Labor Pains

Beginning July 1, the minimum wage in Nevada increases 70 cents an hour. What does that mean to Las Vegas businesses and employees?

Earlier this month, Fob James IV started thinking about measures to cut costs at his two Blondie’s Car Wash locations. The starting wage for his 20 to 30 employees is $8 an hour—a salary that remains higher than required only until July 1, when Nevada’s minimum wage rises 70 cents to $8.25 an hour for employers who don’t provide health benefits. Those who do provide health insurance will see the minimum wage rise to $7.25 an hour. That puts Nevada on par with 13 other states and Washington, D.C., which all pay wages above the $7.25-per-hour federal minimum.

James says it’s a tough time to require small businesses, many of which are already struggling, to pay more. He’ll most likely have to make changes to absorb the added costs.

“One thing we’ve talked about doing is we’re probably going to do away with full-service car washes. We were just doing a few a day as a convenience to the customer, but it requires us to have an extra person on the clock,” says James, who also co-hosts a conservative radio program on KLAV-AM (1230). That change will eliminate two shifts, one at each location.

James isn’t pleased about it. In fact, he disagrees with the entire concept of minimum wage. “Typically, minimum wage is completely irrelevant. It’s not needed,” he says. “Somebody’s talents and skills and productivity always trump minimum wage.”

His stance is familiar throughout libertarian-tinged Nevada. Still, voters are the ones responsible for the wage increase. They opted to raise the minimum wage beginning in 2006, when it rose from $5.15 an hour to $6.15 ($5.15 if the employer provided benefits), and it’s now adjusted annually as required by the state constitution.

Jonathan Fine, president of Sting Surveillance, says he expects three of his 50 employees to lose their jobs. He is also opposed to the mandated increase. “With 15 percent of the Valley out of work, it would make sense to lower the minimum wage,” Fine says. “More people would be able to get jobs. In my opinion, the wage someone gets paid should be based on that individual’s skills. The minimum wage getting higher just makes the less skilled person unaffordable to a small business. Every $1 an hour is $2,080 a year, plus increased taxes and insurance.”

William Stanley views it quite differently. The director of organizing for the International Union of Elevator Constructors doesn’t even think the conversation should revolve around the minimum wage.

“To me, the right discussion shouldn’t be a minimum wage; it should be a living wage,” he says. “While I think the minimum wage going up is a good thing, I still think we’re woefully short of making sure that people who work full time can live on it.”

Stanley points out that $8.25 an hour will still be challenging for an individual to live on, much less a single parent. In those scenarios, he says, companies that aren’t willing to pay a living wage are simply focusing on their own bottom line, ignoring the fact that the rest of society will be subsidizing their employees, whether it’s through food stamps, county hospitals or any number of social services.

Still, with more than a 60 percent increase in the minimum wage since 2006, coupled with the highest unemployment rate in the country, Nevada employers—and even economists—aren’t sure what the increase’s impact will be on Las Vegas. Jeff Waddoups, associate professor of economics at UNLV, admits the current situation could be worrisome. “I think there’s value in a minimum wage, but that doesn’t mean you can raise the minimum wage forever, arbitrarily high,” he says.

Waddoups says the coming months will be a time for Nevada businesses to focus on tightening their budgets and practices, trimming any fat that might be left and becoming even more efficient. But there’s no guarantee that all businesses, from retail to restaurants, car washes to coffee shops, will be able to do that without making adjustments in staff.

“There’s a degree to which you exhaust all these efficiencies and say, ‘Sorry guys, the wage is so high I can’t afford to have you on,’” Waddoups says. “And I don’t know how high that wage is. I don’t think anyone really knows how high that wage is. It’s different for every firm.”

The Coffee Bean & Tea Leaf, for example, will see minimal changes in the books next month.

“It is going to impact us a bit, but not significantly,” says Phil Patent, president and CEO of The Coffee Bean & Tea Leaf in Nevada. “It’s going to impact our payroll maybe 1 percent.” Patent expects the raise will apply to about 12 percent of the workforce of 125, and most of those affected are part-time employees.

For years, he says, the company has strived to pay employees above minimum wage—something that’s become more challenging with the annual wage increases. About a year and a half ago, the company even began offering health insurance to full-time employees.

“We have always paid a bit higher because we want to focus on getting a little better caliber of individuals,” Patent says. “And in this sense, it’s kind of insulated us.”