Editorial: New Nevada laws driving up the cost of doing business

Thanks to the Democrat-controlled 2019 legislative session it is going to be more expensive to do business in Nevada this year and in years to come.

The most expensive dictate from lawmakers takes effect July 1, when the first phase of Assembly Bill 456 kicks in raising the minimum wage in Nevada by 75 cents an hour. Currently the minimum wage for those with health insurance coverage is $7.25 an hour and $8.25 an hour for those without health benefits. The minimums increase to $8 and $9 this year and another 75 cents an hour each year until they reach $11 and $12 in 2024.

At the time of his signing the bill Gov. Steve Sisolak was quoted as saying, “Keeping working Nevadans stuck in a 10-year-old minimum wage erodes the real value and purchasing power of the wages of hardworking Nevadans. But with this bill, hundreds of thousands of working Nevadans will see a difference in their paycheck — extra hard-earned money they can use to put food on the table, save for their kids’ education, and re-invest into the economy.”

He did not deign to mention that some will go from minimum wage to no wage as jobs are eliminated and new jobs fail to be created. Others may see their hours cut to compensate for the higher wage cost. One study found the average low-wage worker in Seattle actually lost $125 a month when the minimum wage was raised to $15 an hour. Not exactly what the lawmakers and the governor foresee for Nevada.

Of course, raising the minimum wage raises the cost of doing business, which translates immediately into higher costs for consumers. A Cato Institute analysis in 2012 found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent. AB456 increases the minimum wage in Nevada by more than 50 percent in five years.

In a recent article, the Nevada Appeal in Carson City quoted Johnny Skowronek, owner of staffing company Square One Solutions and incoming Northern Nevada Human Resources Association president, as saying he expects the service and retail industries to be hurt the most by minimum wage increases.

“Most bars, restaurants, casinos and retail operations pay minimum wage, and they are going to have to pass costs onto consumers,” Skowronek said. “The price of everything is going to go up without question in order to absorb this additional hard cost.”

Laura Jacobsen, an attorney with the law firm of McDonald Carano, told the Appeal some businesses are likely to layoff workers and/or move key personnel into salaried positions.

“Businesses are doing audits now on their pay scales to see how many folks they can continue to employ, whether they need to eliminate some positions, or have someone higher up absorb more executive responsibilities and be put on salary,” Jacobsen said. “It makes sense to streamline now if they can, but moving folks into supervisor positions, you have to make sure they fit the definition of a very specific exemption under the law. You might really have to tailor that job description and consult legal counsel to make sure (employees) are properly classified as exempt from wage per hour and overtime laws.”

Not only did lawmakers hike the minimum wage, but they also more strictly defined what health coverage is adequate to qualify for the dollar lower minimum wage. Senate Bill 192 requires that for a health benefits package to qualify for the lower-tier minimum wage it must include: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use services, prescription drugs, laboratory services, preventive and wellness services and chronic disease management, pediatric services and other specified coverage.

On top of that Senate Bill 312 now requires private employers with 50 or more workers to provide 40 hours of paid leave each year for full-time workers.

Additionally, Senate Bill 166 adds the threat of civil penalties for any employer who fails live up to the requirement of equal pay for equal work based on gender.

Lawmakers should stop trying to “help” Nevada workers with laws that can do as much harm as good.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Gary Varvel cartoon

Editorial: Minimum wage hike will increase prices and crime

Despite all the evidence that it will do more harm than good, a bill to raise the minimum wage in Nevada is still wending its way through the halls of the Legislature in Carson City.

Assembly Bill 456 would raise the minimum wage 75 cents per hour each year as it climbs from the current $7.25 per hour for those receiving company health insurance and $8.25 for those not insured until it reaches $11 or $12 per hour.

In his State of the State speech, Democratic Gov. Steve Sisolak called for raising the minimum wage and declared, “It’s impossible for an individual, let alone a family, to live on $7.25 an hour,” ignoring the fact almost no one “lives” on minimum wage. Fewer than 3 percent of workers are paid the minimum wage and most of them are under age 25 and working part-time. Most are supplementing family income rather than being self-supporting.

In fact, raising the minimum wage often results in jobs being cut and/or working hours reduced. One study found the average low-wage worker in Seattle lost $125 a month because the minimum wage was raised to $15 an hour.

Now, a recent study released by the National Bureau of Economic Research found that raising the minimum wage can harm even those who are not being paid the minimum wage.

Using national crime data from 1998 to 2016, the study found “robust evidence that minimum wage hikes increase property crime arrests among teenagers and young adults ages 16- to-24, a population for whom minimum wages are likely to bind.”

The study projects that raising the minimum wage to $12 an hour nationally would result in approximately 231,000 additional property crimes, costing the nation $1.3 billion. Raising the minimum wage to $15 an hour would generate over 410,000 additional property crimes and $2.4 billion per year in additional crime costs.

“We conclude that increasing the minimum wage will at best be ineffective at deterring crime and at worst will have unintended consequences that increase property crime among young adults,” the study authors concluded. They said that previous studies that projected a decrease in crime due to raising the minimum wage ignored the possibility of hours being cut and jobs being lost.

Don’t ignore the costs imposed on everyone when the minimum wage is hiked. A Cato Institute analysis in 2012 found that a “comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent and overall prices by up to 0.4 percent.”

The Congressional Budget Office in 2014 estimated that if the federal minimum wage were increased to $10.10 an hour — as proposed by President Obama and others — up to a million workers would lose their jobs.

According to the American Enterprise Institute, when the minimum wage rose 41 percent between 2007 and 2009, the jobless rate for 16- to 19-year-olds increased by 10 percentage points, from about 16 percent in 2007 to more than 26 percent in 2009 — even higher for minorities.

Without those entry level jobs younger Americans cannot build the skills needed to earn higher pay for a lifetime.

Still another Heritage study reported that every dollar increase in minimum wage really only raises take-home pay by 20 cents once welfare benefits are reduced and taxes are increased.

It’s the immutable law of unintended consequences. Lawmakers should abandon their support for this bill, which would cause more harm than good.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.