Denver’s lowest-paid workers are getting a 9% raise on Jan. 1. When it takes effect, the city’s $17.29 minimum wage will be one of the highest in the country — higher than Los Angeles, San Francisco, Washington, D.C., New York City and Chicago.
But a little more about the minimum.
The Colorado Secretary of State’s office this week shared the latest quarterly information on how the state’s small businesses are doing. It’s mixed, said Secretary of State Jena Griswold. Job growth remains strong, but the number of companies that do not submit regular reports or default on debt has increased.
“While many new entities are filing with our office, the report also notes an increase in defaults and dissolutions, as well as signs of pessimism in the business community due to inflation, supply chain disruptions, labor shortages and interest rates among other factors that have continued to pressure small business owners ,” Griswold said during the press conference.
According to data provided by the Leeds School of Business at the University of Colorado, the number of new business filings was slightly negative from a year earlier, at -0.2% in the second quarter, the first annual decline since the start of the pandemic. .
And the number of companies showing signs of failure grew at double-digit rates – failure reports rose 9.8%, while companies going out of business rose 27%.
Brian Lewandowski, executive director of the Leeds Business Research Unit, speculated that more businesses would have gone out of business sooner if it weren’t for federal stimulus packages that provided financial assistance to small businesses, such as the popular wage protection programs.
“Perhaps the increase in dissolutions and delinquencies is a sign of a bit of pressure on businesses now that the stimulus is gone,” he said. “With the national economy slowing, can we expect an increase in business failures in the coming quarters?”
His colleague Richard Wobbekind also thinks so. Although the number of bankruptcy filings fell during the pandemic, recent data lags behind.
“I think there’s a fair amount of concern that we’re going to see bankruptcy and that kind of thing increase over the next two quarters,” Wobbekind said. “Some of the funds that were there have disappeared. We hear that from the banking community and elsewhere.”
The country’s gross domestic product slowed in the first half of the year, which may indicate an economy in recession. Despite this, the large number of jobs and growth in the number of well-to-do businesses are proof that Colorado’s economy is stable.
“Our view is that this is not, we are not in a recession,” Wobbekind said. “Despite the slowdown in the first half of the year, expectations are that the total GDP in 2022 will be positive. Right now, forecasts for the third quarter are hovering around one and a half percent for GDP growth. But this is still clearly a much more moderate growth economy than we had in 2021.”
→ $1 for new business registration: Speaking of business filings, Colorado’s Business Fee Relief Act went into effect on July 1st. This reduced the cost of registering a new company from $50 to $1. In the first month, the state attracted 13,000 new business registrations and 4,200 trade names, which the secretary of state’s office estimated at $750,000 in savings for small business owners. >> Where to file
Why Denver’s minimum wage is going to $17.29 an hour
Next year, Denver joins a growing number of cities and states that have tied their minimum wage to the consumer price index. To see also : September 2 – 5 – Arts, Beats & Eats in Royal Oak. In essence, it is the rate of inflation, so when it rises, so do wages.
And boy, the inflation rate is up this year, especially in the Denver metro area, which topped 9% in March. The jump in prices of consumer items from fuel to groceries is something Americans haven’t seen since the 1980s. That rate has already dropped a bit.
But those first six months of the year became the measure the city of Denver used to calculate the 2023 minimum wage. This is required by a city ordinance passed in 2019 that was supposed to help those with the lowest incomes to reach a more stable income. It took three years to raise the minimum wage to $15.87, up from $11.10 in 2019. Minimum wage workers will see their wages increase by $1.42 an hour next year to $17.29.
And from now on, the city’s minimum wage will increase if the annual change in the CPI increases.
Some local business leaders who opposed the increase said companies are dealing with higher costs, labor shortages and the recovery from the pandemic on their own.
The Denver Metro Chamber of Commerce would prefer the government opposes it.
“At worst, increased prices lead to a general increase in the cost of living that could be so high as to cancel out any advantage gained by slightly higher-wage workers. More importantly, some companies struggling with costs may not be able to meet these new wage demands and will be forced to lay people off, increasing unemployment,” the Chamber said in a statement. “Competition, without state interference, is still the best solution for both workers and employers.”
