Good move on utility relief

Past-due utility bills, like rent and mortgage payments, are a part of family budgets affected by job losses associated with the COVID-19 pandemic. In the summer, Governor Kim Reynolds used federal CARES money to subsidize low-income families’ housing needs. Now, she is improving on it.

Last week, the Governor announced that up to $2,000 for a family can be used to pay past-due electric, natural gas and water bills through a new Residential Utility Disruption Prevention Program. State agency data shows that 185,000 families have overdue utility bills and that the amount of arrearage is nearly $30 million. 

The federal Low Income Home Energy Assistance Program (LIHEAP) already determines which families might be eligible for such aid. State officials will coordinate the new program with LIHEAP. 

This policy move is overdue, but welcome. Much of the $1.25 billion given to Iowa through CARES has gone to business either in direct payments or to reduce unemployment insurance obligations. 

The latter, in particular, was a poor use of emergency funding because it was not addressing any sort of emergency, while many Iowans have been struggling economically during the pandemic. By contrast, using the funds for the most vulnerable Iowans — as the Governor is doing with this new program — is both a responsible and effective response to help Iowans who without it would be left behind. 

David Osterberg is the senior environment and energy researcher at Common Good Iowa, a nonpartisan policy analysis organization created by the merger of the Iowa Policy Project and the Child and Family Policy Center. dosterberg@iowapolicyproject.org

Climate lessons from COVID

Climate change experts at Iowa colleges and universities have for 10 years produced annual statements about Iowa impacts of human-caused changes to the atmosphere. This year’s statement comes at the same time another serious crisis, the COVID-19 pandemic, is upon us. We can learn from this, as suggested by the statement title, “Will COVID-19 Lessons Help Us Survive Climate Change?”

Unfortunately, in the face of political polarization, some have taken up the strategy of de-legitimizing science, but this distrust in expert guidance has led to preventable deaths and economic damage to working people and businesses,” said Dave Courard-Hauri, chair of Environmental Science and Sustainability at Drake University. See the news release.

More than 230 teachers and researchers at 37 colleges and universities across the state have agreed to a one-page statement describing how the COVID-19 experience should inform how we deal with climate change.

This thumbnail of the statement notes “three important lessons from the current pandemic that apply to our understanding of climate mitigation and adaptation in Iowa”:

— The best available science as described by professional organizations remains by far the most reliable source of information.

— The cost of late action far outweighs the costs of prevention and preparation.

— Building community resilience against multiple threats is critical, especially for the most vulnerable among us.

Expanding on the third point, the statement notes, “Inequity reduces resilience, leaving poor communities, particularly communities of color, disproportionately vulnerable to the impacts of climate-related natural disasters, just as they are to disease.”

The statement concludes with this sentence: “Our smart investments now will better prepare us for the coming decades when extreme climate events (such as floods, damaging winds, heat, and drought) will become more common and more severe.”

David Osterberg is senior environment and energy researcher at Common Good Iowa.

Where do jobs come from?

Food for thought for Iowa economic recovery policy choices: The vast majority of new businesses in Iowa are independent firms born here. The bulk of job creation comes from independent or standalone businesses.

See the report here

The Governor’s Economic Recovery Board is scheduled next week (Oct. 6) to discuss and recommendations from working groups and present them to Governor Kim Reynolds. This comes as Iowans have filed nearly a half million initial unemployment claims during the current COVID-19 recession, creating serious gaps in the economy.

This is a good time to remind policy makers how most businesses and jobs are created, and where to focus policy responses. The Board should not look e toward the big fish that get all the publicity when the state lands a new manufacturing plant, or a national corporation announces the opening of a new facility. Instead, they should pay attention to entrepreneurial activity and new businesses.

Year in and year out new businesses are being formed, and innovative small firms grow by leaps and bounds. At the same time, branch plants are shuttered, small businesses fail, high-tech stars are bought up and moved out of state. Taking all these changes into account, what accounts for the bulk of employment growth in Iowa? And what does this tell us about economic development policy?

