July 24, 2007
Omaha World-Herald
Joe Ruff


Thousands of Nebraskans got a pay raise Tuesday as the federal and state minimum wage increased 70 cents to $5.85 an hour.

Advocates for low-income workers said it was about time, and it will help.

"That's a significant increase when every penny counts," said Beatty Brasch, executive director of the Center for People in Need in Lincoln. "We have people who can't even afford the cost of the bus."

The increase is the first in 10 years.

A person working 40 hours per week under the old minimum wage of $5.15 an hour would make about $10,712 a year before taxes.

Effective Tuesday, that went up to $12,168 a year, a $1,456 pay raise.

The minimum wage will increase by 70 cents twice over the next two years, which will bring all minimum wage jobs to at least $7.25 by summer 2009.

President Bush signed the legislation in May. The Nebraska Legislature followed suit, putting the state's minimum wage, which also was $5.15, into lock step with the federal wage hikes.

Restaurant workers, ticket takers in theaters and employees of amusement parks and recreation spots are among those most likely to make minimum wage, depending on local markets and wage pressures.

According to the U.S. Department of Labor's Bureau of Labor Statistics, about 15,000 people in Nebraska last year worked at or below the old minimum wage. That was about 2.7 percent of the state's 549,000 workers who were paid hourly.

Iowa already has set a minimum wage higher than the federal level. Iowa's minimum wage is $6.20 and it is set to go up to $7.25 in January.

Most people in the Omaha area already earn well above the current minimum wage, weakening the direct local impact. However, some business owners and economists have expressed concern that boosts in the minimum wage could ratchet up all wages, adding to inflationary pressures and costing jobs as employers cut back to meet payrolls.

Brasch said people living on minimum wage salaries need the pay raise.

Her center interviewed more than 1,200 families over the Christmas holidays last year as they came to the center for free gifts, Brasch said.

About 65 percent of the people had at least one person in the household working, and 19 percent said they were enrolled in some form of job training, Brasch said.

But half of those interviewed said they couldn't afford food for the whole month, 24 percent skipped meals and 68 percent said they could not afford more nutritious food like fresh vegetables and fruit, Brasch said.

"Food is one thing they can cut back on, that they just don't buy," Brasch said.

Rebecca Gould, executive director of the Nebraska Appleseed Center for Law in the Public Interest, an advocacy group for low-income citizens and child welfare, said the minimum wage increase is important, particularly since it had not risen since 1997.

"I think what's important is wages at least keep pace with inflation," Gould said. "People have been losing the value over time."

Even with the increase, many people will struggle to make ends meet, Gould said.

Concerns about wage inflation might be overstated, she said, though she conceded that some workers would receive higher wages as those below them rise.

"However, the 'spillover effect' is modest and affects the bottom fifth of workers in the hourly wage category," Gould said. "All in all, the increase will help more low-income workers and families better meet their basic needs."