Chairperson Harr and members of the Business and Labor Committee:
The Lincoln Independent Business Association would like to express its opposition to LB 494 which increases the tipped minimum wage.
LIBA opposes increasing the tipped minimum wage because it will cut into already thin profit margins in the restaurant industry to increase the wage of employees who are already among the highest compensated at restaurants and bars.
Under Nebraska statute, tip earning employees are guaranteed to earn at least the minimum wage. However, employees rarely have to rely on that guarantee as tipped employees are among the highest compensated employees at most establishments. In fact, at Brewsky’s restaurants in Lincoln tipped employees average $10 an hour in tips alone.
When asked how they would compensate for this cost increase a few business owners suggested they could cut employees or hours but for most that is not an option. They already operate at minimum staffing levels. Instead, restaurants will be forced to raise their prices and hope their customers will keep coming. However, restaurant owners are worried. They are worried because this increase would be one in a pattern of recent government actions forcing up prices. In Lincoln, bar and restaurant bills already have an almost nine percent markup for sales and occupation taxes. On top of that, establishments have increased prices to pay the increased minimum wage and the City of Lincoln is in the process of considering a local option sales tax increase. Taken alone, any one of these increases may not affect customer behavior. However, the increases are cumulative and employers are worried that the next increase will tip the scales and ultimately drive them out of business.
It is for these reasons that LIBA opposes this legislation and respectfully requests this committee indefinitely postpone LB 494.
President & CEO
Lincoln Independent Business Association