Common Good Iowa research examines business dynamics in Iowa over 22 years. This work relies on a database of all business establishments that existed in the state during the period 1992 through 2014.[1] This allows us to identify all business establishments born in Iowa over this period and those moving into or out of the state, or dying. And it allows us to measure the employment in those establishments year by year.

Noteworthy points:

    • The vast majority — 85 percent — of new businesses in Iowa are independent firms born here. Only one in eight are new branches of existing firms, and just 1.4 percent are businesses or branches moving here from elsewhere.
    • Over the 10-year period 2004 to 2014, the net growth in Iowa jobs came almost entirely from independent firms, and mostly from the birth of new firms. As the chart below shows, job growth from new independent businesses outnumbered the jobs lost in businesses that died by 71,623. Independent firms that were already in Iowa in 2004 contributed another 40,000 jobs. Branch plants, on the other hand, showed a net loss of jobs over that period.

Independent Businesses: Major Source of Iowa Job GrowthBut here’s the key: While the average branch plant and independent businesses had the same history of job creation over time, there are far more independent businesses starting up in the state. The result is that the bulk of job creation comes from those independent or standalone businesses. In fact, nearly a third of all the jobs that existed in Iowa in 2014 were in new businesses born in the past 10 years, and most of those were independent firms. Only 1 percent of the jobs were in businesses that moved into Iowa from elsewhere.

The implications for state and local economic development policy are clear. No matter how you look at it, the birth of new independent businesses is the major source of net job growth. This reality calls for a shift in policy away from incentives to attract branch plants and out-of-state businesses, towards investments in education, research, work supports, entrepreneurial education, and the quality of life factors that have been shown to contribute to entrepreneurial activity.

 

[1] The five states are Iowa, California, Texas, Massachusetts and North Carolina. For a complete discussion of data sources, research method, and results for the other four states in the study, see Peter Fisher, Business Survival and the Fiscal Effects of State Incentive Policies. Report prepared for the Ewing Marion Kauffman Foundation. The Iowa Policy Project, November 2018.

Peter S. Fisher is Research Director of Common Good Iowa, recently formed by the merger of two Iowa-based, nonprofit, nonpartisan public policy organizations, the Iowa Policy Project and the Child and Family Policy Center. Fisher holds a Ph.D. in Economics from the University of Wisconsin-Madison, and he is professor emeritus of Urban and Regional Planning at the University of Iowa. He is the author of a number of reports for the Iowa Policy Project from 2001 through 2020 dealing with state economic development and fiscal policy, including tax incentives and tax increment financing.

Beyond jobless rate drop: Little for optimism

The drop in the unemployment rate is due less to economic recovery than by discouraged workers dropping out of the labor force entirely.

Iowa’s unemployment rate fell to 6.6 percent in July, down from its peak of 11 percent in April. But larger picture offers little grounds for optimism.

The overall jobs deficit is still substantial. The Iowa economy has shed 97,200 jobs since February — that’s 35,500 more jobs than were lost in the entirety of the Great Recession. And that 6.6 percent unemployment rate is still equal to the highest monthly rate recorded during the Great Recession.

The drop in the unemployment rate is generated less by any observable economic recovery than by the fact that discouraged workers are dropping out of the labor force entirely. Since February, Iowa’s labor force participation rate (the share of the adult population who are working or looking for work) has plunged from 70.9 percent to 65.6 percent — a decline twice as steep as that of the nation as a whole, and steeper than all but one other state (Kentucky).

For those on unemployment (106,392 continuing claims, and 6,544 new claims last week), the uncertainty and insecurity is mounting. It is now almost a month since the $600 “PUC” bump to unemployment benefits expired, and it is unclear when or how the $300/month “Lost Wages Assistance” program established by executive order while kick in as a partial replacement.

Because the Lost Wages Assistance program requires a 25 percent match in state money, it will be unavailable to those who are receiving “Pandemic Unemployment Assistance” (PUA) benefits instead of regular state benefits. Meanwhile, Iowa Workforce Development is aggressively trying to move beneficiaries from the regular state program over to PUA. And, as of September 8, the job search requirements for almost all receiving UI benefits will be reinstated.

