Democrats in the Nevada Legislature have introduced Senate Bill 106, which proposes to raise the minimum wage by 75 cents a year until it reaches $11 an hour for employers who provide health insurance and $12 an hour for those who do not.
This would affect profitability of employers, tend to push all hourly wage earnings up, possibly result in higher unemployment and increase the cost of goods and services in general — thus affecting nearly everyone in Nevada. The story was relegated to the bottom of the business page in the Las Vegas newspaper, but was the lede story in the Elko paper. AP gave it short shrift.
One minor problem with this proposed law is that the voters approved an initiative petition in 2004 and again in 2006 that amended the state Constitution to require that the minimum wage be tied to the federal minimum wage or inflation, whichever is higher. The current federal minimum wage is $7.25 an hour. The amendment also said the minimum wage would be a dollar higher for employees who failed to provide health insurance. So far as I can find, the amendment does not give lawmakers the option to alter this without asking the voters to again change the Constitution.
According to Legislative Counsel Bureau fact sheet published in 2015: “Because provisions governing the minimum wage rate are included in the Constitution, any changes to the minimum wage provisions require a constitutional amendment. There are two ways to amend the Constitution. One way is through the citizen initiative process. Citizen initiatives for constitutional amendments must be approved in identical form in two consecutive general elections. This is the process that enacted the current minimum wage requirements in the Constitution. The second way to amend the Constitution is through the legislative process. The Senate or Assembly may propose a constitutional amendment, which must pass in identical form with a majority of members of both houses in two consecutive biennial sessions. After that, the proposal must pass a popular vote during the next general election.”
Just such a constitutional amendment was proposed in late 2015, but was dropped during the hectic election year, reportedly because the difficulty of getting enough signatures to put it on the ballot. SB106 proposes to rewrite NRS605.250 to alter the minimum wage. That law currently reads: “Except as otherwise provided in this section, the Labor Commissioner shall, in accordance with federal law, establish by regulation the minimum wage which may be paid to employees in private employment within the State. The Labor Commissioner shall prescribe increases in the minimum wage in accordance with those prescribed by federal law, unless the Labor Commissioner determines that those increases are contrary to the public interest.”
Las Vegas newspaper columnist Victor Joecks quoted Gov. Brian Sandoval’s press secretary as saying: “Due to the predicted loss of jobs and harm to small businesses, the potential to block young people and individuals with less work experience from open positions, and an increase in consumer prices, the Governor has historically opposed a legislative mandate to increase the minimum wage.” This implies the governor might veto such a bill even if it passes constitutional muster.
As I’ve pointed out on a number of occasions the impact of such a bill is far ranging and carries unintended consequences.
“Unfortunately, the real minimum wage is always zero,” economist Thomas Sowell points out, “regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.” The Congressional Budget Office has 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. These are entry level jobs without which younger Americans cannot build the skills needed to earn higher pay.
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. Then there are the affects on everyone. A Cato Institute analysis reports 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.”
Minimage wages also tend to push younger workers with less worthy skills out of the job market, and Nevada already has the 10th highest youth unemployment rate in the nation at 13.5 percent.