Is it time for Nebraska to have a $15 per hour minimum wage? Voters will decide Tuesday

Nov. 3, 2022, 5:45 a.m. ·

The showroom at Optika Curated Eyewear in Hastings
The showroom of Opitka Curated Eyewear, a European boutique, in Hastings. Optika's owner argues raising the minimum wage would make Nebraska a state where people seek employment thanks to good pay. (Photo by Will Bauer, Nebraska Public Media News)

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On Election Day, Nebraska voters will decide whether the state’s $9 per hour minimum wage should gradually be bumped to $15 or remain the same.

The minimum wage hike – Initiative 433 – is one of two on the ballot this year. Voters will also determine the fate of voter identification for future elections.

If Initiative 433 passes, Nebraskans would see starting wages increase from $9 per hour to:

  • $10.50 per hour by 2023
  • $12 per hour by 2024
  • $13.50 per hour by 2025
  • $15 per hour by 2026

After that, minimum wage would have a yearly cost of living adjustment tied to the Consumer Price Index.

A vote “for” the initiative will amend the state statute and gradually raise the minimum wage. A vote “against” would signal opposition to the change. The initiatives are decided on popular vote, meaning whichever side has more votes will determine state law.

This is not the first time voters have taken up the issue. In 2014, Nebraska voters raised the minimum to $9 from $7.25, which took effect in 2016.

A poll released last month by Neilan Strategy group, a Republican consulting firm, said 55% of 1,340 respondents supported the raise, while 34% opposed it. The voter ID initiative also showed favorable support.

According to Ballotpedia, the last time a minimum wage increase initiative failed in the U.S. was 1996, when Missouri and Montana voters both killed efforts. Since then, 22 initiatives and one referral have passed across the country.

The arguments “against” raising

“It's an ongoing increase in the cost of doing business,” said Bud Synhorst, the President & CEO of the Lincoln Independent Business Association. “This really does hurt small business when you take a look at it.”

Small businesses were adversely impacted by the pandemic, Synhorst said. After all the challenges that came in the last two years, Synhorst worries that hiking the minimum wage could put more of his members out of business. He worries those businesses may need to cut jobs or drive up the price of goods because they’ll need to make more money since they are paying more.

Making this proposal in the middle of record inflation, which is up 8% this year, would only hurt small businesses more, Synhorst said, who adds that raising the lowest paid also means raising everyone else's wages, too.

“There's a domino effect across your business,” he said.

Another business organization who opposes raising the minimum is the Nebraska Grocery Industry Association, an advocacy group that represents national, regional and local grocery stores and some wholesalers. Setting the starting wage doesn’t make sense because of the difference in cost of living between rural and urban areas, said the group’s executive director, Ansley Fellers.

“A minimum wage mandate like this treats a company in Superior or a grocer in Superior, Osceola, Scottsbluff or Baird like Lincoln and Omaha,” Fellers said.

Larger businesses can afford to raise their wages, Fellers said. The small and medium-sized businesses won’t be able to do so easily.

“Services and goods are going to have to go up too,” she said.

One of those small business leaders who opposes the idea of hiking the minimum wage is Joe Frey, the operations manager for Triumph Home Health Supplies. It’s a medical resupply company that helps a patient get a catheter, for example, once the doctor has prescribed it.

Joe Frey headshot
Joe Frey is the operations manager for Triumph Home Health Supplies in Lincoln. (Courtesy photo)

He’s not opposed to paying well above the state’s minimum wage. In fact, he argues that it’s nearly impossible right now to hire a solid employee for anything less. But that’s a conversation he’d like to have with his employees.

“If the results weren't to your satisfaction, you would look elsewhere, right?” Frey said. “You try to find more employment or better employment that maybe paid you better. I think the conversation has to stay more organic and not so much forced. I think that's super important.”

Frey is also in a tough spot because his business generally bills insurance companies, not the patients, for the supplies so the prices are capped by the Centers for Medicare and Medicaid Services or by private insurance companies.

In his eyes, it’s disingenuous to say that a business will be able to make more money by raising prices if the minimum wage is increased.

