What would minimum wage boost mean to Nebraska?

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July 25th, 2014

Omaha, NE – Nebraska’s current proposal to boost the minimum wage from $7.25 to $9.00 and hour has hit the next step: signatures have been turned into Nebraska’s Secretary of State, John Gale.

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Officials said it could take anywhere between a few weeks and a month to verify the signatures. According to state law, 81,000 signatures are needed to place the initiative on the ballot.

Ernie Goss, professor of economics at Creighton University, said he believes if the possibility of raising the minimum wage is added to the ballot for voters, it would pass. He also said there are some pros and cons to raising the minimum wage. Goss said often times we hear only about how low-wage workers would get an increase in take home pay. He said you don’t often hear about the downside to an increase.

“Then you will have a loss in jobs, you could have a cut in hours or you could see the growth in jobs not be as strong as it could be,” Goss said.

On the other hand, Goss said if the minimum wage were increased, it could have good effects. For example, he said, it would further incentivize people who are unemployed to get jobs.

“Those individuals that typically work in that industry already have high rates of unemployment,” Goss said. “So this would tend to increase the unemployment rate among those workers.”

Goss said fast food workers are gaining national attention for pushing for a jump in pay. But he said there are other occupations which often get over looked when it comes to the debate. He pointed to custodians as one group. According to the Bureau of Labor Statistics, the hourly rate for custodial workers in the U.S. in 2012 was $10.73. This rate rises slightly, when you look at custodians who work at schools or universities.

Professor Ernie Goss said there are both pros and cons to boosting the minimum wage. (Photo Courtesy KVNO)

Professor Ernie Goss said there are both pros and cons to boosting the minimum wage. (Photo Courtesy KVNO)

Laura Shaw has been a custodial engineer at West Corporation in Omaha for seven years. She said she doesn’t know many people who are able to survive on the minimum wage.

“In this day and age, no matter what you do for a living, you are either going to have a bill you can’t pay or a spouse that helps out,” Shaw said. “It’s quite infeasible to have one job for the entire household. It isn’t really doable in my opinion.”

Shaw cleans office buildings for a living. She vacuums and sweeps, mops and wipes down dirty counters. She makes $9.00 an hour and if a boost were to take place in Nebraska she would be left out. Shaw doesn’t pout over this fact. She said if she puts her head down and does her job well enough her work will be noticed. She did say that if the minimum wage is raised it would be better for her company.

“If you bring in custodians at $9.00/hr, versus what the minimum is now, you’d have a lot better cleaners,” Shaw said. “People who would be there to do their job, because they are getting paid what they should be paid, versus $7.25 an hour and they are just getting by, and will do the minimum they can in order to get paid.”

Shaw said she can tell the biggest difference between a minimum wage worker and one whose pay is boosted.

“They seem more like they are there to get their job done, so they can pay their bills and move on with life,” Shaw said. “Whereas people who are making less, it seems like they don’t care about the company. When you are making more, it is more incentive to stay with that company and grow within that company instead of having to jump from job to job.”

Shaw said she considers herself lucky to be employed at a company like West. She said she leaves every night with a sense of pride from the job she has done. Goss said if a boost to the minimum wage occurs, one way companies could react would be to turn custodians into independent contractors.

“One of the other issues, is would the employer reduce the cleaning of their buildings,” Goss said. “In other words, they could go from cleaning them every evening to cleaning them every other evening. Some companies may ask workers to consider themselves independent contractors. If you’re an independent contractor, then the individual could take a lump sum payment each week and ‘he’ or ‘she’ is required to pay their own taxes.”

Shaw disagrees, she said the building still needs to be cleaned. She said there would be a chance of bug and rodent infestations if staff were laid off and the building not cleaned daily.

“More likely it would be cutting from eight hours, to four hours,” Shaw said. “They would probably cut you from full time to part time. You would still be working five days because the building still needs to be cleaned every day.”

Associate Professor of Economics at the University of Nebraska at Lincoln, Eric Thompson, said there is a delicate balance when pondering the minimum wage.

“I think as a society there is an interest in having a minimum wage,” Professor Thompson said. “We struggle a lot on what the appropriate level for that minimum wage is. Can you set a minimum in a way that helps some workers but doesn’t discourage employment opportunities for other workers?”

Professor Thompson said a more ideal increase would be to $8.00 an hour this year, followed by a gradual increase to $9.00 over the next five years.

“I wonder if we would be better off as a state, if instead of having these periodic sharp increases in the minimum wage,” Professor Thompson said. “If we instead set a standard where we would set the wages to what we thought was an appropriate level and then have it increase on a regular basis with inflation.”

Both Professor Goss and Thompson agreed larger implications would rest with larger increases in the minimum wage.

One Response

  1. The $9 would be the highest in the region and will send jobs out of state. No matter where you set the minimum wage, it is the lowest paying job on the market. Every other worker will be earning more money than the minimum wage worker and outbid them. It happens all the time.

    The big change this time around is the digital age makes it possible to kill all sorts of jobs just to make up for the increase in the minimum wage. There is no transaction cost to send digital data work out of state. Currently, Nebraska has been in a sweet spot for the digital data industry, with low cost of living and low unemployment. Raising the minimum will bring these advantages to an end.

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