This story first ran on BusinessDen.com, a BizWest news partner.

Starting Jan. 1, Denver’s minimum wage will increase from $14.77 to $15.87, the final increase in what City Council members called “catch-up” phases.

Denver raised its minimum wage in 2020 to $12.85 an hour and then to $14.77 at the beginning of 2021. Starting in 2023, Denver’s minimum wage will increase Jan. 1 of each year based on the consumer price index.

“Higher wages for the workers our city depends on every day will help them mitigate cost-of-living increases and raise thousands of their families out of poverty,” Councilwoman Robin Kniech said in a prepared statement.

Employers in the food and beverage industry can reduce their minimum wage obligation for actual tips received by employees up to $3.02 an hour, which is called a “tip credit,” according to the Denver auditor’s office. Those employers may be asked to produce evidence their employees received tips equal to the tip credit taken by the employer during an investigation.

If someone was to work all 52 weeks of the year, 40 hours per week, they will make about $33,000 for the year before taxes, which translates to a little below 50 percent of Denver’s median income for a single person.

“At a time when workers are doing everything they can to get by, this raise is a little bit of extra relief to help them support themselves and their families,” Mayor Michael Hancock said in a statement. “Our economy needs to work for everyone, and for our working families, this pay raise is a big deal, especially during our recovery from the pandemic.”

Denver Auditor Timothy O’Brien said employers should prepare for the wage increase by programming their payroll systems before the start of the new year to ensure they are compliant.

Despite the higher minimum wage, people are still not necessarily going back to work following pandemic upheaval. The Denver Post reported in November that Colorado ranked ninth in the nation with 3.4 percent of workers quitting their jobs, not counting retirees, in August. The U.S. rate also hit a record 2.9 percent in August.

At Colfax Avenue and Downing Street, a Papa John’s is offering between $17 and $25 an hour for delivery drivers. Across the street, the Good Times hamburger stand has offered about $16 an hour.