By Olivia McCown, Ben Porter and Ramey Vachal
The labor market is shifting in Nebraska as workers are quitting their jobs or striking in the wake of the COVID-19 pandemic.
Workers have shaken up the labor market in 2021 with strikes across the country, people quitting their jobs in the wake of the pandemic and petitions for a higher minimum wage gaining traction in Nebraska.
The words “labor shortage” have been circulating in headlines in recent months. Many businesses are unable to fill vacant positions, but the term “shortage” might not be the most accurate description for the current situation.
What’s going on?
“We’ve consistently had problems with limited labor supply.” – Eric Thompson, University of Nebraska-Lincoln Economics Professor
Businesses across Nebraska are struggling to find workers, leaving experts and business owners alike looking for solutions.
University of Nebraska-Lincoln economics professor Eric Thompson said the shortage is especially impacting occupations in information technology, skilled construction and manufacturing. The restaurant industry and the trucking industry have also been significantly affected, but this issue is impacting almost every sector of the economy.
Thompson said a number of factors may be at play, exacerbating the problem. These include recovery from the recession period during the pandemic and impacts of COVID-19 on the workforce. He said this recovery may be slow.
“For some people it may take several years before they reenter the workforce and find a match,” Thompson said.
John Albin, the Nebraska Commissioner of Labor, said the state was seeing steady employment growth prior to the pandemic, but COVID-19 caused many to become jobless overnight.
“As Directed Health Measures were relaxed, some workers did not return due to health concerns, childcare issues, family commitments, retirement, etc.,” Albin said.
This dilemma comes amid a nationwide labor shortage that has baffled many, such as Cindy Curran, an employee at Horseman’s Park in Omaha. Many employees left Horsemen’s Park at the start of the pandemic and many have not returned, Curran said.
“What is going on?” Curran said. “We are just trying to gear up with people, trying to get people to come back that used to work there.”
Some workers are quitting their jobs to look for better opportunities or leaving the workforce entirely.
Others are showing their dissatisfaction by striking, and demanding higher wages from their employers in Nebraska, which some are unable and unwilling to pay.
“This is the time. Everybody's standing up.” - Dan Osborn, president of BCTGM Local 50G.
Workers across the country are going on strike. Fewer people are willing to work lower-wage jobs and a new outlook on workplace structures after the pandemic has created the perfect storm for strikes to break out all over the United States. Factory, healthcare and food industries workers are demanding better conditions, benefits and wages.
In Omaha, workers at the Kellogg’s plant have been on strike since Oct. 5. They are striking to create a fair contract for a living wage and good benefits, according to a statement from BCTGM. On Dec. 2, the workers reached a tentative agreement with Kellogg’s, but a vote by union workers chose to reject the contract.
“I've been a mechanic for 18 years. So I've gone from battling machines to battling the corporate machine,” said Dan Osborn, president of BCTGM Local 50G.
During the pandemic, Osborn said Kellogg’s experienced record sales while workers were working long hours to accommodate co-workers who were exposed to COVID-19. But the long hours and health risks weren’t the breaking point for him. It was that their CEO took a 20% increase in his compensation last year.
“I try to put myself in their [the CEO’s] position,” Osborn said. “Like what more could you possibly gain from taking from your employees? And then it just all ends up at the top.”
Kellogg’s implemented a two-tiered wage system that divides workers into “legacy” and “transitional” groups. The legacy workers are employees that have been with the company for a long time. Transitional workers are newer to the job, so they make $13 per hour less than legacy workers, and don’t get the same benefits. The contract workers initially decided to strike against would have new hires starting at $22.76 per hour instead of $35.26.
“It’s a union buster,” Osborn said. “It creates division within the ranks. If I'm making $13 an hour more than you, getting better vacation, better insurance, and we’re doing the exact same job, you and I are probably not going to get along very well.”
On Oct. 12, Kris Bahner, a Kellogg’s spokesperson, issued a statement in response to the union’s initial decision to strike:
We value all of our employees and recognize their efforts, especially during this global pandemic. Being away from work puts our people and their families in a difficult position and can create financial hardships. We are deeply concerned that the Union at our four U.S. cereal plants has decided to strike and what that means for our employees, and especially concerned that the Union struck without allowing members to vote on our Oct. 1 offer.
