Full-time work not enough

Iowans are faced with limited economic opportunity despite their hard work.

Many Iowa families are unable to afford groceries, car maintenance or prescription refills, even though there is at least one full-time worker in the household. This presents a double bind, where Iowans are faced with limited economic opportunity despite their hard work.

The Iowa Policy Project’s 2019 Cost of Living report delves into these issues, finding work does not provide 1 in 5 Iowa working households enough to meet basic needs.

IPP constructs basic needs budgets that reflect a frugal standard of living — including food, health care, child care, household expenses, and transportation, then uses Census data to calculate the number of working households that make less than a wage that meets these basic requirements. These budgets leave no room for Netflix, student loan debt, vacations or eating at restaurants.

A majority of single-parent working households are unable to meet basic needs in Iowa. Our analysis shows that a wage of at nearly $20 per hour is needed just to afford basic expenses for single-parent families. This is consistent with research showing higher poverty rates among single-parent households, due to single incomes, child care expenses, generally lower educational attainment and low wages.

Evidence-based policymaking can address the reality that many working Iowans do not make enough to afford basic expenses. Policies that increase the minimum wage and adjust it to the cost of living, provide paid family leave, and boost Child Care Assistance will serve to ensure Iowans are able to just get by and hopefully get ahead.

Natalie Veldhouse is a research associate at the nonpartisan Iowa Policy Project. nveldhouse@iowapolicyproject.org

Alliant proposal: Equity, efficiency failure

The proposed Alliant rate increase is a sweeping denial of equitable treatment of customers and a rejection of environmental responsibility.

Alliant Energy, called Interstate Power and Light (IPL) in Iowa, is proposing a nearly 25 percent increase in its basic service rate. Since Alliant divides its charges to customers into energy, transmission, and basic service, the total bill increase will not be that large but it is a pretty big increase.

Since electric utilities are monopolies, some entity needs to “regulate” their actions. In Iowa this is the role of the Iowa Utilities Board (IUB), which must decide on the rate increase. The IUB can certainly reduce the proposed rate and can change the way IPL wants to charge individual customers.

Several electricity users in the Decorah area (the city of Decorah, Luther College, Winneshiek Energy District, and others). formed the Decorah Area Group (DAG) and intervened before the IUB to challenge the proposed rate increase. I wrote testimony on rate design for the DAG, and the following is the conclusion of my testimony:

It is apparent to me that IPL’s overriding desire is to sell more electricity at exactly the wrong times. The Company proposes in this case to:

•    Raise the Basic Customer Charge, which is already much higher than that of the other investor-owned electric company in the state; [$13.00 compared to $8.50 charged by MidAmerican Energy. Low-income customers use less electricity so boosting this charge hits them hardest.]

•    Reintroduce declining block rates during the summer peak period, which will likely cause IPL to add capacity for its system; [few utilities give large residential users a break for using more electricity in the summer and so again the smallest users — low income and conservationists are hurt again by this proposal.]

•    Discourage the production of solar power, when encouraging development of solar generation might help IPL to avoid adding generation do accommodate the super peak days; and,

•    Refrain from introducing a “super” off-peak rate that could redirect demand away from peak periods. [Their new meters allow them to make electricity really cheap around midnight so customers could charge electric cars or big capacity water heaters, but they aren’t doing it.]

These proposals, combined with IPL’s actions to convince the Iowa General Assembly to completely bypass the Board and greatly dismantle the state’s energy efficiency programs [in 2017], compels the conclusion that IPL wants to sell more power — not less — especially during the times of the day when IPL’s system is more costly to operate so that IPL will reap more profits.

As noted in the testimony, the Alliant/IPL proposal goes backward on both equity and energy efficiency, which are responsibilities of the IUB to ensure.

IUB’s own mission states that it “regulates utilities to ensure that reasonably priced, reliable, environmentally responsible, and safe utility services are available to all Iowans.” Note — “all Iowans.” This is IUB’s own assurance to even the least-powerful among us that they will be protected in the monopoly marketplace for electricity.

State law [476.1(5)] demands that the IUB “promote the use of energy efficiency strategies by gas and electric utilities required to be rate-regulated.” The Alliant proposal, by contrast, is a recipe for energy inefficiency.

The IUB has limited latitude to deny this rate increase. However, this rate increase is such a sweeping denial of equitable treatment of customers and a rejection of environmental responsibility that they might. The decision will only come after months of more filings and hearings. Stay tuned.

