Table of Contents

Before turning to trade and other foreign policy–related issues, it is important to stress that many other issues concern Nebraska’s middle-class households equally or far more. Some of those concerns are similar to those raised in Colorado and Ohio. Others are more specific to Nebraska—such as the path taken to achieve middle-income status, the exposure of many rural communities to high property taxes, farm consolidation, extreme weather, and retail store closures.

Challenges to Achieving a Middle Income in Nebraska

Virtually everyone interviewed for this case study—prior to the outbreak of COVID-19, the disease caused by the new coronavirus—expressed confidence in Nebraska’s economy and remarked often about the low rate of unemployment. They stressed that help wanted signs could be seen throughout the state and that anyone who wanted a job likely could find one. Moreover, Nebraska rebounded more quickly from the Great Recession than most other U.S. states. That is because its large agricultural sector benefited from high global commodity prices at the time and the hard-hit auto industry accounts for a very small share of its economy. The city of Kearney is doing so well now that local economic developers reported having to turn away some new businesses seeking to relocate there because they would not be paying high enough wages.1

Economic growth and job creation are crucial and welcome, but they are not enough to keep the middle-class dream alive when rising household costs are perceived to outpace increases in income.

This sense of confidence in the state’s economy—especially in Kearney, Lincoln, and Omaha—nonetheless coexists with mounting financial anxieties that Nebraskans throughout the state regularly report in household surveys. In those surveys, they raise deep concerns about the high costs of healthcare, insurance, and education, as well as the dwindling pool of affordable housing for middle-income families.2 In general, the types of concerns Coloradans, Ohioans, and Nebraskans raise about the future of the middle class bear striking similarities. In all these places, the message is the same: economic growth and job creation are crucial and welcome, but they are not enough to keep the middle-class dream alive when rising household costs are perceived to outpace increases in income.

Similar to families in Colorado and Ohio, families in Nebraska increasingly utilize dual-income households to afford a middle-class lifestyle. What makes Nebraska unique is the extent to which families work longer hours and hold multiple jobs at once to secure a middle income, when simply working normal hours in a single job is not enough. The state has the fourth-highest labor force participation rate and the third-highest employment to population ratio in the country.3 In 2015, 7.7 percent of workers in Nebraska held multiple jobs, compared to 4.9 percent for the nation.4 A more recent regional survey found that 15 percent of the adult population in Omaha, 16 percent in Lincoln, and 18 percent in northeastern Nebraska (including Columbus) hold multiple jobs.5

These realities may explain why so many Nebraskans consider themselves to be middle class, even though the wages for so many jobs in the state fall within the lower-income bracket (as discussed in the next chapter and Appendix C). Nebraskans are working more to make up the difference, and there are enough jobs available to do so.

High Property Taxes

“What do you mean foreign policy? I don’t care about foreign policy . . . we just got through the tax protest . . . so that’s still fresh on my mind.” – A county government official and private business owner in North Platte6

Nebraska’s property taxes are the tenth highest in the United States. Nebraska’s farm owners can end up paying almost half of their net farm income in agricultural property taxes and almost two-thirds in total taxes.7 The rates of state and local taxes are therefore a perennially hot topic. Farm owners naturally advocate lower rates. But others in the state are resistant to efforts to drop the rates, given that approximately 60 percent of the taxes farmland owners pay help to fund Nebraska’s schools.8

Farm owners’ concerns about taxes are in part due to the high valuation of land. While rising farmland values reflect the strength of Nebraska’s farming and ranching sectors, higher land valuation also means higher tax burdens. In the ten-year period between 2008 and 2018, the value of Nebraska’s agricultural land increased by over 200 percent. Meanwhile, residential property has increased by only 34 percent over the same period.9 From the perspective of farm owners, they have been taxed more heavily over the past decade than urban professionals in Lincoln and Omaha.

Farm owners in Nebraska have therefore welcomed a recent change in the trends. Just in the last few years, the value of residential property, especially in Lincoln and Omaha, has started to climb more rapidly, precipitating mounting concerns about urban housing prices. Meanwhile, the value of agricultural land has plateaued.

