As state legislators consider a bill to raise the minimum wage, economists, activists and low-wage workers have found themselves wondering if the legislation goes far enough, and if Nevada Democrats are blowing their opportunity to help working families.
A key component of their vaunted “Nevada Blueprint,” Assembly and Senate Democrats early on vowed to tackle the issue of low wages. The state’s minimum wage has been the same for an entire decade — $8.25 per hour if the employer doesn’t provides qualified health insurance, $7.25 per hour if they do.
According to Jeff Waddoups, chair of the economics department at UNLV, if you adjust the $8.25 hourly rate set in 2009 by the Consumer Price Index you will find it’s equivalent to $10 in 2019.
Similarly, if you look into the future and assume 2% annual inflation, you will find $8.25 in 2009 is expected to be equivalent to approximately $11 in 2024.
The minimum wage bill, AB 456, would set the 2024 minimum wage for employers not offering qualified health insurance at $12 per hour. (Those offering qualified health insurance could pay a dollar less, $11 per hour.) In the years leading up to 2024, the state minimum wage would grow by 75 cents per year.
The eventual $12 figure represents “about a 9% raise over what would’ve prevailed had the $8.25 minimum wage increased with inflation over the entire time period,” says Waddoups, adding that the proposal “doesn’t seem very dramatic when looked at that way.”
Economists aren’t the only ones to be underwhelmed by the proposal in front of legislators. Many of the state’s thousands of low-wage workers have come to the same conclusion, though they didn’t get there from considering the Consumer Price Index. They got there because they’ve seen their bills and they have been living paycheck-to-paycheck for years on end.
‘$12 is not enough’
Derek Powell started out working at Einstein’s Bagels while he was a student double-majoring in political science and English at the University of Nevada Reno. He was the first member in his family to attend college immediately after high school, and he had high hopes of becoming “a success story” who could shower his single mother with all of things he thought she deserved.
But his job got in the way.
Management wouldn’t be flexible with his school schedule. They told him the job needed to be his priority. Powell couldn’t afford not to work, so he made the only choice that made financial sense to him at the time: He took “a leave of absence” from school.
He hasn’t made it back to the classroom.
“During my college years, my school was a priority. Then, it was my job. Then, just living became my priority.”
Eventually, Powell transferred to an Einstein’s Bagels location in Las Vegas to be closer to his support network. He earned a promotion from shift manager to assistant manager, which came with additional responsibilities and a pay raise. He got to help open a brand new location, which he recalls as a great experience, and he eventually settled under the direction of a supportive general manager who he says helped him further develop his leadership and management skills.
By then he’d moved up to making $12 an hour — $24,960 a year before taxes.
He still couldn’t afford his own car.
“Twelve dollars an hour is not enough,” he says flatly.
Trickle up economics
Minimum-wage workers make up a small fraction of the total workforce. In 2017, there were an estimated 1.2 million workers total in Nevada. Data from the U.S. Bureau of Labor Statistics Occupational Employment Statistics program suggests approximately 27,778 of them earned $8.25 per hour or less.
However, the idea is that raising the minimum wage has a “spillover” effect on wages just above the minimum wage. Using that same data set:
- approximately 64,453 workers earned between $8.25 and $9.25 per hour.
- approximately 58,837 workers earned between $9.25 and $10.25 per hour.
- approximately 63,454 workers earned between $10.25 and $11.25 per hour.
- approximately 48,862 workers earned between $11.25 and $12 per hour.
Combined, this would mean an estimated 263,384 workers made $12 per hour or less in 2017. That’s 1 in 5 workers in Nevada. An estimated 447,154 workers made $15 per hour or less in 2017. That’s 1 in 3 workers in Nevada.
These estimates are imperfect because data collection on employment wages is imperfect. They are based on numbers from the Bureau of Labor Statistics that were compiled and compared by the Nevada Department of Employment, Training and Rehabilitation for the Nevada Legislature.
Other analyses put the numbers and percentages of low-wage employees much higher. An Economic Policy Institute report based on 2014 data suggested 30 percent of all workers in Nevada earn less than $12 per hour and 45 percent earn less than $15.
