Dear Council,

Josh Cooperman recently asked me a question regarding tipped wages and how the state’s recent legislation may affect the broader minimum wage discussion. It is an important and reasonable question, and one that is being raised in other communities as well. For that reason, I wanted to share the Chamber’s perspective with the full Council.

When City Council last discussed the possibility of a local minimum wage increase, the concerns raised by Louisville businesses were not limited to hospitality. While tipped employees were part of the conversation, much of the feedback we heard came from retail, professional services, personal services, construction, childcare, and other small employers who do not rely on tipping at all. Those concerns remain unchanged.

Regarding the State Legislature’s recent action, the 2025 bill allows local governments that adopt a minimum wage higher than the state minimum wage to apply a tip offset for tipped employees. In practical terms, this means a city may allow tipped employees to earn a lower direct hourly wage, with tips counting toward the full minimum wage, within the limits set in state law.

However, this provision does not meaningfully ease the broader concerns raised by Louisville’s small business community.

Even with a tip offset, employers are still legally required to ensure that tipped employees earn at least the full applicable minimum wage in every pay period. If tips fall short, the employer must make up the difference through higher direct wages. This true-up requirement creates ongoing uncertainty and financial risk, particularly for small businesses operating with thin margins and seasonal fluctuations.

The tipped wage provision also applies only to a narrow segment of the workforce. It does not mitigate impacts on non-tipped employees.  Retail staff, office employees, trades, childcare workers, and service professionals would all be subject to the full increase.

Many Louisville businesses believe the current state minimum wage already provides an appropriate and fair baseline for entry level and part time roles, including positions commonly held by college students, young workers, and individuals seeking flexible or supplemental income. For these roles, employers feel the current rate appropriately reflects job scope, training requirements, and opportunities for advancement.

When minimum wages increase beyond this baseline, businesses report a ripple effect across their entire wage structure. Employers feel pressure to raise wages for experienced staff, supervisors, and long-tenured employees to maintain internal equity. This wage compression significantly increases total labor costs beyond the base minimum wage change.

These increased costs do not exist in isolation. For many small businesses, higher labor expenses lead to higher prices for goods and services. As prices rise, customers often reduce discretionary spending, dining out less frequently, delaying purchases, or choosing lower-cost alternatives. Businesses consistently report that this reduction in customer frequency directly depresses revenue and further strains already narrow margins.

I would also note that at the Northwest Chamber Alliance meeting yesterday with our state representatives, chamber directors from neighboring communities shared similar conclusions. Broomfield confirmed they are not pursuing a local minimum wage increase at this time, noting that their research showed many businesses already pay above the state minimum wage and that further increases would create upward pressure across their wage structures. Longmont confirmed the same. In addition, examples were shared of business closures in Niwot following recent increases, reinforcing concerns about cumulative impacts on small, community-based businesses.

For these reasons, the Chamber continues to encourage a cautious, data-driven approach. We respectfully request that the City hold on further minimum wage consideration for at least another year, allowing Louisville to continue monitoring outcomes in nearby communities and assess real-world impacts before revisiting the issue in 2027 if warranted. The NWCA directors noted the importance of regional collaboration on this issue.

We would also appreciate additional context on why this item has reappeared on the work plan at this time. To our knowledge, the Chamber has not received requests from local businesses or members of the public asking for a renewed review of minimum wage increases. If there are concerns or perspectives being raised from another constituency, we would welcome the opportunity to better understand them so we can engage constructively and ensure a balanced discussion.

Thank you again for including the Chamber in this conversation. We appreciate Council’s continued engagement with the business community and look forward to working collaboratively as these issues are evaluated.

(In case you are not aware the NWCA is the North West Chamber Alliance: Boulder, Broomfield, Longmont, Louisville, Lafayette, Superior and Latino Chamber of Commerce. The Executive Directors meet monthly and discuss issues of importance in our cities as well as hear from local and state representatives alongside monthly presentations from a variety of sources RTD to Mental Health Programs.  I requested an updated commuter rail presentation in 2026 and will share any information. We will  also be spending a day at the Capitol in January and if anyone from Council would like to join me please let me know and I will extend an invitation. The Chamber will also be attending the Community Solutions Legislative Breakfast in January which will provide further transport insights for 2026)

Happy Holidays to you all and thank you for your hard work and dedication to Louisville.