It’s hard to spin any of this as good news. While just under 100,000 Iowans have gone back to work, almost 130,000 have dropped out the labor force entirely. For many, the return to work — into the teeth of a pandemic that shows no sign of abating — is driven less by a genuine economic recovery than by an unemployment insurance system whose benefits are that is suddenly less accessible and less generous.

Colin Gordon is a senior research consultant for Common Good Iowa. He is a professor of history at the University of Iowa.

IPP, CFPC form Common Good Iowa

A new chapter for great work by longtime partners in Iowa policy analysis — now as one organization, Common Good Iowa.

Today we have exciting news. The Iowa Policy Project has joined with our longtime partners at the Child and Family Policy Center to formally create a new organization, Common Good Iowa.

Look to Common Good Iowa for the solid research, rigorous policy analysis and focused advocacy that Iowans have come to expect from both organizations. Expect the same attention to critical issues that you have seen from IPP over two decades — and a new, invigorated approach to advancing a bold policy agenda. By joining to together we will have more capacity to coordinate our expertise on issues and communications, and wage successful campaigns to improve the lives of every person who calls Iowa home.

The creation of one organization out of two is the result of many months of discussions among board and staff members at both IPP and CFPC. We have always recognized that as each group has focused on some issues that the other has not, we share a common focus in other areas, including budget priorities and tax policy needed to fairly and adequately support those priorities. But we also have recognized that we need to connect the dots better between these many issues if we want our friends in the advocacy community to do so as well.

Common Good Iowa will, with one voice, draw attention to policy that connects these issues for the benefit of our entire community in Iowa — as we say, “the common good.”

Since the early discussions in 2000 that led to our founding in 2001, IPP has followed the vision of a “three-legged stool” for our work: economic opportunity (to include wages, jobs, education, wage theft, collective bargaining, economic development, pensions, and work supports including child care and Food Stamps); tax and budget issues, particularly tax fairness and revenue adequacy; and energy and the environment, including policy opportunities toward clean, sustainable energy choices and better water quality.

As you may know, IPP’s work on tax fairness and tax credits, as well as some of our research and advocacy on work support and safety-net programs, has been in cooperation and coordination with CFPC as the “Iowa Fiscal Partnership.” That brand on our work will go away as we are now formally one organization.

Common Good Iowa will carry on CFPC’s example as a leading advocate in Iowa on early childhood; children’s health, development and well-being; and family economic opportunity. As CFPC has done for many years, our new organization will continue to share data, link research to policy and promote best practices for improving child well-being as part of the nationwide Kids Count initiative.

Every staff member for both IPP and CFPC has a place in the new organization. Anne Discher, who has served as executive director of CFPC, will be the executive director of Common Good Iowa, headquartered in Des Moines. We will retain an Iowa City office, with IPP executive director Mike Owen becoming deputy director of Common Good Iowa. I invite you to reach out to Anne or Mike if you have questions about this new arrangement.

The name “Common Good Iowa” was chosen after great deliberation among staff and board of both organizations. It reflects our vision of public policy in Iowa. Philosophers, economists and political scientists have long debated and defined the common good, and there’s a powerful theme that links those conversations: public systems and structures for the benefit of all people, achieved through collective action in policymaking and public service. It feels utterly right for our new endeavor.

This is a great opportunity to reimagine our work. We’re at a moment when the devastating impact of racism, intolerance in our civic discussions, and years of neglect of our public systems have been laid bare for all to see. No Iowa community can thrive when some community members are systemically deprived of opportunity by our health, educational, human service and justice systems. We must do better.

As a largely white organization, we pledge to listen to and learn from our partners of color around our state, and to be not be just not racist, but, to borrow from scholar Dr. Ibram X. Kendi, to be anti-racist: to actively advance concrete policies and practices to dismantle the persistent inequities experienced by Black, Latinx, Asian, Native and other marginalized communities. We also commit to the internal work to become an organization that itself is attractive to a diverse, talented staff.

The merger is official now, although we will be putting finishing touches on our new brand over the next months. You’ll be hearing more about how you can celebrate virtually with us when we unveil our new logo, website, social channels and policy roadmap later in the year.

