New minimum wage may cause a maximum effect

Taylor Hensley starts a taco down the line at Taco Johns at 1216 E. Fourth St. General Manager Mike Torres said prices at the fast food restaurant have risen after minimum wage was increased from $7.25 per hour to $8 per hour on Jan. 1.

It’s been just five days since Nebraska businesses were required to raise the minimum wage for employees from $7.25 per hour to $8. In North Platte, some businesses are already feeling the effects.

Customers at Taco Johns, for example, are asking why prices have increased. Mike Torres, general manager at the East Fourth Street location, said prices were raised as a result of the wage increase. He said the company didn’t wait until Jan. 1 to raise wages, either.

“Mine changed a couple months ago,” Torres said, of the wage increase.

Across town, though, Josh Catlett said prices at Runza aren’t going to change. Catlett manages the restaurant on East Leota Street.

“We set our own prices,” he said.

In particular, the cost of hamburger is what influences the prices for customers more than the cost of labor, Catlett said.

Except for new employees, such as high school students, Catlett said he already pays over minimum wage. The 75-cent increase for some of his employees wasn’t difficult.

But when the minimum jumps to $9 in January 2016, that’s when it could become more challenging, he said.

For the most part, wages in the area were already above minimum because of strong labor competition, said both Dan Mauk, president of the North Platte Area Chamber of Commerce and Development, and Adam Weinberg, communications and outreach director for the Platte Institute for Economic Research. Mauk said it will take a few months for the real impact of the wage increase to be known, particularly in small businesses that are still working on balancing their cost structure.

“There’s a kind of trickle-down effect,” Mauk said.

At North Platte Community Day Care, for example, most of the employees were making over minimum wage, but about half were making under $8 per hour, according to Vona Koch, day care director. Koch said the board of directors for the business is considering an increase in rates to make up the difference, although they know that can place a stress on parents.

“We haven’t made a decision, but we don’t really have a choice,” Koch said.

She said the board began discussing cost analysis even before the results of the election were announced on Nov. 5. In Lincoln County, 54 percent of voters approved the wage increase.

Weinberg said although the wage increase is meant to help, it could end up discriminating against some employees.

“Who it really hurts are those with limited skills, experience and education,” Weinberg said.

He said the eventual increase to $9 per hour in 2016 could make employers less likely to invest in entry-level employees if another applicant has more training.

Mauk said the chamber can lend a hand to area businesses with free, confidential counseling to help establish a cost structure and make comparisons with similar businesses nationally. The chamber can be reached at 532-4966.

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