Question 1 is straightforward — it enshrines rights for populations who were previously explicitly denied them in the Nevada Constitution. Question 3, meanwhile, makes obvious changes to our voting system by replacing our current first-past-the-post election system and its closed primaries with ranked-choice voting and open primaries. Say what you will about either measure, but you know what they’re trying to accomplish.
The effects of voting for or against Question 2, on the other hand, seem… a bit more ambiguous.
The condensation of the ballot question is straightforward, at least at first glance — if passed, the minimum wage in Nevada will be increased to $12 per hour. Additionally, the measure, if passed, removes the existing provisions setting different rates for the minimum wage based on whether the employer offers (or, cynically, claims to offer) health benefits to minimum wage employees. About those health benefits, by the way — anecdotally speaking, some employers apparently offer benefits to employees if they work enough hours, then refuse to schedule them for those hours. No, the plural of anecdote is not data, but enforcement of, well, anything has never been our state’s strong suit.
The condensation of the question, however, also claims the measure, if passed, will remove the existing provisions for adjusting the minimum wage based on the rate of inflation. That seemed like less of a sacrifice when annual inflation wasn’t the highest it’s been since 1982.
A natural question to ask, then, is whether the passage of Question 2 will make it harder for the state’s minimum wage to increase with inflation. The answer, it turns out, is no.
As things stand, Article 15, Section 16 of the Nevada Constitution — the passage Question 2 seeks to replace — requires the minimum wage in the state to be, at minimum, equal to either $5.15 per hour if the employer provides health benefits or $6.15 per hour if the employer does not, plus annual adjustments to the minimum wage tied to the Consumer Price Index (All Urban Consumers, U.S. City Average) as published by the Bureau of Labor Statistics — but that adjustment must never exceed 3 percent per year.
Since that section’s adoption in 2006, the minimum wage increased automatically by a jaw-dropping $2.10 per hour (I’m being facetious) after 13 years — to $7.25 per hour if the employer provided health benefits or $8.25 per hour if the employer did not. Then, in 2019, the Legislature passed Assembly Bill 456, which increased the minimum wage to either $8 per hour or $9 per hour, depending on whether the employer offered health benefits, and added automatic 75 cent increases to the minimum wage each year until 2024. If Question 2 isn’t ratified, the minimum wage in 2024 will either be $11 per hour or $12 per hour, depending on whether the employer offers health benefits, assuming the Legislature makes no further adjustments to the minimum wage next year.
Consequently, the minimum wage isn’t currently indexed to inflation — and hasn’t been since the Legislature statutorily increased the minimum wage beyond the constitutionally-defined minimum wage in 2019. In fact, assuming 3 percent growth each year (an optimistic assumption, by the way), the constitutionally-defined minimum wage wouldn’t reach or exceed $12 per hour until 2032 at the earliest.
The difference between the statutory minimum wage and the minimum wage currently defined in the state Constitution, meanwhile, raises another concern: The Legislature arguably doesn’t have the power to adjust the minimum wage at all because of how both the minimum wage, and its inflation-indexed increases, are currently constitutionally defined. The words “not less than the hourly rates set forth in this section” do a lot of legal heavy lifting right now, in that the Legislature can arguably claim that the current statutory minimum wage, being higher than the constitutional minimum wage, does not violate the state Constitution.
However, the state Constitution not only defines a minimum wage, it also defines both the method of computing annual increases to the minimum wage and what the maximum allowable annual increase to the minimum wage should be. As the current constitutional language defining the minimum wage and how it should be increased each year is specific in nature, not general, and as the current language doesn’t delegate the ability to increase the minimum wage to the Legislature, the Legislature arguably violated the state Constitution when it statutorily increased the minimum wage in 2019.
Now, before we go any further, I think it’s important to put my opinion on the minimum wage on the table. On the one hand, yes, as a former libertarian (well, a former member of the Libertarian Party, anyway — to borrow a phrase from Office Space, I’m not the one who sucks), I am conditioned to be skeptical of minimum wage laws more generally. As any student learns in Introduction to Microeconomics, when you set the price of something artificially through government fiat — say, by setting fuel prices artificially low or setting labor prices artificially high — you’re going to create shortages and dislocations in the market. Consequently, if you set the minimum price of labor too high, a lot of people who would be happy to work for a lower wage won’t be able to work because their labor won’t be worth whatever the government-mandated minimum wage is.