“In our circumstances, we're not going to be able to do that,” Frey said. “We're capped at the amount that we make.”

Why many people are “for” the hike

“We know that Nebraska parents are working very hard,” said Kate Wolfe, the campaign manager for the group that collected signatures to put the initiative on the ballot. “They work full time, and they still do not make enough to get by.”

Wolfe’s group, Raise the Wage Nebraska, raised nearly $1.62 million for the effort. In total, they turned in 97,245 signatures and qualified in 44 counties. State law requires petitioners to gather at least 86,776 signatures in 38 counties.

Amid current inflation, getting more money in the pockets of lower-income Nebraskans will help offset the rising costs, Wolfe said.

Wolfe said she hears the same arguments against raising the minimum wage today that she heard eight years ago when Nebraska last increased the minimum wage.

“It's unfortunate because none of them came true in 2014 when we did this,” she said.

A number of progressive groups, including the ACLU chapter of Nebraska, the League of Women Voters in Lancaster County, the NAACP and Nebraska Appleseed, all support the initiative to hike Nebraska’s wages, as do a coalition of small businesses across the state.

Mikaela Krueger stands in her showroom next to a wall of glasses
Mikaela Krueger said she opened her shop, Optika Curated Eyewear, in 2020 with the idea it would pay at least $15 per hour. (Photo by Will Bauer, Nebraska Public Media News)

"I believe that small businesses can't afford not to pay more because it keeps us competitive,” said Mikaela Krueger, owner of Optika Curated Eyewear in Hastings.

She's also a member of Nebraska Business for a Fair Minimum Wage, a coalition of nearly 300 small business owners from across the state who support the initiative.

Optika, Krueger's business, is a European eyewear boutique in the city’s downtown, where customers can sip on a freshly brewed cup of tea while picking out fancy eyewear.

Krueger, who started the business in 2020, is sympathetic to fellow business owners who worry about their bottom line if they have to pay employees more. But, she said, organized owners can plan for the changes over the next four years.

“If people are making this wage, the long term benefits to your business outweigh the challenges that it creates,” she said.

For her, paying employees a higher wage, which is something she’s done from the start, is all about retaining them at a time when it’s hard to hire.

“It's so important that we make our employees feel like they are part of something bigger,” she said.

What do economists say?

For economists, the answer on raising the minimum wage is not so clear.

Eric Thompson, an economics professor at the University of Nebraska-Lincoln, said the potential wage increase fits into the larger trend of policies that aim to tip the economy in favor of workers.

“I can understand the appeal, trying to help working-class people and moderate-income people,” said Thompson, who studies urban and regional economies. “My worry is that with any of these policies, you know, when you try to distort the economy in that way, there can be unintended consequences that make the economy less efficient, less productive and, ultimately, end up hurting the standard of living.”

Eric Thompson stands for a headshot
University of Nebraska-Lincoln economics professor Eric Thompson (Courtesy photo)

Limiting immigration and restricting free trade are other policies that Thompson views as other efforts to tip the scales in favor of workers. What would make more sense is funding programs that help lower-income people get job training and education to move up the ladder. He does, however, like the inflation adjustment in this initiative, he said.

“I think it's a bad idea to just raise it, and then let it sit there because its real value is just going to change automatically,” he said.

Creighton University economics professor Ernie Goss also sees the minimum wage increase as a mixed bag.

“For most workers, it will not have much of an impact,” Goss said, citing that most businesses pay above minimum wage.

Ernie Goss sits for a photo at Creighton University
Creighton University economics professor Ernie Goss (Courtesy photo)

He also wonders about what impacts a higher minimum wage will have in the Omaha metro area which straddles a state line. Goss said if Nebraska passes the increase, it would benefit some employees who could get a higher wage on the west side of the river. But he also wonders if businesses may flee for Council Bluffs.

“It's gonna surprise some of my colleagues, but I'm more supportive of the increase in the minimum wage,” he said. “Now, again, it will be painful for some – there's no doubt about it.”

Editor's note: This story has been updated to reflect Krueger's affiliation with a business association.