While California and D.C. have made most headlines about bad wage laws hurting restaurants and their employees, another restaurant crisis is quietly brewing elsewhere: in Colorado.
Statewide, Colorado has a small tip credit (just $3.02), but annually adjusts its minimum wage every year according to inflation (current $14.81 per hour). The capital city of Denver sneakily makes the top charts for having one of the highest local minimum wages in the country (currently $18.81 per hour). In recent years, both Colorado’s state minimum wage and Denver’s city minimum wage have skyrocketed, taking the tipped minimum wage to the skies with them.
States and cities have assumed that raising their minimum wages exponentially is a free lunch with no consequences. California and its big cities – Los Angeles and San Francisco, for example – have learned the opposite. As businesses subject to higher wage increases are forced to adapt with higher prices, downsized staff, or even limited hours of operation, employees often are the one worst-affected by high wage policies.
Unfortunately, Colorado’s wage hikes appear to be following suit. Statewide, Colorado has a small tip credit (just $3.02), but annually adjusts its minimum wage every year according to inflation (current $14.81 per hour). The capital city of Denver sneakily makes the top charts for having one of the highest local minimum wages in the country (currently $18.81 per hour). In recent years, both Colorado’s state minimum wage and Denver’s city minimum wage have skyrocketed, taking the tipped minimum wage to the skies with them.
Unfortunately for residents of Colorado and Denver, these areas have also not been immune to the consequences playing out in other parts of the country.
A recent report by Axios Denver described the state of Colorado’s restaurant scene as “death by a thousand cuts” – saying the state’s restaurant industry had been “battered” by operating cost increases. As a result, over 200 restaurants closed statewide – and 82% of closures were in Denver itself.
In fact, the Denver Post found the city has lost nearly a quarter of all of its restaurants in the last three years.
As a result, this has taken a toll on jobs in Colorado restaurants. A look at recent data reveals that annual wage hikes that go into effect in January of each year are having worse and worse impacts on seasonal fluctuations.
- For the latest data available in March 2024, -15,962 restaurant jobs were slashed since the most recent summer peak in July 2023, more than a -6% decrease in industry employment.
- A year earlier over the same period, Colorado saw a loss of -6,707 jobs from July 2022 to March 2023, a -2.7% decrease in industry employment.
- Even another year earlier, that same period generated an increase of 939 restaurant jobs (+0.4% increase in industry employment) from July 2021 to March 2022.
Because restaurants are highly affected by seasonal foot traffic trends (i.e. summer tourism and holiday rushes), calendar year analyses can miss some of the larger employment trends.
However this pattern is becoming increasingly worse: with every new wage hike introduced, the seasonal slumps occurring between the busy summer season and subsequent winter downturns are more pronounced. The most recent downturn from July 2023 to March 2024 marks the largest employment drop since COVID.
At what point will enough be enough?
Given this alarming trend unfolding in Colorado, state lawmakers should consider a fix before further decimating its restaurant industry.