Why? Because the lower-paying companies have higher turnover costs in the form of job ads, onboarding, training, and opportunity costs. The large staffing company, Adecco, observes, “There’s plenty of research that shows the correlation between low wages and low productivity (and lack of employee engagement).” They note that “some lower-paying companies actually spend more than some higher-paying companies when it comes to workforce management. It also analyzed the “large and critical cost element” of lost customers due to employee turnover, as customers are irritated by new and inexperienced replacement employees, to the point of taking their business elsewhere. It measured indirect costs such as errors, product damage, and improper use of equipment. The research factored in direct costs such as advertising, screening, training, and new employee processing.

For example, an in-depth study of the supermarket industry found that the annual cost of turnover exceeded the industry’s total annual profit by 40 percent. Turnover costs are even higher when more indirect costs are included in the measurement. An analysis of case studies published between 20 found that the median cost of turnover represented 23.5 percent of an employee’s annual wage. Īs summarized in the Wall Street Journal, a “large body of research…suggests that raising wages leads to lower employee turnover and better customer service, which generally correlate with higher sales and lower expenses,” and “stemming turnover, in particular, can save companies a lot of money.” A Pew Research Center survey found that the top three reasons why workers quit their jobs in 2021 are low pay (63 percent), no opportunities for advancement (63 percent), and feeling disrespected at work (57 percent). Turnover rates are affected by worker dissatisfaction. Bureau of Labor Statistics, Job Openings and Labor Turnover Table 16: Annual total separations rates by industry and region, not seasonally adjusted, last modified March 10, 2022. Annual turnover rate by selected industry, 2017-2021 By comparison, the average turnover rate for all industries in 2021 was 47.2 percent. Bureau of Labor Statistics shows that in 2021, turnover rates in three underpaying industries (leisure and hospitality, accommodation and food services, and retail trade) were among the highest, reaching 84.9 percent, 86.3 percent, and 64.6 percent, respectively. Underpaid industries are plagued by high turnover rates-a trend that predates the pandemic (Table 1). Raising the minimum wage would benefit businesses by reducing employee turnover, increasing productivity, and improving customer service Consequently, raising the minimum wage would boost consumer spending as workers and their families buy goods and services from local businesses across Nebraska. Workers in underpaid jobs are, out of necessity, most likely to spend any additional money they make. Raising the minimum wage to $15 per hour will put more money in the pockets of the customers of Nebraska businesses. On average, their annual earnings would increase by $2,100, which amounts to over $278 million in additional earnings for all affected workers. Īccording to the Economic Policy Institute, a $15 minimum wage in Nebraska would benefit nearly 150,000 workers (17 percent of the state’s workforce). Starting in 2027, the state minimum wage would be adjusted annually to account for increases in the cost of living. Under Initiative 433, Nebraska’s minimum wage would gradually increase over four years-first to $10.50 per hour on Jan.

Nebraska’s minimum wage is currently $9.00 per hour, which amounts to $18,720 in pre-tax earnings for year-round, full-time workers. Raising Nebraska’s minimum wage benefits businesses because it increases workers’ ability to spend more as customers Businesses benefit from increased consumer spending, lower employee turnover, increased productivity, and improved customer service. Minimum wage increases are a tried-and-true approach to boosting workers’ paychecks without negative effects, as three decades of economic research demonstrates.

The measure would benefit nearly 150,000 workers and strengthen Nebraska’s economy. Under Initiative 433 the state’s minimum wage would gradually increase to $15 by 2026, with annual cost of living adjustments thereafter. In November, Nebraskans will have an opportunity to raise the state’s minimum wage.

Nebraska unemployment tax form