On the other hand, I also work in information technology — and, speaking from a position of what many libertarians might call enlightened self-interest, when business owners look for substitutes for low-wage workers, they frequently look to my chosen industry. The higher the government sets the minimum wage, the greater the chance businesses will look towards computers and automation to make their workers more productive — think self-service kiosks at grocery stores and fast food restaurants, or those tablets you can order your meal and distract your children with that chain restaurants use instead of waitstaff.
Having acknowledged my feelings on the subject, it’s time to discuss facts. Fact is, over the past decade, economists have surprisingly concluded that increasing the minimum wage, at least at the scale Nevada’s voters are considering this year, doesn’t seem to do any harm — and no, it doesn’t seem to lead to marked increases in employment for aspiring information technology managers who moonlight as opinion columnists, either.
The world of an Intro to Microeconomics textbook assumes that companies and laborers exist in a state of perfect competition — workers, then, can switch to more suitable (better paying, more flexible) employers at the drop of a hat and employers, in turn, can replace workers with more suitable workers at will as well. Here in the real world, however, employment tends to be a bit stickier, meaning it’s harder for everyone, employers and laborers included, to make sudden changes. Consequently, when we compare employment rates between neighboring states with different minimum wage rates (like, say, New Jersey and Pennsylvania) there’s little difference — the unemployment rate for entry-level workers remains roughly the same. As Bloomberg columnist Noah Smith pointed out over a year ago, that result has been replicated consistently enough for a majority of economists — a large majority, in fact — to now conclude that minimum wage increases don’t substantially lower employment among low-wage workers.
Additionally, minimum wage workers receive a lot of benefits, like food stamps and Medicaid, which subsidize the actual cost of labor for employers — without those benefits, those who work at Amazon, Wal-Mart, and the Clark County School District (Nevada’s top three employers with dependents on Medicaid) would undoubtedly need higher pay to feed themselves and receive medical care. These subsidies irritate my latent libertarian sensibilities — sure, yes, a fully functional market economy would let employers and laborers settle on a mutually acceptable wage rate, but we instead exist in a system which allows employers to offload the costs of paying for basic needs to the government while employers pay laborers pocket change. If employees required their employers to pay the full cost of their labor, what would be the minimum clearing price for that labor? Would it still be $9.50 or $10.50 or $12 per hour? I rather doubt it.
Now, granted, all of this theory admittedly seemed more pressing before the labor force shrunk substantially after the pandemic. A lot of people who used to work in child care either found better-paying jobs elsewhere or chose to stay at home — consequently, according to the Center for American Progress, child care services employment is nearly 10 percent lower than it was prior to the pandemic, which is causing a lot of previously working parents to stay home with their children instead. Meanwhile, a lot of Baby Boomers decided to use the pandemic as an opportunity to retire. Put everything together — along with the death of more than 1 million Americans and the recurring hospitalizations of tens of thousands of Americans each day due to COVID-19 — and the result is labor is considerably more scarce, and consequently more expensive, than it was after the Great Recession when the authors of Question 2 first put pen to paper.
That’s why Gov. Steve Sisolak said the “minimum wage kind of took care of itself.” Most people, even in entry-level jobs, aren’t making the state’s minimum wage anymore — in fact, the average weekly wage in most counties in Nevada is more than double the $480 a worker could expect to earn, before taxes, if they worked 40 hours a week at $12 per hour.
Though Nevada doesn’t have many minimum wage workers these days, Question 2 still has quite a bit going for it.
Question 2 constitutionally sets the minimum wage to where it was statutorily going to end up in 2024 (the soonest Question 2 can be ratified) anyway. It eliminates the two-tier minimum wage between those who work for employers who offer (or “offer”) health benefits and those who don’t. It also explicitly authorizes the Legislature to raise the minimum wage — or, alternatively, lower it, as circumstances dictate, provided the Legislature doesn’t lower the minimum wage below $12 per hour. Finally, it leaves the decision to tie the minimum wage to the rate of inflation, and how strong that tie should be, in the hands of the Legislature where such decisions properly belong instead of a federally-updated spreadsheet.
Question 2 is, in short, clearer and more flexible than the language it seeks to replace — which is why, much to my pleasant surprise, I’m going to vote for it this year.
David Colborne ran for office twice and served on the executive committees for his state and county Libertarian Party chapters. He is now an IT manager, a registered nonpartisan voter, the father of two sons, and a weekly opinion columnist for The Nevada Independent. You can follow him on Twitter @DavidColborne or email him at [email protected].