David Osterberg is co-founder and former executive director of the nonpartisan Iowa Policy Project. He is a former state legislator and is IPP’s lead researcher on energy and environment issues.

dosterberg@iowapolicyproject.org

Science change and climate change

Science is ever changing. It is now possible to show that some of the increase in rainfall from storms and consequent flooding has a human fingerprint.

Science is getting better, and that is bad news for climate change deniers.

Only two years ago when I last taught a climate change course at the University of Iowa, I informed students that claiming any extreme weather event came from changes in the climate was too uncertain.

Now, that view needs revising. After working with Dr. James Boulter, professor of Chemistry in the Watershed Institute for Collaborative Environmental Studies at the University of Wisconsin–Eau Claire, I have learned more.

The Iowa Policy Project worked with the Environmental Defense Fund to have Professor Boulter produce a report on climate change and flooding in Iowa. Working on this paper, I read material from the last three years that that brought me up to date on science’s ability to attribute extreme weather events to greenhouse gas effects on the climate.

Here is one source for my new understanding of what is known as “event attribution.” It is a statement from a report of the state of science relating to climate change and its physical impacts, in the Fourth National Climate Assessment (NCA4), by the U.S. Global Change Research Program (USGCRP).[1]

“…(T)he science of event attribution is rapidly advancing, including the understanding of the mechanisms that produce extreme events and the rapid progress in development of methods used for event attribution.”

Attribution has also been a subject addressed in a recent report of the National Academies of Sciences, Engineering and Medicine.[2]

Science is ever changing. It is now possible to show that some of the increase in rainfall from storms and consequent flooding has a human fingerprint. We should not deny that, even as fossil-fuel supporters recklessly deny the existence of climate change or that we can already see its effects.

As Professor Boulter stated in his conclusion to the IPP report, “Now, as national politics begin to inundate Iowa’s media landscape — much as the floodwaters overran the physical landscape — it is crucial that science-informed discussions of policy responses to climate change be prominent in our personal conversations, candidates’ political statements and debates, and our community discussions across all forms of media.”

 

[1] Fourth National Climate Assessment (NCA4), by the U.S. Global Change Research Program (USGCRP). https://science2017.globalchange.gov/chapter/3/

[2] National Academies of Sciences, Engineering and Medicine: “Attribution of Extreme Weather Events in the Context of Climate Change,” 2016. https://www.nap.edu/read/21852/chapter/1#x

David Osterberg is founder and former executive director of the nonpartisan Iowa Policy Project and is IPP’s lead researcher on the environment and energy issues. He is professor emeritus of occupational and environmental health at the University of Iowa.

dosterberg@iowapolicyproject.org

Illusory and elusive economic strength

The hard work of Iowans ought to be celebrated through public policy that raises wages to meet worker productivity and the cost of living, protects workers on the job, and ensures dignified retirement.

This Labor Day we celebrate the successes of the labor movement and workers across Iowa. In that spirit, let’s look at how our economy is doing a decade after the Great Recession. Why doesn’t this feel like an economic recovery? And, isn’t it a bit late to call this a recovery?

Wages

In terms of wage growth, only high-wage earners (making $41.53 hourly) have seen meaningful wage growth over the past 10 years. We see disparities in Midwest median wages by gender and race: Women make $4 less per hour than male peers, and Latino and African American workers make $5 less per hour than their white peers. As we will demonstrate in an upcoming report, these disparities are driven by structural factors like discrimination before and after hiring and the loss of unionized manufacturing jobs.

 

Jobs

Job growth in Iowa has been slow this year compared to monthly averages from 2011 to 2014. A low unemployment rate shrouds the reality that many Iowans have low-paying jobs without benefits, with some cobbling together multiple part-time jobs. We are almost 40,000 jobs short (graph below) of what is needed for a full recovery from the last recession when considering population growth.

Family Security

Many working Iowa households are unable to meet basic needs despite having one or more full-time worker in the house. For example, IPP’s Cost of Living in Iowa analysis shows 6 in 10 single-parent working households are unable to make ends meet on their earnings alone. When companies aren’t paying enough, these households need public assistance (work supports) for food, housing and other necessary items.

Taxes

Iowa’s tax system is upside down with low-income Iowans paying a larger share of their income in state and local taxes than the richest Iowans. Large corporations can reduce their state corporate income tax to zero and even receive a refund through Iowa’s Research Activities Credit. That results in so-called “refunds” — checks to companies that had more tax credits than they needed to pay their taxes — totaling $42 million in 2018 and $44 million in 2017. Those “refunds” to companies not paying Iowa corporate income taxes cost about the same as a 1 percent increase in State Supplemental Aid to public schools.

