(Michael Chamberlain/Nevada Business Coalition) – Throughout the budget debate, many on the pro-tax increase side have claimed that the current dismal economy in Nevada is proof that a low-tax climate is not enough to maintain a healthy, vibrant, thriving economy. Some of you may be surprised to hear that we at NBC agree, a low-tax environment is not, in and of itself, sufficient to create and maintain a strong economy.
It takes more than that to encourage business development and growth. Government can burden businesses in many more ways than merely through the tax code.
Even accepting the premise that Nevada is a low-tax state, an assumption that not everyone agrees with, it does not automatically follow that Nevada is a business-friendly state. Aside from taxes there are many other roadblocks and barriers that government can impose that can smother business growth, retard employment and stifle an economy. Government regulations can also exert a drag on a state’s economy. Nevada is a perfect example of this.
The U. S. Chamber of Commerce recently released a study that compared the relative impact of employment regulations on a state’s economy. Not surprisingly to those who do business in the state, the Silver State ranked in Tier III: Poor.
The report cites the following reasons for Nevada’s poor rating,
- Overtime requirements beyond federal law
- State minimum wage that exceeds federal law
- Exceptions to the employment-at-will doctrine
- Employee handbooks convertible to contract
- State anti-discrimination laws go above and beyond federal laws
- Restrictions on applicant screening and obtaining references
Nevada passed a constitutional amendment a few years ago that set the minimum wage in most cases at least a dollar above the federal minimum. Furthermore, it is indexed for inflation so it can rise each year.
The minimum wage for employees who are not eligible for health insurance is currently $8.25/hour. Let’s face it, how many employers offer health insurance benefits on day one, so this is the effective minimum wage. Since most people who have never worked before are not worth this amount of money to an employer it is a severe roadblock to anyone wanting to enter the workforce for the first time. Thus, the higher minimum wage most hurts the people it is supposed to help.
Many minimum wage workers in the state are employees who receive tips so their wage income is normally a very small portion of their total. Yet their employers are still forced to pay them the ever-increasing minimum wage.
In many cases, employees are able to receive overtime on a daily, rather than a weekly, basis. Federal law requires most employees to be paid time-and-a-half for any time worked over 40 hours in a week. However, many workers in Nevada must be paid overtime for any time worked over 8 hours in a day. This requirement extends to all workers on prevailing wage projects, where hourly rates commonly exceed $40 per hour for straight time.
A big reason that Nevada is suffering more than most states from the recession is that its regulatory environment offsets the advantages it offers in the area of business taxes. Nevada’s Legislature needs to address and correct these regulations, which stifle business development and exert a drag on the Silver State’s economy.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)