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Getting Ahead: Raising minimum wage

Posted Nov 16, 2022 8:23 AM
By Patricia Jones, Alliance Community Task Force: Creating Opportunity

Last week Nebraskans voted for a state Constitutional amendment to raise the minimum wage. Our current minimum wage of $9.00 an hour will increase in increments to $15.00 an hour by 2026. This vote means that more than 10,000 residents, including 3,500 children, will be lifted out of poverty.

On January 1, 2023, the minimum wage will go up to $10.50. On January 1, 2024, it will become $12.00. On January 1, 2025, $13.50. $15.00 will come into effect on January 1, 2026. Finally, on January 1, 2027, and on January 1 of successive years, minimum wage will be raised by the increase in the cost of living, rounded up to the nearest 5¢.

The Constitutional amendment did not change the hourly rate for tipped employees of $2.13 an hour. However, if the sum of their wages and gratuities (tips) do not exceed the minimum wage, the employer must make up the difference.

Student learners in a bona-fide vocational training program (like Cooperative Education at Alliance High School) only need to be paid 75% of minimum wage.

According to an analysis by Open Sky Policy Institute, this amendment will increase wages for about 30% of Nebraskans and lift thousands out of poverty by the time the amendment is fully implemented. Open Sky is a non-partisan organization that studies economic issues being considered by the Nebraska Legislature, offering clear fiscal research and analysis.

Their research shows that about 30% of the Nebraska workforce – 287,319 workers – would be positively affected by increasing the minimum wage. The minimum-wage Nebraska worker, who is currently earning $18,000 a year for full-time work ($1,500 a month) would receive an estimated annual increase of $3,000 per year. The average increase, factoring in part-time work, will be $2,400 per year.

Who earns minimum wage? Women, teenagers, and people of color. Open Sky analysis finds almost half of Nebraska’s Black workers, three out of five Latinx workers, and two out of five Asian workers would receive raises if the minimum wage were increased to $15 an hour. More than one in five white workers also would see a wage increase under the initiative.

Opponents to the increase in minimum wage argued that rural communities will be hit especially hard by this increase, because small businesses and franchise owners cannot afford to pay those hourly wage rates. They may have to lay off employees and raise prices to meet this new requirement. This is true.

The other concern offered by opponents to the minimum wage increase is that it is inflationary, and we are already having a problem with inflation. Open Sky cites research from the Economic

Policy Institute, showing that raising the minimum wage to $15 over five years would increase overall price levels by less than 0.1% per year.

We have to remember that low-income people are the hardest hit by inflation. All their earnings are being used to buy necessities like food, rent, or gas. They simply cannot survive without the government’s social safety net of assistance programs. People working full time should not need to be on government assistance!

The goal of the minimum wage amendment is that low-wage earners will have more money to spend locally and will be better able to support their families. Our tax burden should decrease with fewer people on assistance. The ultimate outcome is that this should grow Nebraska’s economy and improve life for all of us.