Farm Consolidation

Similar to other agricultural states, Nebraska has experienced the same trend playing out nationally of medium-sized farms and ranches being bought out and consolidated with larger ones or being split into specialty or so-called hobby farms. From 2012 to 2017, Nebraska lost almost 6,000 farms (26 percent), ranging in size from 50 to 999 harvested acres, while it added 550 farms harvesting 1,000 acres or more and 560 farms harvesting less than 50 acres.10 The increase in the number of farms harvesting 50 acres or less is reflective of the move to specialized and organic farming. Meanwhile, the trend toward larger farms—including family-owned or family corporate farms—has been playing out for years, perhaps inevitably in response to new technologies affording larger economies of scale in production. It takes economies of scale to sustain a profit or even stay afloat in this environment.11

As an interviewee from North Platte explained, “If somebody wants to get into agriculture or farming, it’s extraordinarily difficult to get the scale you need to make it go. And often the solution is, when the last old couple dies, the family sells the farm . . . it happens because each [farm] is more productive than they used to be, so you really don’t need as many.”12

Extreme Flooding

At the time this study was conducted in July and early August 2019, the state was still grappling with the severe consequences of a March blizzard in western Nebraska and historic flooding that caused an estimated $1 billion in losses to the state’s agricultural economy, including $440 million in potential cow-calf operation losses and $400 million in crop losses.13 At the time, floodwaters prompted the closure of 3,300 miles of state and federal highways and twenty-one bridges.14 States of emergency were declared in eighty-four of Nebraska’s ninety-three counties.15 The state will long be contending with almost a half a billion dollars in infrastructure damage, with an estimated 200 miles of paved roads destroyed and at least fifteen bridges washed away.16 Governor Pete Ricketts called these events “the most widespread disaster we’ve had in our state’s history.”17

On top of this, in early July 2019, an irrigation tunnel associated with the Gering-Fort Laramie irrigation canal collapsed, disrupting water delivery to approximately 107,000 acres of farmland in eastern Wyoming and Scotts Bluff County in the Nebraska Panhandle for nearly six weeks. The tunnel collapse severely impacted crop production in the region for the season, potentially costing as much as $89 million in losses. Water did not begin flowing in the canal until late August.18

Any discussion of the well-being of rural, agricultural communities must consider the effects of increasingly frequent floods, extreme weather, and disruptions in water supply. They affect the planting of crops at home and agricultural commodity prices globally. Farmers and ranchers interviewed for this study found it difficult to comment on the impact of trade policies on their economic well-being in isolation from such factors, particularly the weather.

Thus, while trade is detailed in the next chapter as a prominent concern for the economic well-being of agricultural-based communities, it is by no means the only concern, and it can, in some instances, play second fiddle to extreme weather, farm consolidation, and property taxes. As the president of the Nebraska Farm Bureau put it, “If we wouldn’t have had all of these weather things, you know, would corn and soybeans be half the price that they are now because of the trade issues? . . . If we solve a bunch of the trade issues, do prices double? You know, I doubt that.”19 Consequently, it rings hollow to raise concerns about farmers’ and ranchers’ well-being solely in connection with criticism of President Donald Trump’s trade policies. On a related note, Nebraskans can see mentions of flooding as politicizing the issue if it is brought up principally to highlight the impact of climate change, rather than treating it as a concern for the agricultural community in its own right.

The Retail Apocalypse

In addition to being worried about the factors affecting their agricultural economic base, many of those interviewed, especially in rural counties, expressed anxiety about the growing numbers of vacant commercial spaces. Some explicitly referred to “the retail apocalypse,” a recent trend of thousands of brick-and-mortar retail stores across the United States closing up shop due to exponential growth in e-commerce, previous overbuilding of shopping malls, and changes in middle-class households’ spending power and preferences, among other factors.20

While this is a national trend, the closure of brick-and-mortar chains has hit rural, sparsely populated counties especially hard, because there are fewer retailers to begin with. “When you lose, you know, 20 percent of your, 30 percent of your downtown business base, boy, that really affects you. It leaves a lot of empty businesses and so we’re really seeing that locally,” expressed a North Platte resident and county government representative.21 Meanwhile, it is also much more difficult for rural communities to attract new businesses to occupy the sites. Firms are more likely to open up new physical stores near major population centers and in growing areas. Eighty of Nebraska’s ninety-three counties are considered rural, and 80 percent of them have populations that are shrinking.22

Eighty of Nebraska’s ninety-three counties are considered rural, and 80 percent of them have populations that are shrinking.

