Minimum wage boost creates uncertainty in the Steel City

Pueblo County, lagging behind in wage growth, could see a boost from the minimum wage increase, but officials are undecided by how much.

Though Pueblo is still in many ways recovering from a collapsed steel industry, some Puebloans may gain a financial boost this year from Colorado’s new minimum wage increase. Others predict that Pueblo’s manufacturing economy won’t see much of a change, as the argument is made that current wages aren’t far off from the new standard.

From I-25 South, much of Pueblo’s old manufacturing anchors can be seen, an old industrial campus and further down the Evraz Steel Mill. Big questions surround whether a minimum wage hike will create economic changes, for better or for worse, for the manufacturing sector in Pueblo. Photo via flickr, Ken Lund

Across the board, families in Pueblo earn a much lower household income than the national average. In the city, average household income sits at $34,550 compared to $53,889 for the country. The poverty percentage is also much higher than average, 25 percent, compared to the national percentage of 13.5.

Industries where employees are likely to receive minimum wage are food and service as well as retail. U.S. economic census data show that in 2012, accommodation and food service industry in the city of Pueblo County made $205,099 in sales and retail made $1,653,076.

The U. S. Department of Labor claims that 86 percent of individuals that would directly benefit from a federal minimum wage increase to $12 would be 20 years of age and up and 56 percent would be women.

“This essentially describes families in Pueblo who are living on the margins and need a boost,” said Chris Markuson, director of the Pueblo County Department of Economic Development and Geographic Information Systems.

Colorado’s state minimum wage was already higher than the federal minimum wage and Nov. 8, 2016, the people of the state voted 55.36 percent in favor of passing Amendment 70, a constitutional amendment that will gradually increase state minimum wage to $12 by 2020.

“Will it affect other small businesses? It has to. I’ve heard presentations from some nonprofits who are very concerned about it. We’ve heard mom and pop restaurants and storefronts that are concerned about it, but it’s too early to see if it’s going to make a difference,” said Jeff Shaw, President and CEO of the Pueblo Economic Development Corporation.

The Pueblo Economic Development Corporation’s purpose is to create, maintain and recruit primary jobs, ones that export at least half of a good or service out of the city and county and help bring in revenue in Pueblo.

The fiscal impact statement from Amendment 70 states that state agencies and businesses “will experience and incremental increase in staffing costs,” and options to offset the higher costs “may include increasing state funding, increasing fees, raising prices, reducing workers hours or some combination of these choices.”

“I am confident that the minimum wage increase will benefit small businesses in Pueblo County. Boosting wages increases the buying power of workers that need it most. With more money in their pockets, Puebloans will spend more at small businesses,” Markuson said.

Pueblo may have quite a few mom and pop stores, but one of the larger sectors for jobs in the local economy is manufacturing.The Pueblo Economic Development Corporation recruits and maintains primary jobs for the Pueblo workforce and economy, jobs in which 51 percent of the product or service is exported out of the community, bringing new money in. Manufacturing falls into that category.

Shaw is not concerned about the impact of the minimum wage increase affecting their recruitment of manufacturing businesses.

“We’ll see, but I’m not as concerned about it. The majority of our manufacturing businesses already are paying wages of more than $15 an hour. Their back-office operations pay less and whether it impacts them or whether or not they’ll gradually be able to get to that level, we’ll see,” Shaw said.

Focusing on catering to the specific Pueblo workforce needs and recruiting businesses with wages of typically $17 to $18 an hour pay rates will remain a focus for the Pueblo Economic Development Corporation according to Shaw.

“If there is a workforce niche out there we will try to fill it. Our focus right now coming into this year is going to be the outdoor recreation industry, aerospace, the rail industry, the steel making industry and the hemp industry. All of those pays are well in excess of $15 an hour,” he said.

As of Jan. 1, minimum wage increased from $8.31 to $9.30 and will rise by $0.90 each year until $12 is reached in 2020.