Until then you can reach Common Good Iowa staff at their existing CFPC and IPP email addresses, websites and social media accounts.

Sincerely,

Janet Carl

Vice President, Common Good Iowa Board of Directors
Former President, Iowa Policy Project Board of Directors

Six months: 1 in 4 Iowa workers file jobless claims

While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week.

The week ending July 25th marked the 26th week of the COVID-19 Recession. In that half year, 420,702 working Iowans (including another 7,441 last week) have filed for unemployment insurance. This is a staggering number. It represents almost one-quarter of the February 2020 labor force. And it is nearly four times the number of claims (107,344) filed by Iowans over the first six months of the Great Recession.

The largest differences between the last recession and this one have come from the eighth week on. The last 19 weeks represent 403,697 of the total increase in this recession, all of those weeks substantially higher than the comparable period in the Great Recession.

While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week. The HEROES Act, passed by the House in May, would extend the $600/week PUC program through January 31, 2021. The HEALS Act pushed by Senate Republicans would slash that benefit to $200 through the end of September, and then cap the total UI benefit at 70 percent of lost wages. If this passes, weekly benefits for Iowa’s unemployed would drop from an average of $927 per week to $527 per week — a cut of 43 percent. To add insult to injury, the Senate plan also neglects to extend the federal moratorium on evictions.

This is a perilous moment. With new unemployment claims holding steady at more than double the weekly claims of the Great Recession, and economic recovery faltering in the face of surging COVID cases, we need to protect Iowa’s working families from both income insecurity and housing insecurity.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.

Data clear: New stimulus needed

Basic protections needed in unemployment insurance, SNAP, energy and other assistance as the COVID-19 virus surges in Iowa and other states in a weak economy.

As the long-awaited next round of federal aid and stimulus remains mired in political infighting, the hardship in Iowa — and around the country — is acute. As a new report from the Center for Budget and Policy Priorities (CBPP) makes clear, households are struggling to pay for the basics now, and that need will only grow if the $600 per week federal “PUC” boost to unemployment insurance benefits expires as scheduled next week.

The receipt of SNAP (food stamps) is up 14 percent in Iowa since February of this year, but the share of Iowans reporting food insecurity continues to grow. According to the CBPP’s analysis of the Census Bureau’s Household Pulse Survey, 1-in-8 (12 percent) Iowa families with children reported (for the last week of June and first week of July) that their household sometimes or often didn’t have enough to eat in the last seven days.

Housing insecurity is also a growing problem. Iowa set up a small fund with CARES Act funds to provide short-term assistance for those unable to make rent or mortgage payments — but disqualified those receiving PUC benefits from even applying. There is about $20 million left in the fund (out of $22 million) but when the PUC expires next week, the demands on this program will skyrocket. According to CBPP, 1 in 6 Iowa tenants are already behind on their rent.

These hardships will be especially stark for Iowa’s Black and Latino workers and their families. Unemployment rates are persistently higher for workers of color. These workers are disproportionately represented among the front-line and manufacturing (especially meat processing) jobs that have posed a higher risk of exposure to the virus. In the absence of meaningful and enforceable workplace protections, the temporary boost to UI benefits provided something of a refuge. As an administrative judge concluded in approving unemployment compensation for a worker who quit because of safety concerns concluded in one recent UI case, “the working conditions at Tyson were unsafe, intolerable and detrimental, and rose to the level where a reasonable person would feel compelled to quit.” But that option evaporates next week.

All of this hardship would be even worse in the absence of the CARES Act provisions for enhanced unemployment insurance, and increased federal support for SNAP, LIHEAP (Low-Income Home Energy Assistance Program), and other social supports. Iowans are suffering with those programs in place, and they will suffer more if social supports are allowed to return to levels previous to COVID-induced shutdowns.

The latest data on initial unemployment claims, released today, show the persistence of Iowa’s economic woes during the pandemic, with nearly 400,000 filing claims in the last 18 weeks.