Whichever data sets you choose to analyze, the takeaway is nevertheless the same: A significant portion of the workforce in Nevada is living with low wages.
Nevada legislators have acknowledged as much but have countered that they need to balance those needs with the needs of the businesses that argue their bottom line will suffer if they are forced to pay workers more. It could lead to fewer employees at best or shuttered businesses at worst.
“That’s the classic fear,” says Waddoups. “If you raise the wage, fewer workers will be demanded and there might be more unemployment and fewer jobs available. But what all the research says is that a modest increase in the minimum wage has no impact on levels of employment.”
Nevada’s proposed $12 by 2024 plan would be classified at a modest increase, he adds, referring back to the issue of inflation.
“If we could handle $8.25 in 2009, we can handle $12 in 2024. It’s not that much of a difference.”
‘A lifestyle change’
Powell decided to seek out a promotion to general manager. He wanted the experience and a salary bump. He’d been working for Einstein’s for six years and felt ready for the challenge. When a general manager position opened up, he was told: “This is a lifestyle change.” He would need to be available by phone 24-hours a day for any emergencies. If a lower manager doesn’t show up for opening shift at 4 a.m., or if a freezer breaks overnight, or if the safe is short after closing, that would fall on his shoulders.
He welcomed the challenge — and the “lifestyle change.”
The new position came with a $2 raise, which would bring him up to $14.02 an hour. That’s $29,162 annually. He’d thought the salary bump would be larger, especially considering the responsibility shift. He tried to negotiate a higher rate but was turned down, told the pay scale was an inflexible structure set by people higher up the ladder.
Powell took the job anyway. The raise didn’t take effect until after a three-month mandatory “probationary period,” during which he worked as a general manager job at his assistant manager wage.
His new wage wasn’t as high as he’d expected, and it didn’t come as quickly as he wanted or needed, but extra money was still extra money. It helped. He was finally able to get his own car, but says even that was only possible because he pays far less in rent than the average person living in Southern Nevada.
“I still have debt I haven’t even begun to touch,” he adds.
Despite his work frustrations, he says he’s always been “extremely loyal” to Einstein’s Bagels. He assumed, as people often do, that simply working hard was going to be enough and that his hard work and dedication would provide.
“Maybe that was my downfall.”
Even more than bemoaning his own financial position, Powell has empathy for the coworkers and employees below him on the ladder. He says he has employees who are older than he is and have children and dependents who rely on them. Those people make less money than him and work fewer hours.
“It’s hard to keep them motivated,” he says. “They’re working just as hard as me but making half as much. How much can I ask of this person? How much can I really push this person?”
Powell wishes he could pay everyone there a better wage but it isn’t up to him.
“Unfortunately with business all they see is paper and numbers,” he says.
Many workers rights advocates and unions prior to the legislative session were firmly behind the “Fight for $15” movement that has gained national momentum, and some of them expressed disappointment when the minimum wage bill introduced by Democrats in a Democratically controlled Legislature didn’t aim for that benchmark.
Yet, in an effort not to bite the hand that feeds them, they’ve largely praised legislators for making some movement on the issue. They have come to hope the proposed bump will be one step in a larger, multi-session plan to better the lives of Nevadans.
That could prove problematic if the political climate of the state changes.
Waddoups says when he read the minimum wage bill he’d hoped to see an escalation clause, something that ensures the minimum wage continues to rise after the 2024 benchmark is reached. Several states have passed legislation that mandates their minimum wage rise at the same rate as inflation.
“If pro-employer forces are in power through the mid-2020s, we could see stagnation in the minimum wage again,” says Waddoups.
A separate legislative proposal, AJR 10, was introduced earlier this week. It seeks to change the Nevada Constitution to reflect $12 by 2024 and gets rid of the two-tiered minimum wage structure that allows businesses that offer health insurance to pay less than businesses that do not. That resolution would put the decision before voters.
Like AB 456 it does not include any provisions to protect against future stagnation.
“At least there’s some movement,” says Waddoups. “At least we’re getting to the point where the people who make decisions are not allowing inflation to eat away at the minimum wage for the next several years. But these are not huge gains for less skilled workers.”