contribute 6.67 percent in additional payroll taxes (the “ColoradoCare Amendment”).[2]

Colorado voters soundly defeated the ColoradoCare Amendment, with nearly 80 percent opposing the measure.[3]  However, the Minimum Wage Amendment narrowly passed, as 54.5 percent of Colorado voters favored the minimum wage increase,[4] tracking previous polling on this issue.  (See Related Article.)  The Minimum Wage Amendment will increase the state minimum wage nearly one dollar per hour to $9.30 per hour on January 1, 2017, and annually increase the minimum wage an additional $0.90 per hour until the minimum wage reaches $12.00 per hour on January 1, 2020.[5]  Beginning January 1, 2021, the minimum wage will further adjust annually for cost-of-living increases.[6]

The Minimum Wage Amendment will likely have a significant impact on Colorado employers.  Employers in the restaurant and retail industries, which traditionally have low profit margins, may be required to eliminate jobs, reduce employee hours, and/or reduce benefits to compensate for the increasing minimum wage.  Small businesses in rural Colorado—where the cost of living is lower and recovery from the recession has lagged behind the state’s urban areas along the Front Range[7]—may also need to increase prices and/or reduce payroll to make their business profitable.  There is also the possibility that unknown or unintended consequences due to the minimum wage hikes could further increase costs for employers.

[1] Aldo Svaldi, Colorado voters hike state minimum wage to $12 an hour, The Denver Post (Nov. 9, 2016) (available at: http://www.denverpost.com/2016/11/08/colorado-minimum-wage-amendment-70-election-results/) (last accessed Nov. 10, 2016). 

[2] John Ingold, ColoradoCare measure Amendment 69 defeated soundly, The Denver Post (Nov. 9, 2016) (available at: http://www.denverpost.com/2016/11/08/coloradocare-amendment-69-election-results/) (last accessed Nov. 10, 2016).

[3] Colo. Secretary of State, Colorado Election Results (available at: http://results.enr.clarityelections.com/ CO/63746/182883/Web01/en/summary.html) (last accessed Nov. 10, 2016).

[4] Id.

[5] Colo. Secretary of State, Amendments and Propositions on the 2016 Ballot: Ballot Analysis (available at: http://www.leg.state.co.us/LCS/Initiative%20Referendum/1516initrefr.nsf/b74b3fc5d676cdc987257ad80 05bce6a/72c861d3d50d990287257fa400600ced/$FILE/2015-2016%20101bb.pdf) (last accessed Nov. 10, 2016). The Colorado minimum wage will track as follows:

            $8.31 per hour through December 31, 2016;

            $9.30 per hour from January 1, 2017 through December 31, 2017;

            $10.20 per hour from January 1, 2018 through December 31, 2018;

            $11.10 per hour from January 1, 2019 through December 31, 2019;

            $12.00 per hour on January 1, 2020.

[6] Id.

[7] See Svaldi, supra note 1.