Archive for the ‘Economic Opportunity’ category

Don’t take talkers’ comments at face value

October 2, 2015

The shameless way the public debate can be distorted never ends. Case in point: discussion about the minimum wage.

If you were in Eastern Iowa this morning listening to Simon Conway’s program on WMT-AM radio, you would not have an accurate idea of what happened in Seattle, Washington, following that city’s first step — to $11 — toward an eventual minimum wage of $15. Confusion on this issue has occurred in Johnson County, where supervisors have approved a $10.10 minimum wage by 2017.

Peter Fisher
IPP Research Director

What actually occurred, as Peter Fisher of the Iowa Policy Project has pointed out, is that job numbers rose in Seattle after the wage was raised. See his Aug. 25 guest opinion in the Iowa City Press-Citizen. Excerpt:

There is also misinformation flying around about Seattle, which took the first step toward raising the minimum wage to $15 in April of this year. What actually occurred is that overall employment in Seattle grew after the wage was raised. … The idea that restaurants closed because of the wage hike turned out to be a myth — the owners of the four restaurants in question reported that wages had nothing to do with their decisions.

New job numbers since then show jobs to be up in Seattle — both overall and in the restaurant and drinking places category — and both over the year and since the first step of the minimum wage increase. While it would be a mistake to suggest the minimum wage is responsible, the leisure and hospitality category alone shows a net gain of 1,100 jobs since the higher minimum went into effect.*

Much number-crunching is yet to be done to enhance understanding about how the Seattle increase is now affecting and ultimately will affect the labor market in that area. But the fact that the scare tactics have had little substance behind them has been pretty clear from early on. See this Seattle Times story. Or this story.

The lesson here is not that the minimum wage increase caused an increase in jobs in Seattle — but that it’s ridiculous to say it hindered jobs.

That is, of course, if you are at all interested in the facts.

Owen-2013-57Posted by Mike Owen, Executive Director, Iowa Policy Project
Learn more about Iowa issues with the minimum wage on our website,
* seasonally adjusted jobs, Washington State Employment Security Department.

Careful with the comments, Council Members

September 16, 2015

As the Solon City Council decides whether to back out of a Johnson County minimum wage increase, good information is available for comparison to recent comments by council members.

Peter Fisher of the Iowa Policy Project took a look recently at what a larger increase — to $15 — would do in Johnson and Linn counties. That report is here.

Separately, we have an Iowa Policy Project fact sheet available here on how Iowans statewide would be affected by an increase to $10.10, which is the level recently established by Johnson County supervisors to be phased in by 2017.

Findings of that research contradicts many comments by council members in Solon. For example, the minimum wage clearly is not, as one suggests, “for kids to go out and have some pocket money, that sort of stuff.”

In fact, the wage has been held so low for so long that it has become is part of a larger low-wage climate in our state, so that parents account for 1 in 5 of those who would be helped by a $10.10 minimum statewide. And almost half — 46 percent — of total family income in homes with a worker making less than $10.10 an hour comes from that job.

One council member ignores a lot of people in Iowa, very likely many of his own neighbors, when he suggests this is all about part-time work. More than 4 in 10 — 43 percent — of the workers who would benefit from an increase to $10.10 in Iowa are working full time.

Finally, an observation by a third council member is particularly noteworthy — that local restaurants are having trouble finding help. Wonder why that would be? Something about low pay, perhaps? How many more would be willing to work if pay were increased? How many more would be patronizing local businesses because they could afford to do so?

It is certainly up to the good people of Solon and their leaders to decide whether to go along with the new Johnson County ordinance, and by doing so to put pressure on the state to raise the state minimum. The latter, by the way, is what some council members are quoted that what they want to see: a statewide increase. Yet with no local pressure, is that really the message they send to state lawmakers who are holding Iowa’s minimum below that of 29 other states?

Whichever way they decide, however, they should be making the decision with good information, not discredited myths.

Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

Why $15? Good reasons to consider it

August 12, 2015

There can be little question that Iowa’s minimum wage — like that of the nation — is too low.

At $7.25, it doesn’t come close to a living wage, yet the data show conclusively that in a significant share of households, income from a minimum-wage job is critical to the ability of a family to make ends meet. Plus, in Iowa it has stood at $7.25 since January 2008. An increase is long overdue.

Proposals for how much it should rise, however, are all over the map — literally. Not only do 29 states have wages at various levels higher than the federal minimum, but so do a growing number of cities. Even in Johnson County in Iowa, county officials are thinking of moving to $10.10 over the next 17 months.