Kellogg is ready, willing and able to continue negotiations at any time. In the meantime, we have a responsibility to our business, customers and consumers to run our plants, despite the strike. We are continuing operations with other resources and hope that we can reach an agreement soon.
According to Osborn, one of the major goals of BCTGM Local 50G is to abolish the two-tiered wage system, but discussions with Kellogg’s have shown little progress. As of Nov. 4, the Negotiation Committee met with Kellogg’s leadership and were unable to agree on a contract, so the strike continued.
The proposed agreement on Dec. 2 would have increased wages by 3% and would have allowed workers with at least four years of experience to become legacy workers, with some additional workers becoming legacy workers in later years of the contract. With that contract being rejected, the strike continues. Kellogg's has announced they plan to hire permanent replacements for the nearly 1,400 striking workers.
After rejecting the proposed five-year contract, workers on strike and users on social media are encouraging people to boycott the brand. Redditt users are also spamming Kellogg's job application portals with fake applications.
This is one of many strikes happening across the country from a movement that started in October, leading many to call it “striketober.”
“People from all around the country are all making a stand, and we're all feeding off of each other,” Osborn said. “The more you learn about it, the more you see all the injustices of the other companies. It's the CEOs and executives reaping the lion's share of the profits, and trying to take away from their employees to get themselves richer. It’s the same story over and over again.”
The Big Quit
“They kind of have enjoyed the last year and not having to work and getting a nice paycheck.” (in reference to the workforce and unemployment benefits during the pandemic) - Trevor Hudson, executive director of the West Omaha Chamber.
According to Harvard Business Review, 4 million Americans quit their jobs in July 2021, leading many to dub this pattern “The Big Quit.” According to the Bureau of Labor Statistics, Nebraska’s unemployment rate is only at 1.9%, but many employers are struggling to lure people back into the workforce.
During the height of the COVID-19 pandemic, especially workers in the service industry, lost their jobs because of widespread shut-downs. Many restaurants closed and moved toward promoting take-out only, causing many servers to lose their jobs. Many others in the workforce decided to leave their jobs entirely because of the unemployment benefits and stimulus checks that they were receiving.
“I think the handouts [stimulus checks and unemployment benefits] and everything that people got made everybody get not as hungry to work as they should be,” said Trevor Hudson, executive director of the West Omaha Chamber.
The West Omaha Chamber helps to promote organizations in west Omaha, Elkhorn, Waterloo, Valley and Bennington.
Hudson said workers in West Omaha are not in a rush to find jobs and are “stuck” deciding whether to get back into the workforce.
According to Forbes, polls show that nearly 40% of white-collar employees would rather leave their jobs than give up remote work.
Hudson said that the sector of business that has been hit the hardest in the West Omaha Chamber is the restaurant industry and that is similar to restaurants in Lancaster County as well. Restaurants have been having staff shortages that have caused longer waiting times for customers to get a table and get their food.
“Our minimum wage in Nebraska is not a living wage, and it has not kept up with the cost of living for some time.” - Vic Klafter, community organizer at Nebraska Appleseed.
Executive director of Nebraska Appleseed Becky Gould and Nebraska Appleseed community organizer Vic Klafter are working to gather signatures for a petition to raise the minimum wage to $15 per hour by 2026. The initiative also includes measures to keep increasing the wage based on the cost of living after that time frame. The Nebraska Appleseed is a non-profit based in Lincoln that works for justice and opportunity for people living in Nebraska.
Klafter said in discussions on minimum wage, one must take into account the price of transportation, childcare and additional expenses that come with holding a job. These factors often pose problems for those who are making minimum wage. Sometimes, this means people would rather stay at home than work, as it is the cheaper option.
“You have to really know what it is worth in terms of those expenses that come with working,” Klafter said.
Recent legislation such as LB480 has been unsuccessful at passing in the Legislature. The bill was aimed at raising the minimum wage to $10 per hour by 2022 and incrementally raising it until 2032, when it would be $20 per hour. Even so, Gould said Nebraska State Sen. Megan Hunt of Blair and Terrell McKinney of Omaha would back the initiative. A press release from Nebraska Appleseed also lists the American Civil Liberties Union of Nebraska, Nebraska Civic Engagement table and other organizations as members of the “Raise the Wage Nebraska” coalition.