This phenomenon has hit Scottsbluff particularly hard since it serves as a regional hub for retail services in the Nebraska Panhandle. As one local official stressed, this small city of 36,000 hosts a retail population of 150,000, with consumers streaming in from surrounding areas. And local sales taxes help pay for many of the city’s services.23 The continued closure of retail stores will therefore have a profound impact on local communities across the region. According to the Nebraska Department of Revenue, Scotts Bluff County had 538 retail establishments in 2010. By 2018, there were 445 establishments, with sales barely having grown since then, as otherwise would have been expected.24

Lack of Trust in Information

Finally, another important piece of context to address before diving into foreign policy–related issues is the frequency with which interviewees and focus group participants expressed a lack of trust in information and the media. Participants bemoaned the declining quality of news media and voiced concerns about the use of social media as a provider of news and opinions. Their lack of trust was not restricted to traditional or social media alone, however. It extended to the government and research and scientific institutions.

Participants noted that locally trusted leaders can have a strong influence on how people think about policies, especially given the considerable lack of information coming out of Washington, DC, and distrust of the information that does. As one participant put it, “I think there’s [only] a little, if any, understanding of foreign policy at the household level. . . . Doesn’t mean people . . . don’t care; they really don’t know. You folks in DC have really screwed it up. Really, the policy of the country is unknown to most of us. . . . I would suspect that the domestic economics of the U.S. are being whipped back and forth by foreign policy, not to our best interests.”25

This prevailing mistrust suggests that if focus group participants were privy to more information they could trust, they could potentially change some of the opinions they expressed, as detailed in subsequent chapters, especially on issues that did not relate to their firsthand experiences. Meanwhile, the priority they attached to foreign policy–related issues could also change, depending on how events unfold on other issues, such as local property taxes and extreme weather.

Notes

1 S. Ahmed, J. Walther, J. O’Donnell, T. Abdel-Monem, and D. Rosenbaum, interview with Derek Rusher, president and chief executive officer of the Kearney Area Chamber of Commerce, Kearney, July 16, 2019.

2 Eric Thompson, “Nebraska Business and Consumer Confidence Indexes,” UNL College of Business, Bureau of Business Research, August 2, 2019, https://business.unl.edu/outreach/bureau-of-business-research/documents/Nebraska_Business_Survey_August_2019.pdf.

3 U.S. Census Bureau, American Community Survey, “Employment Status and Work Status in the Last Twelve Months,” 2018, https://data.census.gov/cedsci, accessed February 19, 2020; and Bureau of Economic Analysis, “Employment-Population Ratios of Persons 16 Years of Age and Over by Region, Division, and State, 2018–19 Annual Averages,” February 28, 2019, https://www.bls.gov/news.release/srgune.t02.htm.

4 Monthly Labor Review, “Multiple Job Holdings in States in 2015,” February 2017, https://www.bls.gov/opub/mlr/2017/article/multiple-jobholding-in-states-in-2015.htm.

5 Nebraska Department of Labor, “Nebraska Workforce Trends,” October 2018, https://neworks.nebraska.gov/admin/gsipub/htmlarea/uploads/Oct-Trends2018_FINAL-reducedsize.pdf.

6 S. Ahmed, A. Gelman, J. O’Donnell, E. Thompson, and J. Walther, interview with county government representative, Joseph R. Hewgley, North Platte, July 24, 2019.

7 J. David Aiken, “2019 Nebraska Property Tax Issues,” Cornhusker Economics, July 24, 2019, https://agecon.unl.edu/cornhusker-economics/2019/nebraska-property-tax-issues.

8 J. David Aiken, “2019 Nebraska Property Tax-School Funding Issues,” Cornhusker Economics, February 27, 2019, https://agecon.unl.edu/cornhusker-economics/2019/nebraska-property-tax-school-funding-issues.

9 Nebraska Department of Revenue, “Valuation, Taxes Levied and Tax Rate Data,” 2018, https://revenue.nebraska.gov/PAD/research-statistical-reports/valuation-taxes-levied-and-tax-rate-data.