In our new report, “The Case for a County Minimum Wage,” we look at the impacts on households of a $15 minimum wage in Johnson County and in Linn County. We find a benefit to over 43,000 workers.

Why $15? First, recognize that it is a conservative number. Had the wage been indexed to the growth in productivity since the late 1960s, it would be over $18 now. The graph below shows how the minimum wage, average wage, and productivity have changed from 1968 through 2014. The stark gap between both the minimum and average wages and the pace of productivity illustrates how income inequality has grown so rapidly — gains are not being shared with average or low-wage workers.


Basic RGBAnother reason to look at $15 is that it would be a significant step toward the wage needed for a basic-needs budget in many Iowa families. Our Cost of Living in Iowa analysis shows a married couple in Johnson or Linn County with one wage earner and one or two children needs a job paying $19 to $27 an hour just to pay for the basic costs of rent, utilities, food, child care, transportation, and health care. With two earners, each parent needs between $13 and $18 an hour. For a single parent, the budget math becomes more daunting, as child care costs must be paid out of a single paycheck. Now an hourly wage of $20 to $31 is needed.

Beyond the philosophical arguments about minimum wages, and speculation about whether a local minimum wage law will pass a court test in Iowa, these basic economic realities offer the context necessary to consider a minimum wage increase and to determine a meaningful level — whether adopted by a city, county, state or the U.S. Congress.

2010-PFw5464  Posted by Peter S. Fisher, Research Director of the Iowa Policy Project

On big issues, Iowa leaders emerging locally

July 23, 2015

If state leaders won’t lead, local leaders in Iowa are showing they will take up the job.

On three big issues in the last several months, we have seen this:

I don’t know about you, but I’m beginning to see a trend.

Public policy matters in Iowans’ lives, in critical ways. We elect people who can take care of it in a way that works for all Iowans, but not enough who will. In the absence of state-level leadership, it’s inevitable, perhaps, that local officials who also are hired to work for their constituents will find a way to help them.

Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

Big ‘Oops’ for tax-cutters in school vetoes

July 15, 2015

Governor Branstad’s vetoes of “one-time” funding pose “ongoing” and “recurring” problems for a major and ill-advised proposal by his allies to restructure personal income taxes in Iowa.

And they should.

During the last session, while lawmakers and the Governor were telling schools the state could not afford more than a 1.25 percent increase in per-pupil school aid, a group in the House was pushing a plan to let individuals choose a “flat” income tax rate option. In other words, figure your taxes under the current rate structure, then compare it to the flat rate, and choose which one costs you less.

It benefits primarily the wealthy, and it costs big money. There is no upside.

We have seen such a proposal in the past, and we are virtually guaranteed to see it again in some form in 2016. Not only does it compound fairness issues in Iowa’s tax structure, but it loses hundreds of millions of dollars in revenue, year after year, that Iowa legislators and the Governor have been telling us we cannot afford to lose.

Its supporters cannot avoid that contradiction, given their obsession this year about not letting a surplus — and a sustained one at that — be used for “ongoing” or “recurring” expenses on grounds they were not “sustainable.” Those are the grounds for the Governor’s vetoes of one-time funds for local schools, community colleges and state universities.

For good analysis of the 2015 alternative flat-tax proposal, which was not presented on the House floor as some of these messaging contradictions quickly became clear, see this Iowa Fiscal Partnership backgrounder by Peter Fisher. As Fisher noted, the projected revenue loss was projected at nearly half a billion dollars — $482 million — for the new fiscal year and around $400 million for each of the next three.

In short, the flat-tax idea is not “sustainable.” No need to discuss in the 2016 session.

Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project

Ongoing mistake in ‘one-time’ rhetoric

July 8, 2015

The Governor appears to be missing his own point.

Vetoing one-time funding for one-time uses — as Governor Branstad did last week — goes against what the Governor himself has been saying. And Iowa students will suffer for it.

Set aside for a moment that it can be quite sensible to use one-time funds for ongoing expenses. It depends on the circumstances. Set aside the fact that Iowa revenues and projections are strong and that state money seems to be available on an ongoing basis for corporate subsidies if not for restoring repeated shortfalls in education funding.

In the case at hand, the Governor vetoed one-time funds — for public schools, community colleges and the three regents universities — that ironically would have been spent in line with his own stated concern. The $55.7 million in one-time funds for local schools and area education agencies would have supplemented regular funding, set at 1.25 percent growth per pupil, all part of a package negotiated by the split-control Legislature.

