A whole lot of Nevadans are finding out that the true minimum wage is $0 an hour.
The economic devastation hitting Nevadans is unprecedented. Last week, more than 90,000 Nevadans filed initial claims for unemployment. Tourism is the lifeblood of the Southern Nevada economy, but casinos and our area’s world-class entertainment venues are closed. In January, the state’s unemployment rate hit a record low. If this shutdown continues, it will almost assuredly hit a record high.
Even when the economy opens back up, it’s likely that the tourism sector will take longer to recover than other industries. Travelers and businesses are going to want to have their financial houses in order before taking a Vegas vacation or sending employees to a conference. Even with the federal bailout, businesses of all sizes will be struggling to pay rent, afford supplies and make payroll.
Unfortunately, many of these struggling businesses face another nasty blow in July.
Last year, Gov. Steve Sisolak signed a law pushed by legislative Democrats that increases Nevada’s minimum wage from $8.25 to $9 an hour for employers who don’t provide health insurance. For companies that provide health insurance, the wage floor will rise from $7.25 an hour to $8 an hour. The minimum wage will continue to increase annually by 75 cents an hour until it reaches $12 an hour for employers not offering health insurance.
Seventy-five cents an hour may not sound like much — to someone who’s never had to make payroll. How is a business that the government has ordered to close for six weeks supposed to hand out widespread wage hikes?
This is one of the many problems with government wage edicts. They don’t allow for changing conditions. For the past several years, it was easy to find fast-food restaurants offering starting pay above the required wage. Even for entry-level jobs, businesses were forced to increase wages as unemployment kept dropping. That’s how starting-level wages naturally rise in a strong economy.
But conditions have radically changed because of the coronavirus shutdown. Businesses are struggling just to stay open. To attract customers, some businesses will have to lower prices. If prices and sales volume drop while lawmakers mandate higher personnel costs, some businesses will go bankrupt. Maybe not McDonald’s. But what about the food truck owner trying to establish a customer base? Or the entrepreneur in a strip mall where foot traffic has fallen 70 percent?
The vast majority of business owners want to pay employees a reasonable wage for the work required. But in order to do that, their businesses must be viable. This summer’s minimum wage hike will be a significant barrier to that.