Changes to state minimum wage proposed

Members of the Business and Labor Committee considered a bill Feb. 24 that seeks to change upcoming increases in the state’s minimum wage.

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

LB258, as introduced by Lincoln Sen. Jane Raybould, instead would increase the wage by the lesser of 1.5% or the CPI beginning Jan. 1, 2027.

The bill also would establish a youth minimum wage of $13.50 per hour for employees ages 14 and 15 and adjust the 90-day training wage for new employees under the age of 18 to $13.50 per hour through Dec. 31, 2026. The training rate then would be set at 75% of the state’s minimum wage.

The youth minimum wage would not apply to emancipated minors.

Raybould brought an amendment to the hearing that instead would increase the training wage annually by 1.5% for new employees under the age of 20. The amendment also would increase the youth minimum wage by 1.5% every fifth year beginning Jan. 1, 2030.

Raybould said Nebraska’s minimum wage will have increased by 66.67% between 2022 and 2026 as a result of the ballot initiative. That increase can be absorbed by larger businesses in the state, she said, but the majority of small businesses will have no choice but to pass the cost onto their customers.

Raybould also noted that young workers are prohibited by law from performing certain tasks and in the number of hours they can work during the school week. As a result, she said, many employers resist hiring anyone younger than 16.

“LB258 isn’t intended to weaken our wages or our workers,” Raybould said. “It is intended to find a reasonable balance that ensures that businesses … can stay in business.”

Testifying in support on behalf of the Kearney Area Chamber of Commerce and the Nebraska Chamber of Commerce and Industry, Derek Rusher said the proposal would give the state’s employers predictable wage increases.

Such predictability would allow businesses to plan for the future, allocate resources effectively and maintain stability in their operations, he said, which is especially important for small businesses.

Rusher also said the bill would encourage local businesses to hire young people just entering the workforce. By reducing hiring costs, employers are more likely to invest in training and developing young talent, he said, giving them valuable skills needed to succeed in their future careers.

“[LB258] strikes a fair approach between fair compensation for employees and the economic realities of running a small business,” Rusher said.

Michael Peterson, general manager of Fresh Seasons Market in Gothenburg, also spoke in favor. He said minimum wage increases often cause ripple effects for businesses that can complicate their ability to manage payroll and remain adequately staffed.

“[LB258] would provide a much needed incentive for businesses to continue employing students and those entering or reentering the workforce,” Peterson said.

Anahi Salazar, policy coordinator for Voices for Children in Nebraska, testified in opposition to the proposal. She said lower wages can negatively impact young parents in Nebraska who are working to support their families.

Salazar said rising inflation rates have weakened economic security for many in the state. For example, she said, a minimum wage worker in Nebraska currently would need 1.4 full-time jobs just to afford a one-bedroom apartment, before factoring in the cost of food, transportation and medical expenses.

“Young people in Nebraska are not only working to be able to purchase things that they want — such as books, clothing and gadgets — but also to survive,” Salazar said.

Reed Heaton of Elkhorn also opposed the bill. He said the proposal would hurt students and young Nebraskans and send a message that their labor is not worth the minimum wage.

“Our labor is not less because of our age,” Heaton said. “We deserve equal pay if we work the same job.”

The committee took no immediate action on LB258.