Colorado lawmakers are debating legislation (HB 1208) that would lower the subminimum wage for tipped workers in places like Denver and Boulder County. Such action would be a reversal of the progress Colorado has made recently to tackle one of the largest challenges in the economy: low wages for working people.
While the federal minimum wage continues to stagnate, states like Colorado have set higher standards for their workers. In 2016, voters passed an initiative that increased the minimum wage to $12 an hour and required annual inflation adjustments. As a result, Colorado’s minimum wage in 2025 is $14.81. In 2019, Colorado lawmakers repealed a ban on local wage-setting, allowing cities and counties to set higher minimum wages to respond to local economic factors—like the high cost of living in urban areas. Following this decision, a handful of localities have passed higher minimum wages, demonstrating the popularity of and need for stronger wage floors in the state (see Table 1).
Colorado state and local minimum wages, 2025
| Place | Regular minimum wage | Tipped minimum wage |
|---|---|---|
| Colorado | $14.81 | $11.79 |
| Boulder city | $15.57 | $12.55 |
| Boulder County | $16.57 | $13.55 |
| Denver city and county | $18.81 | $15.79 |
| Edgewater city | $16.52 | $13.50 |
Note: Values as of January 1, 2025.
One problem, however, that Colorado has not addressed is the persistence of a lower minimum wage for tipped workers like restaurant servers and bartenders. Under state law, employers are allowed to pay tipped workers $3.02 per hour less than the regular minimum wage, effectively creating a state “tipped minimum wage” of $11.79. (This $3.02 is called the “tip credit”—i.e., the credit that employers may take against their obligation to pay at least the minimum wage with the expectation that tips will make up the difference.) Although local governments can set higher minimum wages, state law still preempts them from eliminating or reducing the tip credit.
Subjecting tipped workers to a separate and lower minimum wage creates a host of problems, including making them more vulnerable to wage theft, sexual harassment, and racial discrimination. In seven states and several cities, lawmakers and voters have eliminated the tip credit so that all workers receive the regular minimum wage regardless of any tip income. In these states, tipped workers have lower poverty rates and higher take-home pay.
Instead of following the lead of these states, HB 1208 would make matters worse for Colorado’s tipped workers by lowering their minimum wage even further. The bill would increase the tip credit in localities that have passed a higher minimum wage by the same amount that the local minimum wage exceeds the state minimum—effectively reinstating a single statewide tipped minimum wage. For instance, in Denver where the local minimum wage is $18.81, the tipped minimum wage currently stands at $15.79 an hour ($18.81 minus $3.02). If HB 1208 is enacted, policymakers would cut Denver’s tipped minimum wage by 25% to $11.79 (equivalent to Colorado’s state tipped minimum wage).
Deepening this harmful carveout is a step backwards that jeopardizes economic security for 70,000 tipped workers in the state. It also tramples on the democratic will of the cities and localities that chose to set stronger wage standards for their workforces. State lawmakers are interfering in local decision-making at the expense of working people.
Colorado number of total wage-earning workers and tipped workers, 2024
| Employment | |
|---|---|
| All wage-earning workers | 2,506,700 |
| Tipped workers | 69,600 |
Source: American Community Survey 2015–2019 data scaled to match 2024 Current Population Survey employment total for Colorado.
Most tipped workers are low-wage workers who struggle to make ends meet, especially with rising costs in recent years. As shown in Figure A, the median tipped worker in Colorado earns $19.95 an hour from wages, tips, and overtime. For context, EPI’s Family Budget Calculator estimates that even in Colorado’s least expensive county (Mesa County), a single adult must earn at least $19.85 an hour working full time for their wages to cover the cost of necessities like food, housing, and health care. In many regions of the state, costs are much higher. In Denver, a similar living wage standard is $27.75 an hour, while in Boulder it is $28.83. Faced with this steep cost of living, a strong minimum wage policy is vital for working families.
Wages for Colorado tipped workers do not cover living costs almost anywhere in the state: Median wage for CO tipped workers and living wage standard for select CO counties
| Hourly wage | |
|---|---|
| Median hourly earnings for CO tipped workers | $19.95 |
| Boulder County living wage standard | $28.83 |
| Denver County living wage standard | $27.75 |
| Mesa County living wage standard | $19.85 |
Note: Living wage rate for a single adult covering all essential costs through wages. Mesa County is the least expensive CO county according to EPI’s Family Budget Calculator. Median hourly earnings for CO tipped workers ($2024) include wages, tips and overtime.
Source: Median wage data from EPI analysis of Current Population Survey Outgoing Rotation Group microdata, 2020–2024. Living wage standards data from EPI’s Family Budget Calculator.
Increasing or eliminating the tipped minimum wage does not jeopardize the restaurant industry or the economy overall. Seven states of various sizes and economic makeups (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) have long treated tipped workers the same as all other workers, providing them the same minimum wage regardless of their tips. In these states, restaurants still flourish and tipping is still widespread. The difference is that workers are less likely to require their customers’ good will to secure a livable wage. Further, the highest quality minimum wage research continues to show that increasing the minimum wage boosts workers’ wages with no meaningful impact on employment or business growth, including in the restaurant industry.
Both workers and businesses have had to adapt to large price increases in recent years. However, in Denver, where the tipped minimum wage is higher than the state’s, the restaurant industry remains resilient. Denver had more restaurants in 2024 than it did in 2019, and the county’s restaurant industry has grown more quickly over that period than the U.S. average.
The question of whether economic conditions demand changes to the tipped minimum wage in places such as Denver should be left up to local policymakers who are accountable to local constituents, including workers and business owners. HB 1208 would backtrack on Colorado’s commitment to local democracy and take away more of localities’ already limited ability to decrease the harm of the tipped minimum wage.
If passed, HB 1208 would be one of dozens of examples across the country of state lawmakers suppressing the will of localities that want to set higher standards for their workers. Previous EPI research has documented how state preemption in the South and the Midwest prevents cities from taking a variety of steps to improve economic security for local workers, including increasing the minimum wage above the state level. It is notable that this abusive state preemption of local lawmaking often follows a pattern where a mostly white state legislature undermines local policymaking that would benefit large shares of workers of color, entrenching racial disparities in economic outcomes.
The evidence is clear: A strong minimum wage benefits workers without harming businesses. Instead of rolling back progress, Colorado should continue moving toward ensuring all workers receive a fair and livable wage without exception.
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