Boulder City Council will decide next week whether to slow scheduled minimum wage increases for tipped workers, bringing one of the council’s most divisive debates of the year to a head.
The decision could provide financial relief to restaurants while leaving many tipped workers earning less than they otherwise would in 2027.
The city estimates the proposal would save a restaurant with 10 full-time employees between $60,000 and $75,000 annually. But depending on the option council chooses, most tipped workers would earn between $500 and $3,000 less next year than under the current wage schedule.
The vote caps more than a year of debate over how Boulder should balance the needs of an industry struggling with rising labor and food costs against those of workers who say they already cannot afford to live in the city they serve.
At the center of the debate is the city’s “tip credit,” which allows employers to count a portion of workers’ tips toward their minimum-wage obligation and pay them a lower base wage. If a worker’s base pay and tips together fall short of the minimum wage, the employer must make up the difference. Tipped workers are therefore guaranteed the minimum wage, though many earn more once tips are included.
The council is considering changing the tip credit so that tipped workers’ base wages rise more slowly than the city’s minimum wage. That would not change the minimum wage they are guaranteed but could affect how much they earn above it.
The debate stems from a state law passed last year that allows cities with minimum wages above the state’s to adopt a larger tip credit. That means cities can raise their minimum wage without also raising tipped workers’ base pay. The law was intended to ease pressure on restaurants as local minimum wages rise.
Boulder, Boulder County, Denver and Edgewater all have minimum wages above the state’s. So far only Edgewater has taken advantage of the new law to slow scheduled wage increases for tipped workers.
Concern about the local restaurant industry’s financial health also influenced council’s decision last year to limit the city’s minimum wage increase.
Instead of adopting the maximum increase allowed under state law, 15%, council approved a smaller increase, setting this year’s minimum wage at $16.82 an hour. It is scheduled to rise 8% next year, to $18.17, with future increases tied to inflation.
Whether tipped workers’ base wages receive a comparable increase will depend on next week’s vote.
The outcome appears uncertain.
During an April study session, Mayor Aaron Brockett and Councilmember Tina Marquis expressed interest in considering both maintaining the current schedule and slowing future increases for tipped workers. Their votes could determine the outcome.
Councilmembers Taishya Adams, Ryan Schuchard and Nicole Speer also voiced support for leaving the current tip credit unchanged. Councilmembers Matt Benjamin, Rob Kaplan, Mark Wallach and Tara Winer expressed interest in slowing wage increases for tipped workers.
The issue has emerged as one of the council’s most closely watched debates this year, testing how councilmembers balance competing interests in a city that has become increasingly expensive for both businesses and workers.
The dispute extends beyond policy to the language used to describe the proposals.
Labor groups argue that slowing scheduled wage increases amounts to a pay cut, because workers would earn less than they are scheduled to receive under current law. Supporters counter that workers would still receive raises under most proposals and therefore would not be taking a pay cut.
“I’m not interested in cutting anybody’s pay,” Benjamin said in April after proposing that the council consider freezing tipped workers’ base wage for two years.
Boulder’s minimum wages
- 2026 minimum wage: $16.82 an hour
- 2026 tipped base wage: $13.80 an hour
- 2027 minimum wage: $18.17 an hour
- Scheduled 2027 tipped base wage: $15.15 an hour
- Possible 2027 tipped base wages under the alternatives: $13.80, $14.54 or $14.90 an hour
Restaurant owners largely support expanding the tip credit, saying it would provide much-needed relief as businesses struggle with rising labor, food, rent and other costs. Without relief, some say they may have to reduce staffing or increase menu prices. Others say the savings could be used to raise pay for cooks, dishwashers and other back-of-house employees who traditionally do not receive tips.
Workers and labor groups argue that the proposal would shift more responsibility for wages onto customers while making workers’ income less predictable. They also say that when tipped workers earn more, they spend more money locally, benefiting restaurants and the broader economy.
Workers are already struggling with Boulder County’s high cost of living, labor advocates say.
According to MIT’s living wage calculator, a single adult in Boulder County needs to earn about $27.09 an hour, or approximately $56,000 a year, to meet basic expenses.
By comparison, Colorado Department of Labor data show that median wages for many tipped restaurant jobs in Boulder County remain below that threshold. Bartenders earn about $20 an hour, hosts about $18 and servers about $24, although earnings vary widely. The highest-paid 10% of servers earn nearly $40 an hour, while the lowest-paid earn close to minimum wage.
Restaurant owners argue that the industry is also facing financial challenges.
Sales tax revenue from Boulder restaurants has largely plateaued after rebounding from the pandemic. Restaurant employment has fallen since 2023, and restaurant visits have declined slightly since 2024.
“Taken together, these data suggest that growth in the restaurant industry is slowing or even declining,” according to a city report.
A third approach: Forgo the tip credit
The debate does not affect every restaurant in the same way.
In a recent city survey on the issue, about a third of restaurant owners said they do not use the tip credit at all. Instead, they pay all employees the standard minimum wage and use tip pools to distribute tips among servers, cooks and other staff.
“It dramatically increases the pay equity, reduces any one individual’s exposure to bad tips, creates team work [and] addresses both those employees who are not eligible for traditional tips,” one respondent wrote.
Choices before council
The council will consider four options during a July 30 public hearing, which was moved from virtual to in person at Speer’s request.
Option 1: No change. The current $3.02 tip credit would remain, and tipped workers’ base wages would continue rising alongside the city’s minimum wage.
- 2027 tipped base wage: $15.15
Option 2a: Tie tipped workers’ base wage to about 82% of the city’s minimum wage. The dollar gap between the two wages would grow over time, leaving tipped workers with smaller raises than under Option 1.
- 2027 tipped base wage: $14.90
Option 2b: Give tipped workers a smaller raise next year than under Options 1 and 2a. Future increases would be tied to inflation.
- 2027 tipped base wage: $14.54
Option 4: Keep tipped workers’ base wage at $13.80 for up to two years, giving them no base-wage increase during that period. Benjamin proposed this option in April.
- 2027 tipped base wage: $13.80
