Wage hike goes in effect today
July 1, 2010
While an estimated 130,000 Nevada workers earning the minimum wage will get a raise today, business owners who employ them say the increase will mean higher prices for customers and tighter payrolls.
Kathleen Boeche, the owner of Carson City’s Dairy Queen, said the 10 most popular items at her three Northern Nevada stores will likely increase by 3 percent in light of Nevada’s minimum wage increasing today by more than 9 percent, from $7.55 an hour to $8.25.
The minimum wage for employees who get qualified health benefits from their employer will increase from $6.55 an hour to $7.25 an hour.
Aside from price increases on some items in her store, which she runs with her husband Steve, Boeche said the wage increase will result in fewer employees, adding sales have been strained since the start of the recession more than two years ago.
This is the latest increase in Nevada’s minimum wage since voters overwhelmingly approved an amendment to the Nevada Constitution in 2006 that would increase the state’s minimum wage with the federal minimum wage or a rise in the cost of living.
Before voters approved the amendment, the Silver State’s minimum wage had been $5.15 an hour since 1998, among the lowest in the nation. Now at $8.25 an hour, it’s the third highest following Oregon and Washington state at $8.40 and $8.55, respectively. San Francisco and Santa Fe, N.M., require hourly wages of $9.79 and $9.85, respectively.
Elliott Parker, chairman of the department of economics at the University of Nevada, Reno, said the wage hike will not dramatically impact Nevada’s unemployment rate, which was 14 percent in May, but 1 percent to 7 percent of workers earning minimum wage could either lose their position or have a harder time finding one. In other words, most minimum wage earners will benefit.
“Now is not really a great time to hike the minimum wage, but this was a decision the voters made in better times when the minimum wage had failed to keep up with inflation for many years,” Parker said. “But an increase of about 10 percent is much higher than the current inflation rate, and will make unskilled labor a little more expensive in a time when employers are pretty choosy about hiring.”
For Boeche, that means she’s hiring fewer teenagers. Her stores have been averaging about 50 applications a day, and her recent hires have mostly been in their 30s.
“I would say it’s been that way for the last two years,” she said, adding if she’s going to pay more than $8 an hour, she wants employees with experience – something 16-year-olds can’t offer.
The Employment Policies Institute in Washington, D.C., said the wage increase is likely to damper job prospects for the state’s youngest workers between the ages of 16 and 24, who are facing a 22.8 percent unemployment rate, according to the Department of Employment, Training and Rehabilitation.
“The recession, combined with state and federal minimum wage increases, has created a toxic environment for young Americans searching for a summer job,” said Michael Saltsman, research fellow at EPI.
But Danny Thompson, the secretary-treasurer of the Nevada State AFL-CIO, the organization that pushed the minimum wage ballot issue, said many minimum wage earners are adults who work more than one job.
“I don’t think you can make the blanket statement that all minimum wage earners are teenagers,” Thompson said. “Many times they’re people who are just trying to keep a roof over their head. People will take any job they can get.”
He said the wage increase may help the state economy, putting more money into the hands of workers who are more likely to spend than save.
“They won’t stuff it in a mattress, they’ll spend,” Thompson said. “If everybody were spending money right now we wouldn’t be in the mess we’re in.”
Jill Lillaney, the owner of 13 Burger Kings around northern Nevada including one in Carson City, said the minimum wage increase is a tough pill to swallow.
“When you’re selling dollar products it’s difficult to make any money when you have the minimum wage increasing dramatically,” Lillaney said. “It has a rolling effect. An assistant manager will also get a raise.”
As a result, Lillaney said she will watch her payroll closer.
“And when we can choose not to hire, we’re making that decision,” she said.