Low Unemployment in Nebraska: Workers Prosper, Businesses Pull Through

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Harry’s Wonder Bar is a former trusty restaurant in Nebraska‘s capital, frequented by office workers, construction workers and graduate students: the kind of wood-paneled place with a pool table in the back where phones typically stay in pockets, second fiddle to casual conversation, and beer mugs are frosted regardless of the season.

While half a dozen happy hour patrons gathered at the bar one recent afternoon, most had something remarkable in common: Everyone seemed to know someone who got a significant raise, or more raises, over the past year – and many, if not all, had received a pay boost themselves.

This included the early-night shift bartender, Nikki Paulk, an easy-going woman with a flash of pink hair. “I’m in high demand, babe,” she said, mentioning “desperate” employers with a bright smile. “I’ve worked in six bars in the last six months because I keep getting better offers that I can’t refuse.”

Nebraska’s unemployment rate was 2.1% in February, tied with Utah for the lowest in the country and near the lowest on record for any state. In several counties, unemployment is below 1%. Even accounting for adults who have left the workforce, Nebraska’s share of the population 16 and older is about 68%, the highest figure in the country.

After decades of stagnant wages and incomes, the shift of power between rulers and their workers appears, at least temporarily, to be tilting in the direction of labor, with employers competing for workers instead of the other way around. Unemployment in states such as Indiana, Kansas, Montana and Oklahoma is almost as low as in Nebraska, testing the potential benefits and costs of an economy with exceptionally tight labor markets.

Ms Paulk, 35, earned a college degree in graphic design during the Great Recession, when jobs were scarce. She remembers working 60 hours a week near minimum wage in Illinois, “being thrilled to find a quarter” who could do the laundry. In 2013, she moved to Nebraska and took a job entering medical data for $12 an hour.

She started serving as a bartender in 2018, and since then, she says, her overall salary has more than doubled to $25 (and sometimes $30) an hour, including tips.

The nationwide unemployment rate in March was 3.6%, nearly back to pre-pandemic levels that were the lowest in half a century. Nebraska’s particularly low unemployment rate is in part attributable to its above-average graduation rate and the dominant role of industries like manufacturing and agriculture that are less volatile than the service or energy sectors during downturns. Even at the height of the Covid-19 shutdowns in the spring of 2020, the state’s unemployment rate was 7.4%, half the national figure.

Yet Nebraska’s job market may also be a harbinger for the country as a whole. Most economists expect overall unemployment to continue falling this year. Job postings are near record highs, and unemployment rates in January were lower than a year earlier in 388 of 389 metropolitan areas assessed by the Bureau of Labor Statistics.

Many business analysts argue that if labor remains scarce, wages will rise too quickly and employers will continually pass this increased spending on to consumers. At least for now, evidence of such a spiral is sparse: Federal Reserve data shows that median annual wage increases are well within the range – 3% to 7% – that prevailed from the 1980s until to the recession of 2007-2009.

The Fed, still worried, started to raise interest rates to calm the economy and tame inflationary pressures. The supply chain challenges that arose during the pandemic have persisted, and the war in Ukraine further complicates the outlook for inflation as well as overall economic growth. Consumer spending remains buoyant, but polls reflect gloomy public economic sentiment.

In the meantime, even as price hikes weigh on household budgets, burying the value of some new wage gains, a noticeable mass of employees and job seekers are gaining more weight when it comes to benefits. and terms.

At a virtual local economy summit hosted in February by the nonprofit group Leadership Lincoln, Eric Thompson, director of the Bureau of Business Research at the University of Nebraska-Lincoln, argued that the labor market could just rebalance itself.

“Obviously it’s always better to be the employer than the worker, or at least it usually is,” he said. But the current environment makes it easier for some employees to change jobs or compete for higher-level positions. Local employers are dropping degree requirements for a range of mid-level and entry-level positions.

Many fast-food restaurants, which are struggling to staff locations near the state’s $9 minimum wage, have begun offering starting salaries of $14. Evidence of automation is just as prevalent as the Help Wanted signs: some pharmacies dotting major roads and highways appear to have more self-service payment kiosks than employees at any given time.

