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Colorado Minimum Wage Drops, Deflation to Blame

By Neetal Parekh on October 19, 2009 1:01 PM

If you are small business employer in Colorado, snow may not be the only precipitation falling from the skies this winter.  Colorado minimum wage is anticipated to drop from $7.28 an hour to $7.24 per hour on January 1, 2010, one cent below the federal minimum wage.

Colorado is one of 10 states that has its minimum wage tagged to cost of living.  This means that an increase in cost of living triggers minimum wage increases.  On the flip side, the subtle drop in state economic indicators over the past months has prompted this slight decrease.  Other states in the league include Arizona, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington.  And though the states reserve a similar right to adjust minimum wage, Colorado is the first to take action to lower the state rate.   

Enforcing any mandate for minimum wage decrease will be up to employers. 

The legal provision to allow an adjustable state minimum wage came in the form of a voter-approved amendment to the Constitution in 2006.  Passed in a very different economic backdrop, the legislation was intended to ensure that low-wage worker salaries were in tune with cost of living rises.  The law has found a unique application in light of modest deflation.

The proposed minimum wage decrease will be decided at a hearing on November 6th 2009 held by the Colorado Department of Labor and Enforcement, labor Standards.


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