It is crucial that, with the virus surging in Iowa and other states and the economy projected to remain weak, that our federal representatives move quickly to enact a stimulus package that continues and expands upon these basic protections. We need an extension of expanded unemployment benefits, more opportunities for paid leave, more federal support for child care, SNAP, and LIHEAP, and robust fiscal relief for states and localities. And it is just as crucial that Governor Reynolds and the Iowa Legislature pass along any discretionary state assistance to those in the most need.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project and a history professor at the University of Iowa.

IPP News: Opportunities to reform policing, community safety in Iowa

FOR IMMEDIATE RELEASE, WEDNESDAY, JULY 22, 2020

New IPP report identifies key data, potential for reform in state, local budgets

FULL REPORT HERE

iowacapitol-rotunda

IOWA CITY, Iowa (July 22, 2020) — Police spending per capita has grown over the past 30 years and consumes a greater budget share in Iowa’s seven largest cities, while social spending has on average declined, a new report shows.

The May 25 killing of George Floyd by Minneapolis police and other widely documented cases of police brutality have prompted large-scale protests in Iowa and nationally, and have put a fresh spotlight on police spending and police practices.

In their new report, “Policing, public safety and community priorities,” Iowa Policy Project (IPP) authors Colin Gordon and Peter Fisher identify spending trends by state and local governments, not only for policing but other key public services.

Among their findings:
·      Police and corrections make up about 5 percent of all state and local government spending in Iowa, a level largely unchanged over three decades.
·      The share of such direct spending by cities and counties has grown.
·      Larger urban settings in Iowa have a well-documented pattern of disproportionate minority contact.
·      The three state university cities — Iowa City, Ames and Cedar Falls — spend the least on police among cities of 20,000 or more. This may relate to separate university public safety departments in those communities. But social program funding has shrunk as a budget share in those cities.
·      The share of budgets going to police in suburbs and smaller non-metro cities has varied, while budgets have shrunk for social services in many small cities.
·      Police spending is not directly related to population diversity, regardless of city size.
·      Spending levels tell nothing about how police practices might vary.

“Public budgets represent our values and priorities,” said Fisher, IPP research director. “The average spending share for the seven largest cities in 2017 was 21.6 percent, and averaged over 20 percent for the other cities of 20,000 population or more, except for the university cities. The new focus on policing reform will have an impact across a wide range of priorities.”

Fisher said cities and counties do have options to meet locally identified needs from policing to social services, despite substantial constraints in state law on local control of funding options. The report, however, also pointed out fundamental change in funding of education, social services, and family supports will require state action.

“Cities account for lion’s share of expenditures on policing, but spend little on social services other than housing. Social supports and education, in turn, are largely the responsibility of jurisdictions — states, school districts — that spend little or nothing on policing,” the report stated.

The report notes current “push for change revolves around two arguments with budget and policy implications for police and other public services.

“The first is simply that our system is fundamentally broken,” the report notes. “The starkest evidence on this point is the pervasive and systemic racial inequity woven throughout our criminal justice system.

“The second argument is that a share of the resources we devote to policing could and should be spent more strategically and effectively. In this sense, the question is one of budgetary priorities.”

Gordon and Fisher do not make recommendations about police procedures, but lay a foundation of budget and debate context that Iowans may use as they “re-imagine” public safety.

“As Iowa communities grapple with these issues, it is important to understand the basic elements of proposals, the arguments and evidence behind them, and the policy and budget implications,” said Gordon, senior research consultant at IPP and a professor of history at the University of Iowa.

The report states the policy implications are wide-ranging. It specifically notes interest that has grown in one approach, community policing — considered less adversarial and oriented more than traditional policing to reconciliation, relationship development and local trust.

“It is the first priority of the city of Iowa City’s 17-joint response to demands of the Iowa Freedom Riders,” Gordon noted. “People in Iowa communities want to be at the table. This is particularly true for those who have been left out by a structure that has protected wealth and white power, skewing interactions between police and the broader community and people of color.”

The report notes that the state can play an important role in police operations at the local level, as shown by unanimous passage of a bill in June restricting police use of chokeholds, mandates de-escalation training and other measures. However, some lawmakers wanted other steps, including a study of racial profiling practices, and such proposals were left to future legislative action.

Find the report on the Iowa Policy Project website, www.iowapolicyproject.org.

