Northern Nevada businesses brace for July 1 minimum wage increase

RENO, Nev. — Kelly Hodgins was anxious about reopening Kelly's Sun Valley Bar in north Reno.

After shuttering for two and a half months, Hodgins knew that, with COVID-related restrictions in place and the pandemic drying up the Northern Nevada economy, bringing in a steady cash flow would not be easy.

And that was before she realized Nevada's minimum wage would increase on July 1 — a fact that dawned on her in mid-June.

After all, Hodgins said she's been consumed with trying to rebound her business while operating at only 50% capacity. On top of that, Kelly's Sun Valley Bar had to ditch its Friday night karaoke, Sunday night live music, and pool tournaments throughout the week.

“Fifty percent of my business is gone, but I'm supposed to give everyone a raise? It's very frustrating,” Hodgins said. “It's not that I'm against raising the minimum wage, it's just kind of like, really? … Now?”

Come July 1, the minimum wage in Nevada will increase 75 cents, bumping to $8 per hour if the employee is offered health benefits, and $9 per hour for employees without benefits, per the 2019 Nevada Legislature.

The new law approved last spring, Assembly Bill 456, increases the minimum wage 75 cents each year through 2024, when it will hit $12 an hour.

Ann Silver, president and CEO of the Reno-Sparks Chamber of Commerce, said the minimum wage increase — which she called “way overdue” — has been overshadowed by businesses trying to navigate and survive the COVID-19 landscape.

“I think minimum wage is not something anybody is focused on, whereas months ago that was a singular focus,” Silver told the NNBW. “I think the implementation in July of a new wage is one layer of complexity that employers are now dealing with.”

The service and retail industries are impacted perhaps more than most, said Johnny Skowronek, president of Northern Nevada Human Resource Association and VP of operations for staffing company Square One Solutions.

“Where I think it's going to have a major impact is the casino industry,” Skowronek said. “And all positions that are tip supplemented, like service industries and restaurants, especially now with coronavirus, I think they're going to have a really hard time with the increase, especially once this (eventually) hits $12 an hour.”

Brian Cassidy, owner of Junk King in Reno, said the minimum wage increase is “a good thing” for the younger generation entering the workforce. Cassidy said his junk removal and recycling business has always paid above minimum wage to attract and retain employees.

Cassidy added that the non-essential businesses that pay minimum wage and had to shut down for months will have a tough time absorbing the cost.

“My initial thought was this is the worst timing,” he said. “But, who knew when we put this in place that this (pandemic) was going to happen?”

Which is why, Hodgins, for one, feels the minimum wage law should be postponed at least two months since many small businesses — “I'm a micro business,” she says — had to close for that duration. In fact, she even wrote a letter to Gov. Steve Sisolak saying as much.

“We're trying to get everybody back to work. Why not give us a two-month extension before this starts?” said Hodgins, who estimates her bar's revenue is down about 40% since reopening May 29. With a five-person staff, she said the minimum wage increase would add roughly $3,000 to her payroll this year.

“I understand the workers needing more money — I get that part,” Hodgins continued. “Before COVID, I would've been like ‘woo-hoo!' Right now, we're trying to keep everything going and this is another hit. And because it's legislated, you don't feel like you have any control over it.”

To that end, Colin Smith, owner and chef of Roundabout Grill in Reno, says he's in favor of a minimum wage increase, but feels it should be dictated by the market, not by legislators.

“How can a person sitting in a chair legislate to me what I'm supposed to be doing in my establishment?” Smith said. “The fact that we're legislating minimum wage really does essentially take away decision-making power for the independent business, and I don't like that.”

Smith said his servers start out at $9.50 per hour, plus tips, and non-tipped staff earn $12 an hour or more out of the gate — meaning, the minimum wage increase will not have a big impact on his business in the short-term.

“I don't have any minimum wage employees because my employees all excel at what they do,” he said. “And I don't want to pay them minimum wage because they're worth more than that. And because they're worth more than that, their ambition and skill-set drives the wage.”

The Whitney Peak Hotel also pays above minimum wage in order to attract a “better quality employee” in a competitive market, said general manager Eric Olson.

However, Olson said the July 1 increase may force the downtown Reno hotel to raise its wages to stay above the soon-to-be new rate.

“Just to be competitive, we're going to have to raise our wages a little higher, as well,” he said. “But, I think this is a good push forward to close the gap a little bit and make sure people are being valued correctly.”