Democrats in the Nevada Legislature have introduced Senate Bill 106, which proposes to amend the state minimum wage law by raising the minimum wage by 75 cents an hour each year until it reaches $11 an hour for employers who provide health insurance and $12 an hour for those who do not — a 50 percent increase.
There is one minor problem with SB106. You see, that minimum wage law was last amended by an initiative petition approved by the voters in 2004 and again in 2006, which 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, and thus that is Nevada’s minimum for employers who offer insurance and it is $8.25 for those who do not.
According to a 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.”
In fact, the Nevada Supreme Court in 2014 opined in a case specifically about the minimum wage law: “If the Legislature could change the Constitution by ordinary enactment, ‘no longer would the Constitution be “superior paramount law, unchangeable by ordinary means.” It would be ‘on a level with ordinary legislative acts, and, like other acts … alterable when the legislature shall please to alter it.’”
Seems rather unequivocal. None of the major news media noticed this minor flaw in the bill.
Just such a constitutional amendment was proposed by initiative petition in late 2015, but that was dropped during the hectic election year, reportedly because of the difficulty of getting enough signatures to put it on the ballot. It would have raised the base minimum wage to $13 an hour.
Even if lawmakers manage to pass such a constitutionally suspect bill, it might not avoid the governor’s veto pen. Media accounts have 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.”
A minimum wage hike would clearly affect profitability of employers, tend to push all hourly wage rates up, result in higher unemployment, drive certain employers out of the state and increase the cost of goods and services in general — thus affecting nearly everyone in Nevada.
The impact of such a change in either the law or the Constitution would be far ranging and carry unintended consequences.
“Unfortunately, the real minimum wage is always zero,” economist Thomas Sowell points out in his book “Basic Economics,” “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 a mere $10.10 an hour — as proposed by President Obama and others in recent years — 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.
A Heritage Foundation 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.
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.” Imagine what a 50 percent increase would do.
Minimum wage jobs tend to be entry level jobs without which younger Americans cannot build the skills needed to earn higher pay. Nevada already has the 10th highest youth unemployment rate in the nation at 13.5 percent.
Attempting legislatively to raise the minimum wage is a bad idea for many reasons.