Business and Labor

Lower wage advanced for young workers

Young workers could be paid a reduced minimum wage under a bill advanced to final reading April 29 after a successful cloture vote.

LB599, introduced by Crete Sen. Laura Ebke, would allow employers to pay workers ages 18 and younger $8 an hour beginning Jan. 1, 2016, for up to 25 percent of their hours worked.

Nebraska’s minimum wage increased to $8 per hour this year and is set to increase again in 2016 to $9 per hour, following the approval of Initiative 425 by Nebraska voters last November. The ballot initiative was the result of a successful petition drive that followed the 2014 Legislature’s rejection of a bill to increase the state’s minimum wage.

Ebke said businesses in villages with fewer than 500 inhabitants have a small customer base, making them more vulnerable to failure than their counterparts in larger cities. Without local commerce, small towns cannot survive, she said.

Sen. John Kuehn of Heartwell spoke in support of the bill, saying the lower wage would give smaller businesses such as locally-owned grocery stores in rural Nebraska an economic incentive to hire young workers. When these rural businesses fail, he said, unemployment rises and residents are forced to drive long distances for groceries.

“It helps keep our stores solvent and our local communities vibrant,” Kuehn said.

Lincoln Sen. Adam Morfeld opposed the bill, saying that small businesses should explore other options for financial support, such as price increases or tax credits. Rural Nebraska cannot afford to discriminate against young residents, he said.

“We are sending the wrong message to young Nebraskans who we have a hard time keeping here to begin with,” Morfeld said. “If paying people less is the key to rural economic development, then we need to go back to the drawing board.”

Kuehn introduced an amendment, adopted 32-13, which would require that young student workers be paid either $8 per hour or 85 percent of the federal minimum wage, whichever is higher. The amendment also would modify the definition of a young worker to include employees who do not have a high school diploma and who do not have a dependent child.

Omaha Sen. Burke Harr questioned the legality of the amendment, saying it would place employers at risk of being sued if they appear to eschew older workers and parents in favor of less expensive younger workers who have no children. It is illegal for Nebraska employers to inquire about an applicant’s age or parental status, he said, which would prevent them from knowing who would be eligible for the new wage.

“You can’t ask these questions,” Harr said. “This is a law without enforcement.”

Sen. Al Davis of Hyannis supported the bill. He said a grocer in his district estimated that his labor cost would increase by $15,000 when the $9 per hour wage takes effect in 2016. Small town merchants risk losing customers to shops in neighboring towns if they raise prices to generate more revenue, he said.

Bellevue Sen. Sue Crawford disputed the alleged benefits of a reduced youth wage because only one-fourth of their wages would be eligible for the lower rate.

“It’s not that big of a hit to their bottom line,” Crawford said.

Omaha Sen. Jeremy Nordquist added that Nebraska statute already exempts from minimum wage law businesses with three employees or fewer. Other groups also are exempt from being paid a minimum wage, he said, such as agricultural workers, employees working for family members and employees earning a training wage. Creating additional classes of exempt workers is not necessary, he said.

“What more do we need than what is already on the books?” Nordquist asked.

After four hours of debate, Ebke moved to invoke cloture—or cease debate and force a vote on all pending measures—which senators approved on a 33-14 vote.

Senators then rejected another amendment offered by Nordquist, on a 10-33 vote, which would have required that the minimum and young worker wage rates be adjusted by the percentage change in the consumer price index established by the federal Department of Labor.

Lawmakers advanced the bill from select file on a 31-13 vote. Because LB599 would amend a law enacted by voter initiative, it requires 33 votes on final reading for passage.

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