Mr Thompson said such measures were not necessarily bad news for the working class, but rather a reflection of the need for businesses to adapt while workers find jobs that can “maximize their skills and their potential”.

Tony Goins, a former senior vice president of JPMorgan Chase who was appointed by Governor Pete Ricketts in 2019 to serve as director of Nebraska’s Department of Economic Development, said the tight job market could prompt managers to become more flexible and innovative.

“At the end of the day, the market dictates that I have to pay employees more money,” said Mr. Goins, a small-business owner himself with a cigar lounge in Lincoln. “So, I mean, how are you going to make up for that?” To stay competitive in hiring, he said, managers need to improve culture, leadership, employee retention and recruitment.

He spoke of his son, an assistant men’s basketball coach at Boston College — a position he says requires ongoing outreach as well as the dual promise of “the chance to play for a winning program” and personal development. “That’s not what CEOs are used to,” he said.

Companies aiming to grow began to offer incentives beyond compensation. Japanese company Kawasaki Motors is spending $200 million to expand the 2.4 million square foot site in north Lincoln where it manufactures jet skis, all-terrain vehicles and wagons. It increases its membership to 2,400 members from more than 500 employees, with jobs mainly in fabrication, welding and assembly.

The company is becoming more flexible in terms of hiring and working styles in order to be successful. “Before, it took a few weeks to get hired at Kawasaki,” said Bryan Seck, its chief talent management strategist at Lincoln. “Now it’s four o’clock.”

Knowing that many parents remain on the sidelines of the workforce due to childcare duties, Kawasaki recently created a 9 a.m. to 2 p.m. shift suitable for those who need to pick up children from school and daycare in the early afternoon. Starting pay is $18.10 an hour, Seck said, with benefits including health care and a 401(k) plan.

In addition to raising wages to retain employees, Todd Heyne, construction manager at Allo Communications, a Lincoln-based cable company, said management decided that easing in-person work requirements could expand the pool of available workers. This has led the company to allow many of its customer service representatives and technical support employees to train and work further as it prepares to expand beyond Nebraska and Colorado. .

Not all problem solving is easy. Added labor costs add to supply chain pressures that have increased the price of crucial materials like fiber optic cable by up to 30%. Suppliers often charge 20% more for their contracted tasks. As a result, the company took steps such as hiring its own trucking staff.

Ultimately, “combined with some automation efficiencies, our team will see dramatic pay increases with less grunt work,” Heyne said, reducing manual paperwork, centralizing back-end systems and doing more to resolve issues. remote customer network issues. So, despite the cost challenges, “I’ve never been more optimistic about our position, our position in the market, how we compete against our competitors and our technology,” he added. “Which is strange.”

For many, the desirability of this economic moment is tinged with concern. Among them is Ashlee Bridger, a 30-year-old student at Southeast Community College’s Lincoln campus who works in administration at nearby Huffman Engineering after being recruited at a job fair.

Ms Bridger left her job as a nurse to pursue a career in human resources because she felt confident enough to bet on herself: “Of course it was a risk. Leaving any career is. But in today’s job market, she said, “I knew I would be able to progress more easily.”

She also had a series of life stages that fell into place. She will graduate with an associate degree in May and begin her undergraduate work in the fall at Nebraska Wesleyan University. Huffman officials told her she was welcome to continue working there when her schedule allowed and that they would like to hire her for a higher position after she finished her studies.

Last year, she got married in the summer, then moved in with her husband into a newly built house in Lincoln in August. Although they feel financially stable, she half-joked that they were lucky the house was mostly built before lumber prices skyrocketed. With prices up across the board now, “I’m being more careful about my spending,” she said.

Mrs. Paulk, the better paid Harry’s bartender, has friends and customers unhappy with recent inflation. “But it’s something we control anyway,” she said with a shrug.

“All I know,” she added, “is that now I’m not broke – it’s great. Life is good.”

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