Robert Osborne of Omaha is a junior at the University of Nebraska-Lincoln who works at Papa John’s pizza at 16th and Q St in Lincoln. Osborne had grown frustrated with his wages and decided to strike during the National General Strike that took place on October 15th. Workers partaking in the National General Strike argued for a $20 minimum wage, 12 weeks paid maternity leave and a 4-day work week. Osborne was still employed by Papa John’s but did not work that day to voice his opinion on the things he thought should be changed.
“I’m basically striking because right now at Papa John’s I’m making $9 an hour,” Osborne said. “Most people that have part-time jobs... It’s just not enough, especially if you are in school.”
Trevor Hudson, executive director of the West Omaha Chamber, said that Nebraska’s minimum wage of $9 an hour is possibly a factor as to why open jobs are left unfilled.
“A lot of businesses are open to keeping people happy, to keep them employed,” Hudson said. “They’d rather have a full staff and pay you a little bit more than always having to be hiring.”
Still, Hudson said he believes that the workforce has to earn the increased wages that they are after.
“It is just getting those kids to realize like, hey, I mean, we all want to make $20 an hour but you have got to get there,” Hudson said.
Other experts, such as UNL economics professor Eric Thompson, do not believe that increased wages will fix the labor crisis.
“Businesses have chosen not to raise wages,” Thompson said. “I think if all of a sudden wages increase dramatically, we might attract a few more people but we’ll probably lose a number of jobs as well.”
If wages are raised too high, businesses will no longer be able to afford to keep some of the positions that they offer.
“There’s not a lot of room for flexibility” - Chris Etheredge, The Filling Station manager.
Jessica Simon, owner of Cook’s Cafe in Lincoln, said she has had difficulty finding people to work at the restaurant. This mainly applies to front-of-house staff and lower-paid employees who rely on tips.
“A lot of people have never even heard of Cook’s and they don't think that they're going to make money here,” she said.
Cooks Cafe has been in Lincoln since 1988 and has been at their current location at 33 North Cotner since November of 2020.
Simon said she’s had issues with short staffing since spring 2020, which has increased waiting times. It has also decreased efficiency, as employees are not able to “flip” tables as fast.
“You're literally just doing less business because you're not able to,” Simon said.
Chris Etheredge, manager of Lincoln cafe The Filling Station, said he’s experiencing a different problem. The cafe opened in May 2021 and has had to scale back operating hours due to a lack of business. Etheredge said this reduction in hours has multiple consequences.
“It's tough because everyone needs as many hours as they can get and we're relying on very few people,” Etheredge said.
Etheredge’s passion for wanting to work at a local business in Lincoln is what drove him to work at The Filling Station. He mentioned that there is a pool of applicants in Lincoln looking for jobs at locally owned businesses but the pool is small.
“On several occasions, people have come in and asked if we were hiring, because people want to work for local business,” Etheredge said. “That’s why I wanted to work here.”
Even if he wanted to hire an additional person or increase wages at the cafe, Etheredge said the resources aren’t available. The Filling Station has tried to give employees the hours they need but cut costs at the same time.
“Trying to get everyone as many hours as we can while still trying to distribute cuts on labor evenly is tough,” Etheredge said. “It’s not quite something that we can afford to do.”
“We don't have to be passive actors in what happens next.”- Becky Gould, executive director of Nebraska Appleseed
Low unemployment numbers that were present prior to the pandemic are being seen once more. In September 2021, the Nebraska Department of Labor announced the state’s unemployment rate of 1.9%, the lowest rate in the nation. This is also the lowest rate recorded since Nebraska began data collection in 1976. With such high rates of employment, many are left confused by the shortage issue at hand.
“I think there's a narrative out there right now about people opting out of the workforce, and I'm not sure that that's really an accurate story of the challenge here,” Gould said. “It's a little bit more about how we are attracting people to come to the state and to stay in the state.”
Gould said raising the minimum wage is part of the solution to the shortage. As people weigh their financial obligations and job opportunities, making the state a more attractive place to work is key.
“That's part of how people are making decisions about where to go,” Gould said. “With people thinking, ‘Can I stay here, and make ends meet and have a job?’”
Thompson used the term “labor friction” to describe the problem at hand. He said the current state of the workforce is a natural consequence of the recent recession, and it will take time for it to return to normalcy. It will also take time to overcome the impact of COVID-19 on the workforce, he said.
“Time has healed these issues in the past,” Thompson said.