Colorado Legislature Approves Landmark Bill to Repeal Preemption of Local Minimum Wage Laws

First State Bill to Repeal Ban on Higher Local Wages Now Heads to Governor Polis’ Desk

In response to the Colorado legislature’s approval of a bill that repeals a 1999 state law blocking cities and counties from adopting a local minimum wage higher than the state minimum wage, Christine Owens, executive director of the National Employment Law Project, issued the following statement:

“Pushed by corporate interests looking to keep pay low, in 1999, Colorado was one of the first states to ban communities from raising the minimum wage at the local level. But today, recognizing it was a mistake that hurt workers, Colorado’s legislature became the first in the nation to vote to repeal such a ban; Governor Jared Polis now has the opportunity to sign it into law. With similar repeal efforts underway in at least 11 other states, this historic Colorado vote marks a turning point in the fight for fair pay and local democracy.”

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Background

Since 1999, Colorado law has prohibited cities and counties in the state from adopting local minimum wage laws. Subsequently, the state legislature kept the state’s minimum wage frozen at the federal minimum wage rate until voters approved Initiative 42 in 2006, which increased the state’s minimum wage to $6.85 per hour and required the rate to be adjusted annually for inflation. As of 2016, however, Colorado’s minimum wage had reached only $8.31 per hour—a level that failed to reflect the state’s cost of living and made it difficult, if not entirely impossible, for workers and families to afford the basics. Because the state legislature, again, did not raise the state’s minimum wage, voters proposed and approved Amendment 70 in 2016, which will gradually raise the state’s minimum wage to $12 per hour.

Despite the progress that Colorado workers and their families achieved through Amendment 70, workers in a number of areas across the state continue to face high costs of living and a minimum wage that does not allow them to meet their basic needs through work. For example, single full-time workers with no children in the Boulder Metro Area already needed $21.88 per hour just to make ends meet in 2017; a single full-time worker with one child there needed more than $35 per hour to make ends meet. In the Denver/Aurora/Lakewood Metro Area, a single full-time worker with no children needed $19.81 in 2017 to afford the basics; a single full-time worker with one child there needed more than $34 per hour to make ends meet.

Across the country, more than 40 cities or counties in states such as California, New Mexico, and Arizona have adopted local minimum wage laws that have successfully helped workers better afford the basics. Local minimum wages provide a safety valve when gridlock prevents action by the state legislature or Congress, allowing localities to raise the minimum wage to levels appropriate for their communities.

Local minimum wage laws, which generally affect just a few high-cost communities in a particular state, have proven effective and manageable for businesses. The most recent study of city-level minimum wage increases released in 2018 documents the positive impact of raising the minimum wage in six cities: Chicago, the District of Columbia, Oakland, San Francisco, San Jose, and Seattle. It is also the first study to examine the effects of increasing the minimum wage above $10. The study concluded that “a 10 percent increase in the minimum wage increases earnings in the food services industry between 1.3 and 2.5 percent” without a discernible negative impact on employment.

Legislators who support an economy that works for all should oppose preemption of local minimum wage laws and support giving local governments the right to adopt higher minimum wage laws. A recent national survey shows that most voters believe their local government should be able to adopt policies that reflect local values and view preemption as a threat to local democracy.

While opponents of local minimum wages often cite the potential dangers of a “patchwork” of regulations, cities and counties have historically adopted a wide range of differing local laws tailored to specific local problems and needs. Such laws have addressed issues such as zoning, traffic, construction, licensing, environmental protections, and much more—and businesses have adapted. The economic evidence also shows that a city or county that adopts a higher local minimum wage does not become “less competitive” with surrounding areas—another frequent claim by proponents of state level preemption of local raises to the minimum wage. One of the most sophisticated studies of minimum wages was published by economists at the Universities of California, Massachusetts, and North Carolina.[i] The study looked at the impact of minimum wage rates in more than 250 pairs of neighboring counties in the United States that had different minimum wage rates.[ii] Comparing neighboring counties on either side of a state line is an especially effective way of isolating the true impact of minimum wage differences, because neighboring counties tend to have similar economic conditions. The study found no difference in job growth rates.[iii]

The bill approved today expressly grants cities and counties in Colorado the authority to adopt and enforce local minimum wage laws that could help them address the high cost of living in their communities and workers’ pressing need for a higher minimum wage. It is the first time that a state legislature has repealed a past minimum wage preemption law (Arizona voters repealed a 1997 preemption law passed there through a 2006 ballot initiative that also raised the state’s minimum wage). Similar bills have been introduced this year in Louisiana (HB422), Mississippi (SB2321), Indiana (SB82), Texas (SB161), Hawaii (HB96), Georgia (HB573), Virginia (HB2631), Kansas (HB2017); Oklahoma (SB713), New York (AB5441); and Kentucky (HB302).

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The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org. Follow NELP on Twitter at @NelpNews.

Endnotes

[i].        Arindrajit Dube et al., The Review of Economics and Statistics, Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties (Nov. 2010) at 92(4): 945–964.

[ii].        Id.

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[iii].       Id.

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