Indy Explains: What AJR10 would do to change Nevada’s minimum wage

The Assembly voted 26-16 on party lines Monday — with all Republicans opposed — to pass AJR10, a proposed constitutional amendment that would raise and restructure the minimum wage. But what’s the significance of the move, considering Nevada is already on track for minimum wage increases in the future?

Here are some key facts.

What is the minimum wage currently?

Nevada has a two-tier system for minimum wage rates that requires businesses to pay $9 an hour if they do not offer health insurance and $8 if they do. 

The last time that Nevada’s minimum wage laws changed was in 2019, when lawmakers passed AB456, which gradually raises the minimum wage each year until 2024. The bill specifies that:

  • By July 1, 2020, the minimum wage would be $9 an hour if the employer did not offer health insurance, and $8 an hour if they did.
  • By July 1, 2021, the minimum wage would be $9.75 an hour if the employer did not offer health insurance, and $8.75 an hour if they did.
  • By July 1, 2022, the minimum wage would be $10.50 an hour if the employer did not offer health insurance, and $9.50 an hour if they did.
  • By July 1, 2023, the minimum wage would be $11.25 an hour if the employer did not offer health insurance, and $10.25 an hour if they did.
  • By July 1, 2024, the minimum wage would be $12 an hour if the employer did not offer health insurance, and $11 an hour if they did.

What does AJR10 (of the 2019 session) do?

The main feature of the resolution is doing away with the two-level system in the state Constitution and creating a single minimum wage, even for employers that offer health insurance. Some employers who otherwise would be paying a minimum rate of $11 per hour by 2024 under the current plan in state law would have to pay $12 if the resolution passes.

The resolution:

  • Proposes to amend the Nevada Constitution to set the minimum wage at $12 per hour beginning July 1, 2024, regardless of health benefits.
  • Removes the annual adjustment to the minimum wage and instead stipulates that if at any time the federal minimum wage is greater than $12 per hour, the state wage would increase to match the higher federal minimum wage.
  • Allows the Legislature to establish a minimum wage greater than the hourly rate set forward in the Constitution.

If the measure passes both houses of the Legislature this session, it will head to a statewide vote in 2022. The Senate has not yet voted on the resolution.

Through language adopted by a ballot measure approved in 2006, the Nevada Constitution includes minimum wages of $5.15 per hour and $6.15 an hour based on insurance offerings, but prescribes a formula for reviewing and potentially adjusting the rate each year based on any increases in the federal minimum wage or the cost of living.

Before the increases prescribed by the Legislature in 2019, Nevada’s minimum wages had been $7.25 an hour and $8.25 an hour since 2011.

What are the arguments in favor of the resolution?

Assembly Speaker Jason Frierson (D-Las Vegas), who presented the measure, argued that minimum wage jobs are often the basis for supporting a family and not simply entry-level positions for teenagers. He said the resolution allowed time for employers to adjust to a higher rate and was a compromise from the original proposal, which called for a minimum wage of $15.

On the bill’s health insurance provisions, Frierson said the quality of health insurance plans used to qualify for the lower rate varied widely, with some offering deductibles of $20 and others offering deductibles of $1,000.

Progressive groups say employers have abused the two-tiered minimum wage to take advantage of the lower of the two rates.

“We have heard story after story where businesses are able to pay $1 less than the current minimum wage in the state simply because they offer unaffordable garbage health care plans that employees rarely opt into because of cost,” Annette Magnus, executive director of Battle Born Progress, testified earlier this month. “No one should be paid a dollar less because their employer is taking advantage of a loophole to save a dollar an hour especially when people are struggling.”

What are the arguments against the resolution?

Opponents argued that raising the minimum wage would eliminate entry-level jobs and hurt teenage workers trying to get their foot in the door of the job market. Janine Hansen, president of Nevada Families for Freedom, referenced a Congressional Budget Office (CBO) analysis from when Congress was considering a $15 minimum wage — a change more dramatic than the one in AJR10.

The CBO’s research indicated that raising the minimum wage would increase earnings and family incomes for most low-wage workers and pull some families out of poverty. Still, the analysis noted that some low-wage workers would become jobless, and their family income would fall, possibly below the poverty threshold.

Specifically, the February 2021 report said that, based on median estimates, in an average week in 2025, a $15 federal minimum wage would increase wages for about 17 million workers who would otherwise earn less than that amount. Another 10 million workers who earn slightly more than $15 an hour would also likely be affected, as employers seek to keep their wages higher than the lowest earners, and about 1.4 million workers would be out of a job. 

The report also estimated that about 900,000 fewer Americans would be living in poverty.

The Las Vegas Chamber opposed AJR10 in a committee hearing last week. Spokeswoman Cara Clarke said that was “because of a variety of concerns including the increased costs to employers, and the potential negative impact on job creation, as well as job losses.”

The Nevada Republican Party criticized the Assembly passage of the resolution in a tweet on Monday.

“Nevada's economy has been put in jeopardy due to the @GovSisolak shutdown,” the post said. “Instead of focusing on opening up our state and restoring jobs, @nvdems in the assembly have passed AJR 10 ** which looks to increase the minimum wage and regress Nevada's economy even more!”

What’s happening with the minimum wage at the federal level?

The federal minimum wage stands at $7.25 an hour.

President Joe Biden called for a $15-an-hour federal minimum wage in January. Later that month, Sen. Bernie Sanders (I-VT) sponsored the “Raise the Wage Act,” which would gradually raise the federal minimum wage from $7.25 to $15 per hour by 2025.

Support for raising the minimum wage tends to fall along party lines, with Democrats generally in favor and Republicans mainly in opposition. 

Though the “Raise the Wage Act” has not advanced since Sanders introduced it, efforts to increase the minimum wage through an amendment to the COVID relief package in the Senate in March failed by a vote of 58 to 42.

The eight Senate Democrats who joined 50 Republicans in voting against the amendment cited a need for a separate discussion around raising the minimum wage, not a measure slapped onto a COVID relief package.

Sen. Catherine Cortez Masto (D-NV) and Sen. Jacky Rosen (D-NV) voted for the amendment to the COVID aid package and Rosen is also listed as a co-sponsor on the “Raise the Wage Act.”

“I’ve long supported action that raises the minimum wage to 15 dollars an hour,” Rosen told The Nevada Independent in March. “I am a proud co-sponsor of the Raise the Wage Act, legislation that builds to 15 dollars an hour over a 5 year time period, in order to both meet the concerns and needs of small businesses and employees.” 

Some Republican members of the Senate have indicated willingness to consider a federal minimum wage increase; Sen. Mitt Romney (R-UT) and Sen. Tom Cotton (R-AR) introduced a measure in mid-February to increase the minimum wage to $10 over the span of four years and to index it for inflation. Sen. Josh Hawley (R-MO) also proposed a plan in early March to raise the minimum wage to $15, but only for businesses with more than $1 billion in annual revenue.

The last time the federal minimum wage increased was in 2009 when it rose from $6.55 to $7.25 as part of a three-step plan approved by Congress in 2007 under the Bush administration. Before implementing the 2007 measure, the minimum wage remained at $5.15 an hour for a period of 10 years.