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Iowa jobless claims numbers daunting

Initial jobless claims keep climbing in Iowa. Yet, as the crisis persists, the safety net for Iowa’s unemployed is about to unravel.

In the last week, another 11,125 Iowans applied for unemployment insurance. That brings the total, in the 24 weeks since the COVID-19 recession began in February, to over 400,000 — or almost a quarter of the entire Iowa labor force. Of that, nearly 388,000 (387,847) are the change over the last 17 weeks, in which these numbers first spiked.

Let’s put that in perspective: 400,000 unemployment claims is over four times the number filed over the first 24 weeks of the Great Recession. Over that span, from December 2007 to May 2008, weekly claims peaked at 13,542 in late December 2007 — the only week in the Great Recession when Iowa unemployment claims topped the 10,000 mark. In the last 24 weeks, weekly claims have exceeded 10,000 eleven times. Indeed, the average since early February is almost 17,000 new weekly claims — 3,000 higher than the worst week of the Great Recession.

As the crisis persists, the safety net for Iowa’s unemployed is about to unravel. On July 25, the federal Pandemic Unemployment Compensation (PUC) program — the $600 weekly boost to regular state benefits — comes to an end. For the nearly 150,000 Iowans currently receiving unemployment benefits, the checks will be a lot smaller: For an unemployed worker who had been working full-time at minimum wage, the weekly check will shrink from over $800 to barely $200. Once the applications of the 11,125 Iowans who filed for unemployment last week are processed, the PUC will be a distant memory — and their benefits will replace barely half of their lost wages.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project.

Warning: Edge of a cliff

With COVID cases surging, extending federal support for unemployment insurance is crucial to fighting this recession — and the virus that caused it.

In less than two weeks, the Pandemic Unemployment Compensation (PUC) program — the $600 federal supplement to unemployment insurance benefits — will come to a close. The impact, for Iowa’s working families and for the Iowa economy, is likely to be devastating.

Our regular unemployment insurance system reaches only about half of the workforce and replaces barely half of an unemployed worker’s wages. In order to support those workers thrown out of work by the pandemic and, more broadly, to support the public health goal of sheltering in place, the CARES Act extended eligibility to most of those not covered (Pandemic Unemployment Assistance or PUA) and added $600 a week to the benefit paid under regular UI and the PUA.

This means a full-time minimum wage worker who lost their job qualifies for a regular weekly benefit of about $152.00 (Iowa unemployment insurance replaces about 52 percent of wages), and an additional $600 under the PUC — for a weekly benefit of $752.00. An unemployed worker had had been earning the median hourly wage in Iowa ($18.40) qualifies for a weekly benefit of $387.00 and an additional $600 under the PUC — for a weekly benefit of $987.00.

The $600 supplement under the PUC and the entire benefit paid to non-traditional workers under the PUA are all paid for the federal dollars. That has had a huge stimulus effect in Iowa, sustaining not just individual consumption but state and local tax revenues as well. Currently there are 145,875 Iowans either receiving regular UI+PUC or waiting for their claim to be processed, and another 18,456 receiving PUA+PUC. That represents an inflow of over $102 million into the state every week. Come July 25th, when only the federal contribution to the regular PUA benefit is left, and that will slow to a trickle, barely $3 million a week.

The result? Many of the unemployed will see a substantial benefit cut, tumbling from near full replacement of wages for workers earning less than $65,000 to barely half that. At half-wages, few will be able to meet basic expenses. That blow will reverberate throughout the economy. According to new estimates by the Economic Policy Institute, failure to extend the PUC beyond July will cost Iowa another 42,586 jobs over the next year.

Meager benefits and persistently high unemployment, in turn, will put new demands on other forms of social support, including SNAP and rental and utility assistance. And they will press the unemployed — unable to pay their bills — back into the labor force at the expense of their health and the public health. With COVID cases surging in Iowa and many other states, the extension of federal support for unemployment insurance is crucial to fighting this recession — and the virus that caused it.

Colin Gordon is a professor of history at the University of Iowa and is senior research consultant at the nonpartisan Iowa Policy Project in Iowa City.