It’s unclear how many businesses in Denver even pay the minimum wage, as persistent labor shortages have forced many employers, from McDonald’s to Charter Communications, to pay much more.
According to Ryan Gedney, an economist with the state Department of Labor and Employment, some “very rough” estimates from the Occupational Employment and Wage Estimates program, released in April, showed that the Denver metro area had 147,000 people making $14.25 an hour or less last year. That would include people outside of greater Denver, where Colorado’s minimum wage was $12.32 last year (it’s now $12.56). And for those who are curious, the federal minimum is $7.25 an hour, which is the default minimum used by our neighbors in Utah, Wyoming, Kansas and Oklahoma.
When Denver’s new wage goes into effect in January, a full-time minimum wage worker would earn $35,963 a year, which even some in the Denver Chamber say isn’t enough. The Prosper CO program, which the Chamber designed to investigate why employers can’t find enough workers, found that one reason was that the economy wasn’t working for lower-wage earners. They concluded that the $45,000 was a “scrape-by” salary, and this was based on pre-pandemic data.
“We know this will put an additional burden on our local businesses, but this is an important tool to support vulnerable workers across the city,” Denver Mayor Michael B. Hancock said in a statement about the minimum wage increase.
I’ll be exploring the minimum wage in more detail next week, so if you’re a Denver business already juggling higher bills or a worker who could really use a raise, please share your story at tamara@coloradosun.com.
→ Inflation eased in July: The U.S. consumer price index was unchanged in July, according to the Bureau of Labor Statistics, but prices for all items rose 8.5% from a year before seasonal adjustment. Gas prices fell by 7.7% compared to June, but are still higher by 44% compared to last year. An inflation update for the Denver area is expected to be released this month. >> WSJ, BLS report
→ Gas prices fall below $4, but not in Colorado. AAA Gas Price Tracker showed the average price of a gallon of regular fuel was $4.054 in Colorado on Friday, or about eight cents more than the $3.978 nationally. Still, it’s lower in some parts of the state, including Greeley, which averaged $3,813 and Pueblo, at $3,749 per gallon. >> AAA gas prices
Colorado ranked
Colorado manages to make all kinds of lists. My inbox is full of them. And we are often on top. It usually comes from a company seeking publicity. But some are fun, a bit informative and, well, something to talk about. A few arrived this week:
Other working bits
→ More homes are coming on the market: Home sellers have rushed to put their homes on the market before buyers disappear due to rising interest rates resulting in higher monthly payments overnight. To see also : Amazon’s growth increases as core retail businesses face macro challenges. Here’s how it worked out, according to the Colorado Association of Realtors:
>> Latest reports by county or region
→$10,000 Grants Available for Education Entrepreneurs: Founders in the education space are encouraged to apply for microgrants of up to $10,000 from Daniels Fund and VELA Education Fund. $750,000 is available and is open to “everyday education entrepreneurs,” which includes students, parents, teachers and community leaders. The goal is to find new ways to help children learn. >> details
→ Craig, Hayden receive $8.5 million for economic development: The cities of Craig and Hayden have received grants from the U.S. Secretary of Commerce to support economic development in the northwest part of the state. Craig received $3.3 million to build a park and river access along the Yampa River in a project expected to create 129 jobs and generate $16.3 million in private investment. Hayden receives $5.2 million for road and water infrastructure to develop industrial park. The project is expected to create 79 jobs and generate $12 million in private investment. >> details
→ Aging while living at home: Denver-based Silvernest, which has developed technology to help seniors safely share their empty homes, has partnered with A Little Help, a nonprofit that connects volunteers with elderly residents who need help with everyday tasks in the House. “This program,” said Hilary Simmons, executive director of A Little Help, “will make it easier for our members to continue living in the communities they love with the help of their neighbors and volunteers.” >> More information
Share your two cents on how the economy is holding you back or helping you at cosun.co/heyww. See you next week! ~tamara
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