Some are skeptical about benefits of hourly hike

Pauline Bell

Monday, July 8, 1996 | 11:59 a.m.

LARRY Gillespie may be forced to raise prices or cut back the number of hours he gives his five high-school-age employees. He may have to work more hours. Or he may have to do all three.

That's the dilemma facing the Southern Nevada fast-food restaurant owner if federal lawmakers vote to increase the minimum wage.

"It would affect us tremendously," said Gillespie, owner of the Dairy Queen at 4140 E. Sunset Road in Green Valley. "Most of our workers are@minimum wage or just a little bit above."

Workers making more than minimum wage but less than $5.15 also would have to have raises if a new rate goes into effect, he said.

"To make it up, I would have to raise a few prices -- I hope they (customers) understand. In addition, I'll probably not be able to give as many hours to my employees and I will be working more hours (than the 60 per week he now works)," Gillespie said.

The Senate was expected to take up the minimum wage issue when it reconvened today following a week-long Independence Day break. At issue: Whether to raise the federal minimum wage from the present $4.25 an hour to $5.15 an hour over two years. The proposal is said to contain tax-relief amendments that would help mitigate the impact on small businesses.

On the other side of the valley in North Las Vegas, Paula Brown, president of JB Chemical Co., says her business won't be impacted if the wage increase is approved.

"We've never started anybody out at minimum wage. We've always started folks out at a dollar over and above that so it's not going to impact us at all," said the owner of the 25-employee firm that manufactures environmentally based chemicals for industrial use.

Where it will affect Brown, as well as her employees, is in their role as consumers. The businesswoman fears it will cost them more to buy fast food and purchase services such as car washes.

Brown said she opposes any government involvement in setting a minimum wage.

"I feel people (employers) give a fair wage for the work and they (employees) have a choice -- if they don't like the job they can leave," she said.

Brenda Ricoy, who owns a small hamburger restaurant, Tommy's, at 2635 E. Tropicana Ave., favors the increase. She said she pays her employees more than minimum wage anyway.

"The more you pay them the more they are willing to work. They are happier and you have a very good worker. If they (workers) are friendly, your customers are going to come back," she said.

Culinary Union Local 226, which represents 40,000 workers at 38 resorts in Southern Nevada, also supports an increase in the minimum wage, even though union members typically make more than $4.25 an hour.

Glen Arnodo, political action coordinator for the union, said one of the lowest-paid union job categories is food servicer -- typically a waiter in a restaurant -- which starts at $7.76 an hour. Guest room attendants start at $9.50 an hour, he said.

Even though the union supports the measure, Arnodo said he doesn't think it's going to do what it's supposed to do -- give people a better standard of living. The only way to do that is through unionization, he said.

At least 12 percent of Nevada's workers would benefit from an increase in the minimum wage.

The U.S. Department of Labor's Bureau of Labor Statistic estimates there were 12,000 hourly workers working at $4.25 an hour in 1995, 2.5 percent of the 472,000 hourly workers in the state.

Further estimates indicate there were an additional 45,000 workers in the state who would benefit from a minimum wage increase -- people who in 1995 were working for between $4.26 and $5.14 an hour. They represent 9.5 percent of the total hourly workers in the state.

Bureau economist Steve Haugen said the numbers may be understated "to some degree" because they exclude salaried workers.

An increase in the minimum probably wouldn't have much of an impact on Nevada's lifeblood gaming industry.

"I see no direct effects because I think people in Las Vegas are above the minimum wage -- in most casino jobs," said Bill Thompson, an industry analyst and professor of public administration at UNLV.

Rob Stillwell, vice president and spokesman for Boyd Gaming, and Jack Leone, vice president of communications for the MGM Grand hotel-casino, agree.

"We have not taken a position one way or another. It won't have any material effect on us, we don't have that many in the minimum wage area. The ones that are are in a toke situation ... so there won't be a material dollar impact," Leone said.

Likewise, there are very few job classifications at the six Boyd Gaming casinos in Southern Nevada that start at minimum wage including dealers, bingo agents, bowling alley scorer assistant and parking attendants. Of those, dealers and parking attendants get tips to supplement their income.

Workers receive a raise after six months and, teamed with a high retention rate, that means there are very few employees still at minimum wage, Stillwell said.

While Thompson doesn't see any direct effects on the gaming industry, he does see several possible indirect effects.

He thinks a higher minimum wage could lead to a push by the Internal Revenue Service and casino management to come up with a centralized system for keeping track of workers' tips.

For tip earners, casinos are able to count a portion of their tokes as wages to meet the minimum wage. A centralized system of tracking tips would allow casinos to document that they are meeting minimum wage for everybody, he said.

Some teams or shifts of dealers do centralize their tips for their own accounting purposes. But, change persons, waiters and waitresses and bus persons don't, and casinos could encounter some difficulties in determining how to do this, Thompson said.

And, some workers may not be too happy about it because it would force them to report their true wages to the IRS. The IRS has contended that some employees under-report their tips to avoid paying higher taxes.

As of April 1, 1991, the tip credit was 50 percent of the minimum wage, so a tipped employee must be paid at least $2.125 an hour. A "tipped" employee is one who constantly and regularly receives at least $30 per month in tips.

Thompson also thinks increasing the minimum wage could start a ripple effect, perhaps prompting the Culinary Union to ask for an increase similar to the 21 percent provided in a minimum wage hike when it goes to the bargaining table with the resorts next year. The union contract with Southern Nevada hotels expires June 1.

"If that happens, it could be crunch time and it could lead to layoffs. I would think the union would just bargain normally and not use this as a bargaining tactic. It would be adverse to everybody's interest," Thompson said.

Arnado said the union has not yet formulated its bargaining position, but it ultimately comes down to strength, not good arguments.

The nongaming service sector would feel the pinch of an increase more than the gaming industry, said UNLV economist Keith Schwer, director of the Center for Business and Economic Research.

Target, the national retailer with six stores in Southern Nevada, opposes any increase in the minimum wage, said spokeswoman Susan Eich from her office in Minneapolis. So does the Retail Association of Nevada.

"It typically creates a false economy and it doesn't assist the people they are trying to assist," said Mary Lau, executive director of the association.

Most Nevadans earn in excess of the minimum wage. Increases create a false scale since wages for other employees have to be adjusted up because of the increase, she said.

"You end up with the customer paying more; part-time teenagers won't get hired. Who is really affected is the small businessman," said Lau, whose association represents 200 retailers in the state.

Short term, any increase will have a negligible effect on Southern Nevada's economy because there is a small percentage of minimum-wage workers, Schwer said.

But taking a longer-term view, it could pressure employers to increase wages for higher-paid workers, he added.

"Generally speaking, I think it's not going to have significant impact," Schwer said.

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