Effects of state minimum wage vote likely to be modest

Nevada voters gave the nod to a bill that boosts the minimum wage currently $5.15 an hour to $1 more than the federal rate. However, if employers offer a certain level of health insurance coverage, they needn't pay the $1 an hour more.

The change has not touched off a stampede of insurance firms waving health policies at employers. In fact, the business community greeted the bill with a great round of yawns.

At the Reno-Sparks Chamber of Commerce, Chief Executive Officer Harry York says, "Most of our members never saw it as a big deal because they already pay more than the minimum wage. They already pay $8 or $9 an hour."

Nor does it appear to affect the insurance industry.

Valerie Clark, executive vice president at Clark & Associates of Nevada Inc. Insurance Services in Reno, says, "I don't see carriers jumping in now, any more than they did before."

Long term, the bill may not benefit those on the bottom of the wage scale.

"Lower-end wage people will be replaced by capital machinery," says Norm Robins, president of the Northern Nevada Association of Health Underwriters and president of Alta Insurance Agency Inc. "Most people at low wages don't have benefits. We have not seen any increase in interest in providing coverage to those not now covered, but that could change as employers pencil in the numbers. A dollar an hour translates into $173 a month. That could provide a fair amount of health insurance for a young, single person, but it would be only somewhat helpful to an older worker with a family."

Those low-wage service workers often work in the hospitality industry.

At the Nevada Restaurant Association, President Paul Hartgen says, "We were never in opposition to the dollar increase." However, because the state minimum wage must now always be at least $1 above the federal rate, if that goes to $7.25 it would mean $8.25 at state level. And that could mean a starting wage approaching $9 to $10 an hour.

Nevada is one of six states that don't have a tip credit. So the minimum wage applies even for servers who also make many times that in tips.

And don't forget, adds Hartgen, that tipped employees must report those wages to the IRS, and the employer must then pay FICA and payroll taxes on the full amount.

Overtime is where things get complicated for employers, says Jim Nelson, executive director of Nevada Association of Employers.

Workers who are paid less than 1.5 times the minimum wage qualify for daily overtime pay, he explains. Democratic Speaker of the House Nancy Pelosi says her first priority is raising the national minimum wage, so $7.25 is possible. In Nevada that would be $8.25. Multiply that by 1.5, and workers making as much as $12.37 an hour would qualify for overtime if they work more than eight hours in a day.

"That's huge," Nelson says.