Public Investments

Iowa state and local spending as a share of personal income has remained virtually unchanged over the past 12 years, contrary to standard political rhetoric at the Capitol. State K-12 funding has not kept up with costs of educating children. Public spending on private schools continues to rise. The Iowa private scholarship subsidy cap doubled in nine years.

The hard work of Iowans ought to be celebrated through public policy that raises wages along with worker productivity. This would allow wages to keep up with the cost of living. Better public policy would protect workers on the job, and ensure a dignified retirement.

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project.

nveldhouse@iowapolicyproject.org

Transparency: Corporations see; we don’t

The transparency on tax breaks that we get in Iowa is merely a tease for the taxpayer, and for the folks who lobby the Legislature each year for their causes.

It’s not enough to really let Iowans compare the choices being made on the spending of public dollars.

Advocates for public-focused priorities push lawmakers to apply an adequate share of the state budget to real responsibilities: to educate children and young adults, care for those without the means to do so on their own, and to keep their natural environment clean and their streets safe.

They have to make a case, that a public investment is not only needed, but a responsible use of funds that benefits the greater good in Iowa.

Some in the lobby can afford to advocate differently. In the “We Got Ours” huddles of big-business advocates in the lobby, the high stakes business of protecting their special breaks, and expanding them, is often only evident in the results.

A Cedar Rapids Gazette story shows we can expect more of this for an expensive and unaccountable program long on the books, the Research Activities Credit, or RAC. The RAC, unlike most tax credits, often does not affect taxes at all, but is a straight and automatic subsidy provided to huge companies that pay little — and often nothing — in Iowa corporate income taxes. (Remember that next time you hear their  complaints about Iowa’s corporate tax rates.)

Much of the story offered weak defenses of this program by the state’s economic development director, Debi Durham, and a spokesperson for the biggest recipient of these subsidies. Neither of those two people offered a shred of evidence of a public return on the $60-plus million annual cost.

You see, we know the cost, because there is an annual report that lawmakers required for this program. (The lobby fought that requirement hard when it passed in 2009.) But what the report cannot show is how much of the subsidized research would have happened anyway.

RAC table ... large claims
The Research Activities Credit was set up to help small, entrepreneurial businesses get going. Instead, as official state reports have shown, very large companies with RAC claims above $500,000 account for between 80 and 90 percent of the cost every year.

In a deliberative budget process, everything is on the table — funds available, a clear and understandable process to apportion them, and the public benefit evident. But when $300 million in business credits are on autopilot, a large chunk of those funds is taken off the table before the rest of us even get to sit down.

Peter Fisher, IPP’s research director, notes in The Gazette story that the system gives all the advantages to the corporations.

“The corporations hold all the cards, which is why I think states and localities routinely spend way more than they need to,” Fisher told The Gazette. “It’s like playing poker where the other players know your hand but you don’t know theirs.”

To learn more about the RAC, see this Iowa Fiscal Partnership piece.

M

 

Mike Owen is executive director of the nonpartisan Iowa Policy Project and director of the Iowa Fiscal Partnership.

mikeowen@iowapoicyproject.org

Nothing complicated about threatening food

Eliminating BBCE might sound confusing, from the alphabet soup of terms for public programs. But it’s not. It means taking away food from Iowans’ tables.

The Trump Administration aims to threaten important public supports for people who have trouble making ends meet.

The latest challenge is to Food Stamps (formally known as SNAP, the Supplemental Nutrition Assistance Program). The administration would eliminate something called broad-based categorical eligibility (BBCE). It’s not just more alphabet soup, but an effective tool that states can use to set less restrictive asset tests and streamline administration, which curbs costs.[1]

Forty states participate in BBCE, including Iowa, allowing them to set income limits and ensure something like owning a car doesn’t count against SNAP benefits. The Administration seeks to eliminate BBCE on its own, without legislative approval.[2] This would kick 3 million individuals off of SNAP nationwide, including working families, children, people with disabilities, and seniors.

SNAP is a proven work support program for Iowans. It reached nearly 320,000 Iowans in June of 2019, helping working families and those unable to work put food on the table.[3] The program works to improve child development, educational attainment, helps to prevent disease and increase lifetime earnings of Iowans.[4] It helps keep rural grocery stores open, and pumps $35 million into the state economy each month.[5]

These wonky rule changes take food off Iowa tables. The Administration seems to want to keep these changes below the radar. While some might not notice a purely administrative action, the impact of removing BBCE from SNAP — changing the alphabet soup — means real harm for families.