Here’s the oft-stated concern about one-time funds, in a nutshell: You don’t spend one-time money on things that commit you to the same or greater spending in the future, because you don’t know whether the funds will be there later on.

The compromise on school funding negotiated and passed by legislators (part of HF666) reflected that concern:

  • For K-12 schools, the legislation specifies that funds “are intended to supplement, not supplant, existing school district funding for instructional expenditures.” It goes on to define “instructional expenditures” in such a way that assures the funds are for one-time uses that carry no additional commitment beyond the FY2016 budget year.

So, you can add to one-time expenses that you would have had to leave out, for purposes such as textbooks, library books, other instructional materials, transportation costs or educational initiatives to increase academic achievement. You can’t plan on having the same funds available in the following budget year.

  • For community colleges and the regents, each section of the bill included this stipulation: “Moneys appropriated in this section shall be used for purposes of nonrecurring expenses and not for operational purposes or ongoing expenses. For purposes of this section, ‘operational purposes’ means salary, support, administrative expenses, or other personnel-related costs.”

In his veto message, the Governor stated, “Funding ongoing expenses with one-time money is unsustainable.” In neither case did the Legislature propose doing so.

The larger problem with one-time funding is that such a cautious approach was unnecessary, because funds are available for more ongoing spending on education than what either the Governor or the House leadership permitted. The latest estimates are for 6 percent revenue growth in the coming year.

With or without the one-time funds that would have helped school districts, the legislative compromise ensures the continued erosion of the basic building block for school budgets, the per-pupil cost.


Supplemental State Aid (formerly termed “allowable growth) defines the percentage growth in the cost per pupil used to determine local school district budgets, which are based on enrollment. For FY2016, the Legislature and Governor have set the growth figure at 1.25 percent. Though state law requires this figure to be set about 16 months before the start of the fiscal year, the issue was not resolved until last week, when the Governor signed the legislation, and the fiscal year had already begun. The Senate passed 4 percent growth for FY2017 and the House 2 percent, but no compromise emerged and that remains unsettled. The education funding vetoed last week by the Governor affects separate one-time spending that would not have affected future budgets.

For the last six budget years, per-pupil budget growth has been above 2 percent only once. Once it was zero, and schools for the coming year are at 1.25 percent. This does not come close to meeting the costs of education at the same level year after year.

Ultimately, that is the test of what is, or is not, sustainable.

Owen-2013-57Posted by Mike Owen, Executive Director of the Iowa Policy Project


See the Iowa Fiscal Partnership statement from July 2

New expectations on minimum wage

May 4, 2015

What, you won’t give us $10.10? OK, we’ll take $12.

Now, we’re talkin’!

At a time when progressive positions are compromised before they are given a chance to help the economy, boost family prosperity and lessen growing inequities, minimum-wage proponents have drawn the line at an unusual place in the sand: ahead of the one before.

It’s a bold stroke when the House and Senate leaders are against any increase in the current minimum of $7.25 an hour. The national minimum wage has been stuck there since July 2009 — and in Iowa even longer, since the state minimum rose and stopped there in January 2008.

Seven-plus years later, inflation has put minimum-wage workers in Iowa behind where they were in 2007 and 2008.

In 2013, Senator Tom Harkin of Iowa and Congressman George Miller of California teamed up to promote $10.10, calling $7.25 “unconscionably low.” But it has not happened.

Last week, Senator Patty Murray of Washington and Congressman Bobby Scott of Virginia introduced legislation to raise the minimum to $12 by 2020, in five steps. It also would eliminate the $2.13 tipped wage and index the new minimum to inflation.

Here’s an Iowa fact sheet, and here are reports from the Economic Policy Institute and National Employment Law Project.


For some a $12 minimum wage will still sound too low. For some it will sound too high — which is why the debate retreated to $8.75 in Iowa this year, and that cannot even get a vote in the Iowa House.

Pushing the debate ahead to a place where it will affect more workers — 436,000 in Iowa, or 42 percent more than the 306,000 affected with a minimum at $10.10 — is where this needs to go. It may increase pressure to the point where we see more candidates taking a stand and votes taken in Washington and more state capitols.

Owen-2013-57Posted by Mike Owen, executive director of the Iowa Policy Project
Basic RGBThe Iowa Policy Project is a nonprofit, nonpartisan organization. IPP is a 501(c)3 organization and contributions to IPP are tax-deductible as permitted by law.


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