Minimum wage hike causes 'snowball effect' for area businesses

LAUREL - Changes may be on the menu at a local eatery as its owners grapple with changes to Nebraska's minimum wage. Eective last month, the minimum wage across the state jumped from $9 to $10.50 per hour and will continue to increase incrementally each January over the next three years. The minimum wage will be set at $12 per hour in 2024, $13.50 in 2025 and $15 by 2026. Prior to this year, the minimum wage had not been increased since 2014, when it increased from $7.25 to $9 per hour. At Jim's Food Center grocery store, Randolph, there's about 20 employed, including part-time workers, said owner Bill Fye. Most are paid more than the minimum wage. "When minimum wage goes up, everyone else's wages, they go up, too," he said. "It's only fair."

Some businesses in Hartington are also making that move, said Karen Flamig, the local president of the Chamber of Commerce. "That's a very progressive and forward-thinking approach," Flamig said. "It's not just that person earning minimum wage dealing with inflation." Time will tell whether the bump in employees' paychecks will translate to any uptick in local retail sales receipts. "I don't think it will have a substantial impact right now but it could in the future, as time goes on," she said. Flamig understands that extra in employees' paychecks may come as a burden for some business owners who are dealing with the eects of inflation as well. "The labor costs increasing for the business when they're already struggling, they're barely hanging on, and having that extra going out the door is tough," she said. Those changes have left smalltown business owner Scott Taylor fumbling and frustrated, unsure of how he will keep one of his local businesses, The Scoop in Laurel, afloat. The Scoop is a fast-food restaurant specializing in custom ice cream creations, burgers and broasted chicken. "High school kids absolutely they cannot wait," to see that extra hike in their paycheck, Taylor said. But they don't understand the toll it takes on the small-town business already feeling the pinch with an exponential rise in food costs. Most likely, menu prices will increase, which could in turn deter customers and eventually force the business to close. Taylor admits that seems like a "doom and gloom" scenario that he hopes never comes to fruition. He sat down with The Scoop's sta of 16 and explained the situation. The majority wanted to keep the eatery operating under the status quo if possible with sta taking orders at the front counter and everyone making the new minimum wage. An alternative discussed would be to turn some employees into waitsta and have them work for tips like they do at his other Laurel business, Knuckleheadz Bar. There, wait sta are paid well below minimum wage, but then are able to accept customer tips. "We make our waiters and waitresses split tips between themselves," Taylor said. "We have some people, regulars, some of them are really good tippers and some won't leave a penny." So splitting tips was a more fair approach and allowed for good customer service to all and not just those who tip well, Taylor said. Wait sta routinely make $25 or $30 per hour when accounting for tips received, he said, and shudder to think of working for minimum wage only. Taylor said the entire business focus behind opening The Scoop was to oer a place of employment for first-time job seekers - sometimes di$cult to come by in a small town. "They're just learning. They have no experience. A lot of them don't," Taylor said, which leads him to believe at least during the training period he's not receiving a good return on investment when paying a higher minimum wage. Instead, he prefers to reward those with a higher wage when they earn it. Fye said the minimum wage hike causes everybody to raise prices just like Taylor may have to raise his menu prices. "Everybody along the line, suppliers all the way up, at least in Nebraska, will drive prices of being in business up," Fye said. "It's a snowball eect and when everything else goes up, is anybody better o than they were before?" One Hartington business indicated the minimum wage hike discourages hiring entry-level employees, Flamig said. At least one Nebraska senator agrees with that sentiment. Sen. Tom Briese of Albion has introduced new legislation that would change the minimum wage requirement to workers age 19 or older and allow employers to pay youth workers, ages 14 to 17, less. "You'd still have that high school student or college student who could still be working, but maybe not at that higher minimum wage rate," Flamig said. Employers could pay youth more if they choose. Briese said his intention behind the proposal is to help small businesses. "As legislators, we can't allow provisions like this to force momand-pop stores out of business," Briese told the Nebraska Examiner. A public hearing was held on the bill Jan. 30, but the state Legislature's Business and Labor Committee has not taken any action on it. In the meantime, Flamig urges those businesses that are strug gling with the increase in minimum wage to seek out ways to cut other expenses. "Make small changes. That little savings over the long term may help oset increases in wages," Flamig said. Fye, who owns the business with his wife, Jami, will most likely work longer hours himself to cut back on labor costs, but he already works 6080 hours per week. He's not had a full slate of employees for several years now - since before the COVID-19 pandemic began. The area has been plagued with labor shortages since. Even with wages higher than the minimum to start, it can be a di$cult task to fill positions, he said. With nearly 25 years of business ownership under his belt, Fye has learned to take inevitable hurdles in stride, especially those out of his control. "We're in a tough time, a tough economy. It's not going to get any better for awhile," he said. "We figure out ways to make it work."

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