Natalie Veldhouse is a research associate at the nonpartisan Iowa Policy Project. 

nveldhouse@iowapolicyproject.org

[1] Dottie Rosen, “SNAP’s ‘Broad-Based Categorical Eligibility’ Supports Working Families and Those Saving for the Future.” Center on Budget and Policy Priorities. July 2019. https://www.cbpp.org/research/food-assistance/snaps-broad-based-categorical-eligibility-supports-working-families-and
[2] Federal Register, “Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program,” July 24, 2019, Vol. 84, No. 142, 35570-35581, https://www.federalregister.gov/documents/2019/07/24/2019-15670/revision-of-categorical-eligibility-in-the-supplemental-nutrition-assistance-program-snap.

[3] Iowa Department of Human Services, “F-1 Food Assistance Program State Summary – June 2019.” July 2019. http://publications.iowa.gov/30484/1/FA-F1-2016%202019-06.pdf

[4] Feeding America, “Child Food Insecurity: The Economic Impact on our Nation.” 2009. https://www.nokidhungry.org/sites/default/files/child-economy-study.pdf

[5] Iowa Department of Human Services, “F-1 Food Assistance Program State Summary – June 2019.” July 2019. http://publications.iowa.gov/30484/1/FA-F1-2016%202019-06.pdf

How home solar helps everyone

Solar power not only saves on current generation of high-cost power; it reduces the need for future generating capacity. My own home system shows that.

IPP parody — apologies to Peanuts and the late Charles Shultz

It was a hot and sunny month. … No, this isn’t the opening line of a bad novel; it’s a story about electricity and climate change, and our backyard solar array.

July was indeed hot, which means it was a costly month for electric generation. When the heat index pushes over 100 degrees, and homes and businesses run their air conditioning full tilt, utilities have to purchase more expensive power, from less efficient generating stations, to meet the higher demand. Their costs, and the costs for every consumer, go up.

But here’s the good news. It was a sunny month, which means all those solar arrays at farms and businesses and in people’s back yards were generating power at a great rate. The recently installed array at our home generated 1,749 kilowatt hours of electricity from late June through late July. That was 510 kWh more than we used, for which we received a $14 credit from the utility. (When I use more electricity than I generate, I pay over 12 cents per kWh for the extra; when I generate more than I use, the utility pays me 2.8 cents per kWh.)

But all of that electricity we generated meant that the utility needed to purchase 1,749 kWh less power from the grid, power that was more expensive than average. That savings equates to about the amount of electricity used by two average residential customers in a month.

In the last session of the Iowa Legislature, MidAmerican Energy pushed a bill that would allow them to charge an extra monthly fee to future solar generators, people pretty much like us. That fee would have been enough to make installation of solar unattractive to many, which in turn would have devastated the growing solar installation industry in the state. Their rationale: People like me aren’t paying their share of costs for using the utility’s transmission facilities to sell our home-generated power back to the utility.

Every month I pay a $13.50 “facility charge” regardless of our usage or solar generation. The Iowa Utilities Board, which has to approve all changes in rates proposed by Iowa regulated utilities, is scheduled to undertake a study to see if these kinds of facility charges appropriately reflect the utilities’ cost of accommodating solar generation. But MidAmerican’s proposed bill would have pre-empted the normal rate-setting process with the utilities board and imposed the new fee by legislative fiat before the study was even undertaken to see if any fee was justified.

In pushing their bill, the utility or some unidentified group, sponsored TV advertising to try to get the average Iowan riled up by convincing them that they are subsidizing solar users.

But here’s the thing: Iowa is a summer peaking state. Despite the longer winter heating season, the summer air conditioning season is when electricity usage hits its daily or hourly maximum. All utilities use their most efficient, lower cost generating facilities first, and bring the higher cost facilities on line only when needed. So those high-cost facilities are brought into use just when solar power is doing its thing, when the hours of sunshine are greatest. That reduces the need for that high-cost power, which helps all utility customers.

More importantly, those summer peaks are likely to get worse as climate change worsens. Solar power not only saves on current generation of high-cost power; it reduces the need for future generating capacity by helping to reverse the trend of global warming. That is good not just for electricity consumers, but for the planet and for our grandchildren.

Peter Fisher is research director of the nonpartisan Iowa Policy Project. pfisher@iowapolicyproject.org