New Nevada minimum wage starts today, but inflation taking toll

Nevada’s lowest-paid workers will receive a raise Friday, as the state’s minimum wage reaches about $10.50 an hour and comes against a backdrop of thousands of job openings offering much more to entice workers.

The scheduled increase is a result of Assembly Bill 456, passed in 2019, which dictates that the state’s minimum wage rises in 75-cent increments until July 2024. The law includes a two-tier system that offers a lower wage to employees with health benefits. This year, those workers will receive a minimum wage of $9.50 per hour.

Still, many job seekers may find postings for a higher base pay considering the competitive labor market. And they may feel that $10.50 — or more — is not enough because of the high rate of inflation, which reached 8.6 percent in May compared with the previous year.

Some hourly workers were not fazed by the new rate and expressed concern that it wasn’t a livable wage. Rikyyah Washington works at a temporary tattoo booth in downtown Las Vegas’ Fremont Street Experience, where she makes $13 hourly plus commission.

“It’s still not even enough to live,” said Washington, who started earning $11 hourly at her job about three months ago. “I live paycheck to paycheck. I get a check, I help out my mom, food plus other bills and expenses I have, then I only have like $200 to save. But I’m 21, I want to go out and have fun and have life experiences. It’s a struggle.”

Jeff Waddoups, a labor economist at the University of Nevada, Las Vegas, said lawmakers couldn’t predict rapid inflation when the minimum wage bill was written several years ago. That inflation cut into the real minimum wage, or minimum wage when adjusted for inflation.

Data from UNLV’s Center for Business and Economic Research shows the effect will be minimal. Only 0.9 percent of the state’s workers earn at or below the minimum wage. Louisiana leads the country in share of minimum wage workers at 3.2 percent, Director of Research Stephen Miller said via email.

Most retailers are prepared for the increase and may even pay more than what’s required, Bryan Wachter, spokesman for the Retail Association of Nevada, said.

“The vast majority of Nevadans, they probably won’t be affected by the increase,” Wachter said. “Our members have had plenty of time to build it into their models and to know that there’s going to be an increase in the cost of labor. We’re confident that they’ll be able to work that into their operations going forward.”

Nevada’s minimum wage is roughly in the middle among neighboring states. Both Utah and Idaho are in line with the federal minimum wage of $7.25 per hour — a rate that has not increased in about 13 years. But it’s still below Arizona’s $12.80 per hour, California’s $14 per hour and Oregon’s $13.50 per hour.

Despite the relatively low population of laborers earning at that rate and its standing in the region, the 2019 law is still worth it for the workers, Waddoups said.

“If we hadn’t passed the increase in minimum wage, maybe people would be suffering from inflation, and they wouldn’t even have gotten a wage increase,” he said. “It does give market power to people at the lower end of the income spectrum.”

Today’s labor market

Many employers in the labor market are offering starting wages far above the state’s minimum to fill positions lost during the pandemic. Gov. Steve Sisolak said he didn’t expect Friday’s increase to make much of a ripple because he knew of so many firms paying beyond the state’s requirement.

“Every employer that I talk to, they’re far above (the minimum), and they’re still having trouble attracting people so I don’t think it’s going to impact the job market,” Sisolak said.

That’s what Kevin Mills, owner of the breakfast restaurant Omelet House, said. His only minimum wage employees are servers, who receive a larger compensation from tips. He said any mandated base pay increase affects his budget, but this one also comes at a time when other business costs are going up.

“My concerns are that my food costs have escalated dramatically,” Mills said. “I used to gut wrench about (raising menu prices) 2 or 3 percent. Now, it’s way more than that just to keep my doors open. I can’t sell food at a loss.”

More than just money

Mothership Coffee CEO Juanny Romero said her company employs about 60 part- and full-time hourly employees and several more salaried managers in three Mothership locations and at its other business, Sunrise Coffee. The company used to pay employees above minimum wage and offered health benefits, she said. But that didn’t stop a 70 percent attrition rate in a six-month period, adding labor costs all while food and other costs rose, too.

Beginning Friday, the company’s base wage will fall in line with the state’s minimum requirements for companies that have those benefits. Instead of a wage increase, the company expanded its paid time-off offerings, enforced work-life balance policies and built bonuses into the next quarter’s budget.

“Money is important to a certain point, but it’s more about the culture and the dynamic of their shifts, how they relate to each other as a team,” Romero said. “We’ve seen that has had a huge effect at lowering attrition to the point where we don’t have any room to hire anyone right now because we have such a great group of people.”

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.