Nebraskan Signs Petition for Minimum Wage
A Nebraska resident signs a petition to raise the minimum wage in Nebraska to $15 an hour by 2026. Photo courtesy of Raise The Wage Nebraska

While the cost of labor is the largest expense for small businesses — in some cases up to 70 percent of total costs — some Nebraska business owners already pay their employees more than the state’s current minimum wage — and they are advocating that other businesses do the same.

This November, Nebraskans will have the opportunity to vote on raising the minimum age in the midterm election. Initiative 433, also known as the minimum wage statute, would raise Nebraska’s minimum wage from $9 to $10.50 an hour in 2023, to $12 in 2024, to $13.50 in 2025 and to $15 in 2026, followed by adjustments for living costs in subsequent years. For workers compensated by gratuities, such as wait staff, the minimum wage will not increase from $2.13 an hour.

If successful, Initiative 433 would make Nebraska the latest state to enact a $15 minimum wage. In January 2022, California became the first. Nebraska’s minimum wage has been $9 an hour since 2016, $1.75 higher than the federal minimum.

In a tweet on Sept. 6, Secretary of the State of Nebraska Bob Evnen announced that both Initiative 433 and Initiative 432, the voter ID amendment, had received the necessary amount of signatures to be added to the ballot in the midterm election. 

Some small businesses in Nebraska have already found success paying their employees higher wages. Wild Bird Habitat Stores, Mana Games and Shirts 101 all start their employees at $15 an hour. 

In October, RAYGUN Clothing, which employs 110 people in locations in Missouri, Iowa, Illinois and Nebraska, will join them.  For Mike Draper, the owner and founder, raising his company’s starting wage is common sense.

Draper said the minimum wage is an oddity in the United States because unlike cost of living expenses, taxable income levels or even social security benefits, the minimum wage has remained “frozen in time.”

Mike Draper Profile 300x300 - Some small business owners advocate for a higher minimum wage, others express concerns
Mike Draper, Owner and Founder of RAYGUN Clothing

“It’s hard to think of anything else that has not moved in 12 years except the minimum wage,” Draper said. “It’s sort of a loophole. If someone is allowed to pay minimum wage, it’s almost like they’re getting away with something.”

Draper said he’s not in favor of arbitrary regulations for businesses, but said it’s unfair that the minimum wage hasn’t kept up with the rest of the economy.

“You can be working full-time in America and be qualifying for government benefits,” Draper said. 

Draper said a $15 minimum wage is a popular issue and is rarely contested in parts of the country that have voted in favor of introducing it. According to a Pew Research study in 2021,  62% of Americans are in favor of raising the minimum wage to $15 an hour. 

Initiative 433 received 97,245 verified valid signatures, and the 5% threshold required to advance a petition was reached in 44 of Nebraska’s 93 counties.

State Sen. Terrell McKinney, one of the co-sponsors, said that the minimum wage increase is something that can benefit Nebraskans in his North Omaha district and across the state. McKinney co-sponsored Initiative 433 with Zeke Rouse and Nancy Williams. Williams is the CEO of No More Empty Pots, a Nebraska-based non-profit that focuses on helping families that are food insecure.

“One in five workers who will benefit is a parent supporting children and trying to make ends meet,” Williams said. “The reality is that the cost of groceries, housing, and basics have gone up for years, and the minimum wage hasn’t kept up.”

Raise The Wage Nebraska helped gather signatures and collect donations for the campaign and said that up to 150,000 Nebraskans would benefit from the increase. 

The current minimum wage in Nebraska isn’t enough, said Kate Wolfe, campaign coordinator for Raise The Wage Nebraska.

“Parents just can’t afford to pay rent, travel to work, put food on the table at today’s minimum wage,” Wolfe said.

Wolfe also said that more money in the hands of the community means more money spent in local stores and businesses, which helps to strengthen the local economy.

However, not all people share the same enthusiasm for the initiative.

Art Diamond, a professor of economics at the University of Nebraska at Omaha, said raising the minimum wage is an initiative with good intentions, but it has unforeseen consequences.

“There’s going to be some unemployment,” Diamond said. “And the people who tend to be laid off are people that might be described as ‘marginal.’”

Diamond described marginal workers as people of color, immigrants, the mentally and physically handicapped, young people and those without higher education. 

Equilibrium photo 300x235 - Some small business owners advocate for a higher minimum wage, others express concerns
Professor Art Diamond uses a graph similar to this one to teach his students about the possible consequences of imbalanced economic equilibrium.

In 2021, the Congressional Budget Office projected that as many as 1.4 million Americans could face unemployment in the first year if the minimum wage were to be increased to $15 an hour all at one time. A gradual increase, like the one proposed in Nebraska, saw that number shrink to 700,000. Diamond said 700,000 only accounts for the first year, and it’s likely unemployment trends would continue for years after.

The U.S. Bureau of Labor Statistics projects that 163.5 million Americans will be employed going into 2023, up by 8.5 million since 2021.

In California, the most recent unemployment rate sits at 4.1 percent. In July 2022, the state saw its lowest recorded month for unemployment since 1976, with 3.9 percent of residents registered as unemployed. California’s unemployment rate is less than half a percent higher than the federal unemployment level of 3.7 percent. Nebraska has one of the nation’s lowest unemployment rates, with the most recent recordings showing 2.1 percent of residents registered as unemployed.

In 2016, when Nebraska’s minimum wage was raised to $9, the state’s unemployment rate never rose above 3 percent. 

​The gradual increase from $9 an hour to $15 an hour would help relieve stress put on business but won’t alleviate it entirely, Diamond said.

“There’s still a big effect,” Diamond said. “It may make it less severe, but to those who say it solves the problem completely, it doesn’t.”

Although the $15 minimum wage has only passed in California, 18 states including Alaska, Arkansas, Florida and South Dakota currently have their minimum wage indexed for inflation. This means that the minimum wage will increase in accordance with the cost-of-living expenses. 

Raising the minimum wage is a good thing because it puts more money in the hands of the community and gives the individual more money to spend in their local economies, Draper said. He said this will hopefully ease the concerns of smaller businesses.

By 2026, When Nebraska’s minimum wage is raised to $15 an hour, Connecticut, Florida, Delaware, Hawaii, Illinois, Maryland, Massachusetts, New Jersey, New York and Rhode Island will all have a minimum wage at or above $15 an hour.

UPDATE: This story has been updated to correct the locations of RAYGUN stores and to clarify Nebraska’s status in regard to other states. The story said that Nebraska would be the second state — in addition to California — to enact a $15 minimum wage. But by the time Nebraska’s minimum wage rises to $15 in 2026, multiple states also will have $15 or higher minimum wage requirements.