10 U.S. Department of Agriculture, Census of Agriculture, “2017 Census by State—Nebraska,” last modified June 24, 2019, https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Census_by_State/Nebraska/.

11 Nicholas Bergin, “Report Shows Continuing Farm Consolidation,” Lincoln Journal Star, February 17, 2017, https://journalstar.com/business/agriculture/report-shows-continuing-farm-consolidation/article_18da0fde-bc44-5fac-b351-580ec7c58e3f.html.

12 S. Ahmed, A. Gelman, J. O’Donnell, E. Thompson, and J. Walther, interview with Eric Seacrest, Mid-Nebraska Community Foundation, North Platte, July 24, 2019.

13 Peter Salter, “‘Just a Terrible Mess’—Ranchers, Farmers Left With Dead Animals, Flooded Fields, Work to Be Done,” Lincoln Journal Star, March 25, 2019, https://journalstar.com/news/state-and-regional/nebraska/just-a-terrible-mess-ranchers-farmers-left-with-dead-animals/article_83f10982-0adf-5845-871d-d491ecbb72ef.html.

14 Erin Ailworth, “After Months of Floods and Tornadoes, Midwest Officials Tally Billions in Damage,” Wall Street Journal, July 4, 2019, https://www.wsj.com/articles/after-months-of-floods-and-tornadoes-midwest-officials-tally-billions-in-damage-11562232602.

15 FEMA, “Nebraska Severe Winter Storm, Straight-Line Winds, and Flooding (DR-4420),” August 7, 2019, https://www.fema.gov/disaster/4420.

16 Salter, “‘Just a Terrible Mess.’”

17 Chris Dunker, “Vice President Pence to Visit; Ricketts Calls Flooding ‘Most Widespread Disaster’ in State’s History,” Lincoln Journal Star, March 18, 2019, https://journalstar.com/news/state-and-regional/federal-politics/vice-president-pence-to-visit-ricketts-calls-flooding-most-widespread/article_f1548039-f1b3-5e86-b31c-91c829bdd242.html.

18 “Potential Economic Impact of Tunnel Collapse Is $89 Million,” University of Nebraska Extension, https://newsroom.unl.edu/announce/floodrecovery/9925/58448, accessed on August 20, 2019; and Gary Stone, Jessica Groskopf, and David Ostdiek, “Water Flowing Again in the Gerin-Fort Laramie and Goshen Irrigation Canal,” University of Nebraska–Lincoln Institute of Agriculture and Natural Resources, August 30, 2019, https://cropwatch.unl.edu/2019/canal-water-flowing.

19 S. Ahmed and J. O’Donnell, interview with Steve Nelson, president of the Nebraska Farm Bureau, Lincoln, July 31, 2019.

20 Derek Thompson, “What in the World Is Causing the Retail Meltdown of 2017,” Atlantic, April 10, 2017, https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/.

21 S. Ahmed, A. Gelman, J. O’Donnell, E. Thompson, and J. Walther, interview with county government official and private business owner, Joseph R. Hewgley, North Platte, July 24, 2019.

22 “Rural” refers to all counties that are not designated as parts of metropolitan areas by the Office of Management and Budget. Office of Rural Health Policy, “List of Rural Counties and Designated Eligible Census Tracts in Metropolitan Counties: Updated Census 2010,” updated December 31, 2018, https://www.hrsa.gov/sites/default/files/hrsa/ruralhealth/resources/forhpeligibleareas.pdf; Matt Olberding, “Census: Nebraska’s Big Counties Keep Growing, While Rural Counties Decline,” Lincoln Journal Star, April 18, 2019, https://journalstar.com/business/local/census-nebraska-s-big-counties-keep-growing-while-rural-counties/article_c411fa3b-af1a-5659-91c9-87d6ef290247.html.

23 S. Ahmed, A. Gelman, J. O’Donnell, E. Thompson, J. Walther, interview with Scotts Bluff resident, Scottsbluff, July 23, 2019.

24 State of Nebraska, “Sales Tax Data,” https://revenue.nebraska.gov/research/statistics/sales-tax-data, accessed January 2020.

25 Focus group conducted by S. Ahmed, J. Walther, T. Abdel-Monem, J. O’Donnell, and D. Rosenbaum, Lincoln, July 9, 2019.