Minimum wage hike gets a chilly reception from some COVID-crippled Reno small businesses

Nevada’s minimum wage is on the rise for the first time in nine years, and the timing could hardly be worse for mom-and-pop shops ravaged by the coronavirus.

The 75-cent pay boost, which took effect on Wednesday, raises the minimum wage to $8 per hour for employees with qualified health benefits and $9 per hour for those without benefits. It’s the first of several gradual increases spelled out under Assembly Bill 456, a law passed last year that will set the Silver State’s wage floor at $12 per hour by 2024. 

The move was once widely praised as a long-overdue step that would help lift thousands of Nevadans out of poverty. Even progressives — who lobbied for a much more robust pay hike — begrudgingly accepted the measure as a “baby step” lawmakers could build on in future sessions.

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Today, COVID-clobbered small businesses are simply hoping they can comply with the law without adding to one of the nation’s highest unemployment rates. 

Tim Carter, owner of Carter Bros Ace Hardware in Midtown, has faced a triple threat to his sales between the pandemic, rising payroll costs and major road construction on Virginia Street. 

Carter said most of his employees already make more than the minimum wage, though he worries that future wage hikes could lead to layoffs and higher costs for consumers at other, similarly sized operations.

He’s also anxious about the possibility that Nevada lawmakers will raise taxes during an upcoming special session meant to shore up massive, COVID-caused holes in the state budget.

Jeffry Paine, owner of Gold 'N Silver Inn, says he is not currently seeking to sell his restaurant, a Reno institution, despite rumors to the contrary.

“At the risk of getting political, the government can’t run the Mustang Ranch without going broke,” Carter said. “So to think they can put together a minimum wage program that actually functions is absolutely silly.

“I don’t necessarily have a problem with having some minimum standards … But I have absolutely zero confidence that (Nevada lawmakers) will do that in a responsible way that doesn’t put a whole bunch more small businesses out of business.”

Gold ‘N Silver Inn owner Jeff Paine suspects plenty of his fellow restaurant owners will not be able to survive ill-timed pay increases on top of the economic damage wrought by COVID. 

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Paine said food sales at his well-established eatery on Fourth Street plummeted nearly 70 percent during the early stages of the pandemic, leaving him with a lot less money to pay state and local taxes officials continued to collect during the pandemic. 

Thankfully, he was among the fortunate few who got a small slice of $350 billion in federal COVID stimulus funds for small business owners, which helped keep his restaurant afloat.

“It’s hurting our bottom line immensely,” Paine said of Wednesday’s minimum wage increase. “I think you’re going to be hard-pressed to find a restaurant person who isn’t unhappy about this, but here’s the thing: It’s the law.”

Two Chicks Restaurant employee Carlos Cuevas cleans a table and chairs after customers have eaten at the Midtown area restaurant in Reno, Nevada on May 20, 2020. The restaurant has opened for dining-in with new guidelines, such as distancing, closed bar area, condiments off the tables and enhanced cleaning.

Paine said many state lawmakers seem to be out of touch with the challenges faced by small business owners, adding he would’ve been much happier about the minimum wage hike if it had been put up for a statewide vote and coupled with a grace period on sales tax collections during COVID.

“Government is now saying, ‘This is what we’re going to do and you will do it,’” he added. “There’s no voice from the businesses and from the people anymore.”

Wednesday’s wage boost will also apply to workers’ daily overtime rates. Employees with qualified health benefits who earn $12 per hour or more will get paid time-and-a-half for hours that exceed the regular 40-hour workweek.

Those without health benefits who earn $13.50 per hour or more will get paid time-and-a-half for hours that exceed the regular 40-hour workweek, and employees who earn less than $13.50 will get paid time-and-a-half for shifts that exceed eight hours in a single day.

More information on the changes is available through the Nevada Labor Commissioner’s office or at labor.nv.gov.

James DeHaven is the politics reporter for the Reno Gazette Journal. He covers campaigns, the Nevada Legislature and everything in between. Support his work by subscribing to RGJ.com right here