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Cortez, Durango consider impacts of higher minimum wage

Cortez chamber worries about job creation in rural Colorado

The minimum wage in Colorado increased from $9.30 to $10.20 an hour on New Year’s Day, but it is unlikely to change pay for many employees in Durango, where the entry-level wage for a job is higher than $10.20.

However, when the minimum wage rises to $12 an hour in 2020, it’s unclear if the increase will boost pay for entry-level employees in Durango or cause business owners to look for alternatives to hiring.

“In Durango, it’s hard enough to find quality employees that if you’re paying them minimum wage, you are not going to have them for long,” said Ted Hermesman, owner of Days Inn.

Hermesman said an employee might be hired at minimum wage initially to ensure the new hire has the proper work ethic, but within a week, if the employee shows basic work competency, he or she will receive a raise.

“If you hire a high school kid, and he makes a difference for you, if the kid is good at his job, supply and demand is going to take over, and he will not be making minimum wage for long,” Hermesman said.

On Nov. 8, 2016, Colorado voters passed Amendment 70, which raised the minimum wage across Colorado by 90 cents a year until it reaches $12 an hour in 2020. The measure passed 55 percent to 45 percent.

Rocky Moss, manager of the Cortez Area Chamber of Commerce and the Dolores Chamber of Commerce, said the minimum wage increase might have more of an impact in rural Southwest Colorado and in towns outside of Durango.

“It’s going to cost you incrementally,” she said. “If you have a payroll, and you have 120 hours a week, you can do the math. Yeah, I think it’s going to have an impact.”

Moss said the increase in the minimum wage could also force increases in pay up the wage-scale ladder, causing additional payroll costs.

The McDonald’s in Cortez, she said, has added two kiosks for customers to self-order. “Who knows if more of that will start to happen.”

Brandon Shubert, owner of Stonefish Sushi and More on Main Street said the changes will not affect the restaurant that much.

“Even my cooks and dishwashers make more than minimum wage, so it didn’t affect us a whole lot,” Shubert said. “I try to get close to a living wage as I can, and that is why I keep people for a long time.”

The chambers of commerce in Cortez and Dolores want to conduct a study of the minimum wage increase in the two communities, she said, and would like to hear from businesses about the impact of the rate increase.

She added that a $12 minimum wage might not harm job creation on the economically vibrant Front Range, but it could dampen job creation in rural Colorado.

“We don’t have the resources you have in a large municipality,” she said.

In November, Cortez Recreation Center supervisor Joye McHenry asked the Cortez City Council for a $36,533 increase in the regular wages budget, in part for a few new hires, but also because of the rise in the minimum wage. The rec center, which employs a large number of the city’s part-time staff, could see more direct impacts from the change, but City Manager Shane Hale said he expected all departments to be affected.

“It kind of ripples through the whole budget,” he said. “We’ve got four different pay classes that are making under what the new minimum wage is going to be, so we have to adjust everything upward.”

On Dec. 12, the City Council voted to approve a $32.28 million budget for 2018 that includes a roughly $1 million increase in spending from 2017, which was just over $31 million. Most of the increases come from capital projects and planned increases in employee wages. Hale said wages will increase a total of 2.5 percent in 2018, adding in a memo that the city needed to remain “competitive with wage and benefits.”

Chris Block, co-owner of Three Peaks Deli & Grill, 2411 Main Ave., said all his employees currently make more than $10.20 an hour.

However, in 2019, when the minimum wage goes up to $11.10 an hour the business might need to make adjustments.

Next year, Block said, the business might have to use more formal accounting methods to ensure tips are keeping wages above the minimum wage.

Block said a more formal accounting of tips would be his first step before looking to increase prices.

Shane Lugo, district manager for Wendy’s, said wages at the store increased last month, and prices were increased three months ago.

Future annual price adjustments would likely take into account the cost of wage increases.

Ultimately, Hermesman said, it is job-holders themselves who need to look at their own skill sets, aptitudes and work ethics in seeking wage increases beyond the minimum wage.

“People need to be responsible for themselves and quit having the government do everything for them,” he said.

The Journal contributed to this article.

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