Posted tagged ‘Heather Gibney’

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Wind Power in Iowa: Lower Rates, Good Jobs

March 18, 2013

Opponents of expanding renewable energy often claim that new, safe and clean electricity is all very nice but it just costs too much. Let’s look at the data. The Energy Information Administration of the U.S. Department of Energy keeps statistics on retail electric rates by state and for the nation as a whole. The graph below[i] compares the average retail rates (residential, commercial, industrial) in Iowa to the U.S. as a whole starting in 1998 when Iowa began to produce significant amounts of wind electricity. While there are many reasons why a particular state’s electric rates are high or low it is certainly fair to say that our rank as the leader in per-capita wind electricity production (24.5 percent of all electricity in 2011)[ii] has not caused our rates to shoot up dramatically. Even though Iowa produces seven times as much wind power as the U.S. average, its rates continue to be about 2.5 cents per kilowatt hour below the national average.

Basic RGB

Any discussion of prices for electricity must be qualified since the amount of wind electricity produced is not the same as the amount consumed in the state. States around Iowa have requirements that a percentage of electricity sold be from renewable energy. Iowa also has such a requirement and ours was the first in the nation, a fact the governor tends to emphasize, and the requirement was met long ago. Some wind electricity is certainly exported. Thus, while data on wind electricity consumption would be helpful, information is unavailable on what portion of electricity from each fuel source serves retail load and what is sold on the wholesale market. It should also be pointed out that selling at the wholesale level has some benefit to Iowa ratepayers.

 

[i] Energy Information Administration. October 1, 2012. Average Price by State Provider. http://www.eia.gov/electricity/data/state/

[ii]  American Wind Energy Association. “American wind power now generates over 10 percent of electricity in nine states.” Accessed March 15, 2013.  http://www.awea.org/newsroom/pressreleases/wind-generation-2012.cfm

Posted by David Osterberg & Heather Gibney

Categories: Energy & Environment, Organization
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Stagnant objections to minimum wage increases

March 7, 2013
Heather Gibney, Research Associate

Heather Gibney

Dialogue about increasing the minimum wage is finally emerging in 2013. President Obama proposed an increase in the minimum wage to $9.00 per hour in his State of the Union address, and Senator Tom Harkin and Representative George Miller have introduced the Fair Minimum Wage Act of 2013 — which would raise the minimum wage from $7.25 an hour to $10.10. The Harkin-Miller bill would raise the wage in three steps of 95 cents before indexing it to keep up with the rising cost of living.

Iowa’s minimum wage now matches the federal. Raising it to $10.10 per hour would put nearly $6,000 more dollars in the pockets of Iowa families, and for the first time since the late 1970s a single parent with two children would be above the federal poverty level — a wage gap that we should have seen diminishing over time, but have not.

poverty vs min wage

Recognizing that the federal minimum wage is too low, 19 other states, including the District of Columbia have a higher minimum wage than the federal and 10 states annually increase their minimum to keep up with the rising cost of living. Unfortunately, attempts to raise the federal minimum wage and set automatic adjustments to keep pace with the rising cost of living have been hindered by bad economics. Beliefs that increasing the minimum wage will lead to job loss, that the majority of those benefiting would be teenagers and that it would decrease output for certain industries is the consensus among opponents, however unfounded. A recent report from the Center on Economic Policy and Research (CEPR) looked at the most influential research done on the minimum wage in the last 20 years and continuously found insignificant or no discernible effects feared — and promoted — by opponents of raises in the minimum wage.

While the passage of any of these proposals remains uncertain, Iowans working for the minimum wage will have to get by with their creativity; possibly working two jobs, relying on cash assistance and tax credits, going without those amenities that make life a little more enjoyable and hoping that one day they might join the middle class.

Posted by Heather Gibney, Research Associate

Categories: Economic Opportunity, Organization
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Why the minimum wage matters

February 13, 2013
Heather Gibney, Research Associate

Heather Gibney

It doesn’t take long after someone proposes an increase in the minimum wage — as President Obama did in his State of the Union message — to hear the same, tired arguments against it.

Rather than repeat them, and the bad economics behind them, it’s important to put the minimum wage in the context of the cost of making ends meet. It doesn’t come close — which means two things: (1) the wage itself needs to keep pace with increases in typical household costs, and (2) to fill gaps between the wage and the cost of basic needs, and to encourage people to work, we can through public policy offer work supports, such as the Earned Income Tax Credit, as well as assistance with the costs of food, health care and child care.

The Cost of Living in Iowa analysis by the Iowa Policy Project last year provides a look at just how far short a $7.25 hourly wage would fall for a single parent even working two full-time jobs. It would not come close to paying the bills without work-support programs. Note these estimates in the accompanying table (Table 3 from that May 2012 report) of a basic-needs, no-frills household budget for a single-parent family of two or three.

120531-COL-Table3

The national minimum wage of $7.25 has not been increased in almost four years — and in Iowa it’s already been over five years, as the state’s $7.25 minimum took effect in January 2008. Prices are higher than they were then, and employers cannot be counted upon to raise pay for minimum-wage workers without the stick of wage-and-hour laws. That is why there’s a minimum.

Posted by Heather Gibney, Research Associate

Categories: Economic Opportunity, Organization
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EITC boost would help families who need it — and economy

January 17, 2013
Heather Gibney, Research Associate

Heather Gibney

If you imagine a packed Kinnick Stadium on game day you have an idea of how many Iowans were kept out of poverty from 2009 to 2011 thanks to two refundable tax credits.

