Proposal to hike Nevada’s minimum wage will erode state’s entry-level job market

Original Article:

  • Author: Michael Saltsman

  • Publication Date: February 2017

  • Newspaper: Las Vegas Review Journal

This year, Nevada’s small business and entry-level employees probably won’t hit the jackpot. The Legislature is considering minimum wage legislation proposed by state Sen. Kelvin Atkinson, a Las Vegas Democrat, that would raise the state’s minimum wage to $11 for all businesses and $12 for businesses that do not offer health insurance.

This 33 percent minimum wage hike will raise new barriers to the job market for the state’s least-skilled employees.

Census Bureau data shows that Nevada’s young people are still at a disadvantage relative to young adults in nearby states. As of November 2016, youth unemployment in the state averages 18 percent, compared to 10.5 percent in nearby Utah and 11.1 percent in Idaho. Yes, these young adults need help from legislators in Carson City. But not the kind that Sen. Atkinson has in mind.

The evidence on this point is clear. A 2014 study conducted by the nonpartisan Congressional Budget Office found that the proposed $10.10 federal starting wage would eliminate a half-million jobs nationwide. A separate analysis by economists at Miami and Trinity universities found that a $12 minimum wage would cause 6,700 lost jobs in Nevada.

 Nevadans don’t need to look far to see these consequences playing out in real-time.

In Washington state, whose minimum wage rose to $11 on New Year’s Day, multiple businesses have closed due to minimum wage hikes. Louisa’s Cafe in Seattle closed after nearly 20 years citing the city’s minimum wage increase as a major factor. O’Doherty’s pub on the north side of Spokane closed in January. Owner Tim O’Dorherty said the minimum wage increase from $9.47 to $11 put his labor costs over the edge.

In neighboring California, which passed a $15 minimum wage last year, major businesses are quitting the state. This year, ARGYLEHaus, an apparel manufacturer in California, announced it would move to Nevada in the face of the state’s new mandated wage laws. It would be foolish for the state to put up a “keep out” sign directed at businesses fleeing California.

Another major manufacturer in California, Ashley Furniture, closed its production and warehouse facility which employed 840 people.

These entry-level jobs are being sourced to states such as Wisconsin and North Carolina. Competitive Edge Research and Communications in San Diego is also moving jobs out of the state. Its CEO, John Nienstedt stated, “We’re moving the call center to El Paso because California has become inhospitable to (telephone) interviewing jobs.”

New York, a state that relies on hospitality and tourism, much like Nevada, has seen numerous restaurants impacted by the increased minimum wage. From Del Rio Diner in Brooklyn to Da Silvano in Manhattan, restaurants have either shut down or laid off employees. Del Rio Diner’s owner, Larry Georgeton stated, “The minimum wage, that’s what broke the camel’s back. It killed us.”

This type of harsh economic reality is often overlooked by minimum wage proponents.

Nevada’s minimum wage proposal would turn some low-margin small businesses in the state into the new victims of dramatic minimum wage hikes. The result would be fewer job opportunities for those who need not only a paycheck but also the structure, skills and workplace socialization that comes with learning on the job.

The Silver State should focus on preserving these entry-level employment opportunities, not threatening to eliminate some of them and exacerbate its high youth unemployment rate with a dramatic minimum wage increase.