Business and Labor

Bill would cap minimum wage increases

The Business and Labor Committee heard testimony Feb. 13 on a bill that would cap upcoming annual cost-of-living increases to the state’s minimum wage.

Sen. Jane Raybould
Sen. Jane Raybould

At the November 2022 general election, Nebraskans voted to increase the state minimum wage incrementally to $15 per hour on Jan. 1, 2026. The wage then adjusts annually based on the Consumer Price Index to account for cost-of-living increases.

LB327, introduced by Lincoln Sen. Jane Raybould, instead would increase the wage by the lesser of 1.5 percent or the CPI beginning Jan. 1, 2028.

Raybould said she introduced the bill not to undermine the ballot initiative, but to provide certainty to businesses across the state that are required to comply with the mandated minimum wage increases. The Legislature should aim to strike a balance between the increase approved by voters in November and the interests of small and medium-sized businesses, she said.

“Most employers who are hiring at or just above the minimum wage are in industries that operate on razor-thin profit margins,” Raybould said. “Increasing their costs forces these businesses to raise prices, reduce jobs and training opportunities, decrease benefits or cut some of the services that they provide.”

In support of the measure was Katie Bohlmeyer, speaking on behalf of the Lincoln Independent Business Association. Adjusting the wage based on the CPI could trigger a wage-price spiral, she said, which would negatively impact both businesses and consumers.

“Failing to reduce inflation can trigger hyperinflationary issues,” Bohlmeyer said. “It’s also important to note that we’re not saying these rates should be what is required to pay employees — this is just the floor, not the ceiling.”

Alex Reuss, speaking on behalf of the Nebraska Chamber of Commerce and Industry, also testified in support of the bill. While respecting the intent of the ballot initiative, Reuss said, the chamber remains “laser-focused” on making sure the change is manageable and structured in a way that does not harm small businesses, the state’s workforce or consumers.

“We believe [LB327] will help ensure small businesses can accommodate the changes passed in the ballot initiative without incurring undue financial hardship if inflation is high,” he said.

Ansley Fellers testified in favor of LB327 on behalf of the Nebraska Grocery Industry Association, Nebraska Hospitality Association, Nebraska Petroleum Marketers and Convenience Store Association and the Nebraska Retail Federation.

Fellers said that under the current system “bad actor” businesses that exploit labor, short benefits and cut hours will absorb the tighter margins caused by the CPI increase and will wait until small and medium-sized competitors go out of business.

“The valuable entry-level jobs — the fun jobs where you work for caring, creative and flexible people — are going to go away,” she said.

Anahí Salazar, representing Voices for Children in Nebraska, testified against the bill. As a partner that advocated for the ballot initiative, she said, the organization believes in the importance of adjusting the state’s minimum wage for the cost of living.

“Increasing the minimum wage and adjusting after inflation will allow parents to meet their children’s basic needs year after year regardless of market fluctuation,” Salazar said.

Susan Martin, testifying on behalf of Nebraska State AFL-CIO, also testified against LB327. In a world of higher prices, low-wage workers need stronger labor standards in order to make ends meet, she said, and increasing the minimum wage is sound policy that supports working families.

“Indexing the minimum wage to keep pace with inflation should and must be a priority to protect workers from rising prices,” Martin said. “Capping the minimum wage increase at 1.5 percent or lower is a regressive move.”

The committee took no immediate action on the bill.

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