The minimum wage for Colorado hourly employees is set to climb next year, raising worries anew among restaurants, which have long complained that the cost of running business notably in Denver is adding up to levels seen in big cities like New York.

Colorado’s minimum wage will rise to $15.71 from the current wage of $15.16 an hour.

Meanwhile, restaurant servers and other tipped workers will see a new minimum wage of $12.69 an hour.

The Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics announced the increases on Thursday.

While worries persist among businesses about labor costs, some advocates have argued that Colorado — and Denver, in particular — are behind neighboring states and cities when it comes to getting tipped workers up to the minimum wage.

Colorado’s minimum wage is adjusted annually following state constitutional amendments approved by voters in 2006 and 2017, which had boosted it by set yearly increments to $12 an hour in 2020 followed by regular annual increases adjusted for cost-of-living.

Last week, the City and County of Denver announced a minimum wage increase to $19.84. Municipalities can require higher wages than the state minimum.

Restaurant owners worry about costs

Following the announcement, restaurant owners raised worries about the consequences for taverns and other establishments with tipped workers.

“Denver restaurants are already struggling under extraordinary cost pressures from the price of food, rent, utilities, insurance, labor and more,” Sonia Riggs, president of the Colorado Restaurant Association and Foundation, said in an email to The Denver Gazette.

“Increasing the minimum wage to $19.84 (in Denver) in 2027 will add tens of thousands of dollars in new annual costs for every local restaurant, shrinking their impossibly tight margins even further,” she said.

She added: “These added costs will make dining out even more expensive and add to Denver’s already high cost of living. It’s a troubling inflationary cycle.”

Riggs said she had hoped the Denver City Council would do more specifically to support the family-owned establishments in Denver neighborhoods.

Some welcomed the wage increases.

Dan Klehm, who opened Convict Coffee in Parker two years ago and has a second store now open near DU, told The Denver Gazette that employers have a responsibility to keep their employees comfortable in the context of the cost of living.

“What a lot of employers are doing is counting on the generosity of strangers to comp their employees,” Klehm said.

He noted that he pays a minimum $20 per hour in addition to tipped income and maintains a policy of keeping his lowest-paid employee within a one-to-five ratio of his own compensation as corporate owner.

“I opened in Parker two years ago and haven’t lost an employee,” he added. “Our sales are growing, and that’s a sign of having employees stay with us.”

Klehm will open his third area store at East Colfax Avenue and York Street in coming weeks, he noted.

Colorado adjusts the wage using the federal Consumer Price Index, referencing an All Urban Consumers (CPI-U) version of the CPI that tracks spending habits of urban consumers, based on a wide sample of the U.S. population.

Denver uses an Urban Wage Earners and Clerical Workers CPI focused on households supported by hourly wages or clerical work based on a more targeted sample.

According to the state statistics office, the new wage of $15.71 represents a 3.6% increase over the current wage and a 41.5% increase from the wage in 2019 of $11.10 an hour.

Are area workers ahead?

The increases follow the release of a study on national wage performance over the past five years, showing that although wages of U.S. workers as a whole are failing to keep pace with inflation, Denver area workers are coming out slightly ahead.

That July report by a London-based tech firm said that metro Denver workers had averaged a $344 annual increase in real wages during the last five years, after backing out the cost of inflation.

Denver area workers showed the 14th-highest real wage increase of all major U.S. metro areas, the study said.

However, the study noted that local inflationary costs, including for housing, could be giving a false positive to that “real” wage performance assessment.

Also in July, a nonpartisan policy group issued a broad-based economic report showing Colorado outperforming the national economy but lagging major competitor states including Arizona, Texas and Utah. That study had noted a 40% chance of a recession in Colorado in the coming year.

The study by the Romer Institute of Evidence-based Policy had noted that wages in Colorado run well ahead of peer states, but that higher living costs reduce those benefits to workers and make for added employer costs.

An earlier ranking by CNBC had dropped Colorado from among its annual “America’s Top States for Business” ranking to 25th best economy, from its 11th-best ranking in 2025. That study had rated the state lower on “business friendliness” and noted recent population losses that may be resulting from high costs of living and housing.

Besides Denver, local cities exceeding the Colorado minimum wage include Edgewater at $18.17 an hour and $13.50 with a tip credit; and Boulder with $16.82 an hour and $13.80 with the tip credit.

Colorado has a website at cdle.colorado.gov/dlss that tracks minimum wages, including those of other localities that will post higher minimum wages for 2027.

Restaurants have long lamented how it is increasingly becoming costlier to run their businesses notably in Denver.

They said costs can go high as long as there’s enough customers to cover them. But Denver is a smaller city, they said, and the local market isn’t big enough like New York City to be sustainable.

“Denver is about as expensive as the coastal cities, if not more than a lot of them right now,” one restaurateur said last year.

One of the largest costs they attribute the problem to is Denver’s higher minimum wage for tipped workers, which spurred state legislators last year to allow lowering the pay for tipped workers in places where a local government’s minimum wage sits higher than what the state imposes.

The restaurant owners have argued the legislation is needed in order to offset the rising costs associated with running their businesses, while workers said it unfairly reduces their wages and forces them to become even more reliant on unpredictable tips.

Sponsors said the bill aims to address the unintended consequences of a 2019 law that allowed local governments to establish minimum wages above the state threshold. Critics said it cuts wages at a time of soaring expenses for workers.

Bernadette Berdychowski contributed to this article.