A new state-by-state analysis from the Brookings Institution finds that the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 71,123 Iowans out of poverty, over half of them children.

The Governor’s Condition of the State speech Tuesday missed an opportunity to discuss the value of Iowa’s own Earned Income Tax Credit (EITC) to Iowa families and prospects for an expansion — something he has twice vetoed on grounds that he wanted more comprehensive tax reforms.

The Brookings analysis uses a new way of looking at poverty: the Supplemental Poverty Measure, an updated approach to the calculation of whether an Americans household is in poverty. So it’s a valuable look that we haven’t seen for state-level figures.

The EITC is designed to encourage work when low-income jobs don’t provide enough for a family to make ends meet. So, as a family earns more income, they become eligible for a larger credit; as their income approaches self-sufficiency the EITC gradually phases out.[1]

At the state level, Iowa families who are eligible for the federal EITC also qualify for the state EITC, which is set at 7 percent of the federal credit. Proposals in the past would take that higher, to 10 percent or even 20 percent. It can be an important break for lower-income working families because Iowa already taxes the income of many who don’t earn enough to pay federal income tax. Currently, a married couple with two incomes and two children who qualifies for the federal EITC doesn’t have to start paying federal income taxes until their incomes reach $45,400. That same family would have to pay Iowa income taxes when their incomes reached $22,600.[2]

The EITC is the the nation’s largest and most successful anti-poverty program, largely because it encourages and rewards working families. With Iowa’s 85th General Assembly under way, discussions about raising Iowa’s EITC above 7 percent may once again emerge after lawmakers failed to reach an agreement last year.

An EITC increase would raise the threshold at which Iowa families start to owe income taxes — putting more money into the pockets of those who need it the most and encouraging them to spend that money in their local communities.

Posted by Heather Gibney, Research Associate

Categories: Budget and Tax, Economic Opportunity, Organization
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Good signs on jobs horizon?

October 5, 2012
Heather Gibney, Research Associate

Heather Gibney

The national unemployment rate fell to 7.8 percent in September — down from 8.1 percent from August. Nonfarm jobs nationally rose by 114,000 with gains in areas like health care, transportation and warehousing.[1]

Iowa’s seasonally adjusted unemployment rate has been averaging two to three percentage points lower than the national average pretty much all through the Great Recession and recovery. It is good to see this gap beginning to close.

However, in August, the Iowa unemployment rate increased to 5.5 percent, worse than July, but better than a year ago when the rate was at 6.0 percent.  Iowa Workforce Development[2] cites seasonal job losses, effects of drought conditions, a global economic slowdown, and the national uncertainty surrounding taxes and expenditure cuts as factors that are restraining job growth.

We’ll get Iowa’s unemployment data for September later this month. Now that the national unemployment rate is breaking through the 8 percent mark we would hope to see Iowa’s rate fall below 5 percent in the near future.

[1] http://www.bls.gov/news.release/pdf/empsit.pdf

[2] http://www.iowaworkforce.org/news/XcNewsPlus.asp?cmd=view&articleid=81

Posted by Heather Gibney, Research Associate

Categories: Economic Opportunity, Organization
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Better understanding the 47 percent

October 1, 2012
Heather Gibney, Research Associate

Heather Gibney

The current political environment has set off a firestorm of confusion about who does and who does not pay taxes in America — and unfair criticism of many working families and others.

It’s true that 47 percent of Americans pay no federal income taxes, but they do pay taxes. In fact, almost two-thirds of the 47 percent are low-income, working households who are paying payroll taxes to help finance Social Security and Medicare, and many pay federal excise taxes on things like gasoline, alcohol and cigarettes.[1] These households are also paying a large percentage of their income in state and local sales and property taxes.

Many working Americans are exempt from the income tax because of features Congress added to the tax code — with overwhelming bipartisan support, in an effort to enable people to care for themselves and their children while encouraging them to work. Some of these features include the Earned Income Tax Credit, a Ronald Reagan era anti-poverty program that enables low-wage working families with children to meet their basic needs while promoting employment. In addition, the child tax credit gives families a tax credit through the form of a refund check even when they don’t owe federal income taxes.[2]

The other one-third of the 47 percent — those households that aren’t paying either major federal tax — includes those who are unemployed, low-income senior citizens who paid taxes during their working years and aren’t currently taxed on Social Security benefits, students, those who have disabilities or can’t work due to serious injury and people who don’t meet the income tax obligation because their wages aren’t high enough.

Often missed in the focus on those who are not currently paying income taxes is the errant assumption that all those people have never paid taxes and never will. Just because a household doesn’t owe income tax one year, doesn’t mean they won’t pay income taxes over their lifetime. For many, a career change, the loss of a job, a disability or injury, or low wages can lead to incomes too low to pay taxes.

Iowa households who aren’t paying federal income tax are still paying a large percentage of their incomes to state and local taxes. As the Iowa Policy Project reported in (2009), moderate-and low-income Iowans pay more of their income in state and local taxes than the rich do. [3] [4]

whopays2009As the graph at right shows, Iowa’s regressive tax system takes a larger share of the incomes from those who have the least, and a smaller share from those who have the ability to pay a larger percentage of their income. Make no mistake: Working Iowans pay taxes.

For more on this issue, see our two-pager, “Better understanding the 47 percent.”

Posted by Heather Gibney, Research Associate

Categories: Budget and Tax, Economic Opportunity, Organization
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