Nevada businesses brace for $12 minimum wage change

While the state is still waiting on the final vote tally, 54.5 percent of voters supported the constitutional amendment to increase the minimum wage and 45.5 percent voted against the rate hike as of Friday afternoon.

Business leaders said the passage of ballot Question 2 could hurt businesses with tight margins, though many companies are already paying workers an hourly wage of at least $12 because of mounting pressure from a tight labor market.

Paige and Rye owner Lauren Tieru said her apparel and home goods store on South Hualapai Way has its lowest hourly wage set at $12, but she expects the company will eventually need to increase its wages.

“It’s competitive,” Tieru said. “I mean, the gas station around the corner has a sign that they’re hiring for like $16 an hour.”

Nina Manchev, owner of Forte Tapas and CEO of The Caviar Collective, said everyone at her restaurant already makes more than $12 an hour.

“With inflation and food costs and supply issues, as an industry, it’s just one more thing facing us,” Manchev said.

Currently, the minimum wage is $10.50 an hour if a business doesn’t offer health benefits and $9.50 for businesses that offer health benefits.

Question 2 would eliminate the two tiers and create a standard $12 an hour rate, regardless of benefits, and it would take effect July 1, 2024.

Scott Abbott, managing partner at Las Vegas law firm Kamer Zucker Abbott, said lawmakers won’t be able to lower the minimum wage below $12 without changing the state’s constitution.

“It’s not subject to just the whims of a legislature to change the laws downward at this point, not that I think that would happen,” Abbott said. “I think that for some people, particularly workers, the minimum wage can never be high enough. If they raise the minimum wage to $25 an hour, those people would say, ‘OK, that’s a good start.’ Employers have a very different story to tell, because they have to shoulder the burdens of those costs.”

Raising the floor

Michael Mack, owner of Max Pawn Luxury, said because his store focuses on luxury items it offers higher pay to get quality employees, adding that new hires typically receive $16 to $18 an hour.

While Question 2 will have little impact on his bottom line, Mack believes it sets a dangerous precedent.

“This drives all wages up,” Mack said. “If the bottom of the scale is up then it all goes up.”

Randi Thompson, state director of the National Federation of Independent Businesses, said business owners are already facing high inflation and a tough labor market. She said a wage increase will raise the state’s unemployment rate, especially among younger workers.

“Because the minimum wage is so high, you’re not going to hire that high school kid anymore,” Thompson said. “You’re going to just ask for overtime (from) your skilled workers.”

Abbott, whose firm represents employers, said with inflation still high it’s likely labor advocates will continue to push for higher minimum wages. Consumer inflation reached 7.7 percent in October from a year earlier and 0.4 percent from September, the government reported Thursday. And while price increases moderated, it’s still high enough to be a concern for local businesses recovering from the pandemic.

“Those businesses that can weather the storm and have weathered the storm … I think they’ll still be able to absorb the wage increase,” Abbott said. “For those that may not be able to, we may see some job loss.”

Joe Muscaglione, owner of Shanghai Taste in Chinatown, said the constitutional change won’t impact his restaurant since employees start at $14 an hour.

“It might affect a lot of smaller shops,” he said. “It’s just part of your operating costs. A good business model shouldn’t be broken by this.”

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com. Follow @seanhemmers34 on Twitter. Review-Journal staff writer Jonathan Wright contributed to this report.