Maximum focus on minimum wage

When minimum-wage workers account on average for 44 percent of their family income, it is certain that any increase will benefit a large number of Iowa working families.

There are lots ways to look at the minimum wage issue. Some make sense, and some do not. There are good numbers and bad numbers, the latter usually tainted by ideology or politics.

Any discussion about the minimum wage in Iowa — whether on the floor of the Iowa House or Senate, or outside the Capitol in any coffee shop or street corner — should focus on the clear, central realities of this issue, with reliable and credible numbers.

How much?

Iowa’s first minimum wage passed in 1989, almost half a century after the first federal minimum wage of 25 cents an hour took effect in 1938. That first Iowa minimum wage was phased in over three years.

So the minimum wage has long been established in public policy as a floor for wages. But it’s a sinking floor.

  • The wage has not been increased in Iowa since January 1, 2008, when it went to $7.25.
  • Had it kept up with inflation since 1992, the Iowa minimum wage would now be $7.91 (February 2015).

The latter shows just how conservative is the legislation pending in the Iowa Senate. A minimum wage bill would raise the wage to $8 in July — about where it would be had the original state minimum been indexed to inflation in 1992 — and bump it to $8.75 a year later. Given that this issue is only rarely reviewed in the Legislature and that the wage is not indexed, it would not take long for inflation to catch $8.75 and certainly we’d be seeing another debate in a few years.

The $8.75 proposal from the Senate is a considerable compromise from the $10.10 federal minimum proposed a couple of years ago by Senator Tom Harkin and President Obama, and from the $15 sought by people trying to bring the minimum closer to a “living wage.”

For whom?

An increase to $8.75 would benefit:
•   12 percent of Iowa workers
•   112,000 Iowa workers directly*
•   69,000 Iowa workers indirectly*
•   181,000 Iowa workers in total — about 3 1/2 times the number of people working at the current minimum.

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The minimum wage matters

No matter the politics, what no one can deny is that the minimum wage is not enough — not nearly enough — to get by. Many Iowa families in Iowa depend greatly on that wage.

When minimum-wage workers account on average for 44 percent of their family income, it is certain that any increase will benefit a large number of Iowa working families.

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

 

* Estimates from Economic Policy Institute. Indirectly affected workers have an hourly wage just above the proposed minimum wage. They would receive a raise as employers adjusted pay scales upward to reflect the new minimum wage.
See our two-page fact sheets on:

Iowa impact of $8.75 minimum wage

Iowa impact of $10.10 minimum wage

Basic RGB

Author: iowapolicypoints

The Iowa Policy Project is a nonprofit, nonpartisan organization that provides research and analysis to engage Iowans in state policy decisions. We focus on tax and busget issues, the Iowa economy, and energy and environmental policy. By providing a foundation of fact-based, objective research and engaging the public in an informed discussion of policy alternatives, IPP advances effective, accountable and fair government.

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