Today’s virtual House graphic: minimum wage boosts families

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Often lost in the spin surrounding debates over the minimum wage is the reality of who benefits. As indicated in the graphic above, the typical talking points promoted by the business lobby fall through the cracks — the same way many people attempting to support their families fall through the cracks due to Iowa’s current minimum wage policy. The illustration above outlines the demographic makeup of over 300,000 workers who would benefit if Iowa raised its minimum wage to $10.10. Four counties have moved to go that high, or higher, between now and 2019 under ordinances already passed.

There is no pending legislation to raise Iowa’s paltry $7.25 state minimum wage — and, in fact, choices being made in the Legislature effectively will render that state law meaningless. That is because local minimum wages are targeted for repeal and the Senate majority leader has indicated he will not entertain any legislation to raise the state wage, leaving that issue up to Congress, which shows no sign of action, either.

For more about the minimum wage in Iowa, both statewide and locally, visit this page on the IPP website.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. In today’s graphic, we illustrate the impact of a statewide minimum wage increase. Previous “virtual House graphics” illustrate impacts of local minimum wages approved in counties where wages higher than the statewide $7.25 has been approved.

Today’s virtual House graphic: Who gains with local raises

Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs.

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About 29,000 Iowa workers have already seen pay raises because the supervisors in Johnson and Linn counties enacted a local minimum wage, held at a mere $7.25 statewide for over nine years. That number will more than double to 65,000 come April, when the first step of the Polk County minimum wage takes effect.[1] By January 2019, when wage rates in all three counties will top $10.10, about 85,000 Iowa workers will be enjoying a substantial increase in their pay.[2]

All of those wage gains will be rolled back if a bill under consideration in Des Moines is passed and signed into law. House File 295 would prohibit counties from enacting any law that sets standards for wages, benefits, scheduling, or other employment practices that are higher than state law. It would also nullify the wage ordinances already enacted in four counties where the elected representatives took action to help low-wage workers in the face of nearly a decade of state inaction.

Who are the workers who have gained, or who will gain, these pay raises? They are disproportionately women (56 percent) and disproportionately non-white (20 percent), compared to the overall population shares. Only 1 in 6 is a teenager; 31 percent are age 40 or older, while 53 percent are age 20 to 39. Almost three-fifths work full time, while only 13 percent work 20 hours per week or less. Of the workers seeing a bigger paycheck, 31 percent are parents.

Iowa is a low-wage state in an increasingly low-wage economy. In 2016, the median wage (half of Iowa workers earn less than that, half earn more) was $16.04 an hour, just 13 cents higher than it was in 1979 when adjusted for inflation. Since that time, worker productivity has risen 167 percent, but the gains from that greater productivity have not gone to workers. Minimum wage increases are one of the most important ways of ensuring that the gains from economic growth are widely shared instead of being captured by the richest 1 percent of households.

Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs. Local, democratically elected boards have passed laws overwhelmingly supported by Iowans that are raising the wages of about 85,000 Iowa workers, helping not just those workers and their families, but local economies dependent on their spending.

[1] The Johnson County minimum wage rose to $10.10 in January, 2017, and increases by the rate of inflation after that. The first step of the Linn County wage to $8.25 also took effect in January, and the last step, to $10.25, is scheduled for January 2019. The Polk County minimum becomes $8.75 April 1, and rises to $9.75 January 2018 and then $10.75 January 2019.

[2] A county minimum wage was also enacted in Wapello County, but the city of Ottumwa, home to most of the jobs in the county, nullified it within the city by enacting their own ordinance leaving the wage at the state level. We do not include any estimates for Wapello County in our figures. In Johnson and Linn counties, a few small towns have also enacted ordinances establishing minimum wages below the county level, but few jobs are affected. The number benefiting from the higher minimum wage includes all those projected to be earning less than that wage as of the year the minimum goes into effect (about 65,000 workers), as well as those whose wages are a little above the new minimum but who can be expected to get a raise in order to retain parity within a business or in order to remain competitive in the labor market (another 20,000).

2010-PFw5464Posted by Peter Fisher, research director of the Iowa Policy Project
pfisher@iowapolicyproject.org

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate how many Iowans are gaining from locally approved minimum wages.

When democracy is not enough

For public workers, long-accepted notions of electoral fairness in America do not apply.

170118_capitol_170603-4x4The governance issues raised by the anti-bargaining bill that just passed the Legislature are many, some in the process, and some in the new legislation itself.

An excellent synopsis of the impact of the onerous recertification requirements for bargaining representation is in a letter to the editor published in the Mason City Globe Gazette.
In that letter, Jason Enke of Clear Lake outlines what elections would look like for the representatives supporting the bill if the same requirements applied to their re-election campaigns:
This is what it would look like for them:
  • Each year, any legislator seeking to continue representing their constituents must submit a petition signed by at least 30 percent of their constituents in order to be placed on a ballot.
  • If they complete a successful petition, an election will be scheduled with the legislator themselves paying all costs of the election upfront.
  • Any eligible voter who does not vote in the election will have his or her vote counted as a vote against the legislator.
  • If there are multiple choices on the ballot, a legislator must receive the vote of a majority of all eligible voters.
  • If none of the choices on the ballot receive a majority vote, there will not be a runoff election. Those constituents will not be represented.
  • Furthermore, if a legislator loses an election and constituents are unrepresented, another election for that district will not be considered until a period of at least two years has passed from the last election.

Currently, by contrast, it is incredibly easy to get on a ballot for the Iowa Legislature — only 50 signatures for a state House seat, and 100 signatures for a state Senate seat. All costs of a legislative election are paid by public funds. If people do not vote, they are not considered in the outcome. To elect takes only a plurality, not a majority, of those voting, not those eligible or even registered. Those who are interested enough to vote make the decision. Deadlines are set in the Iowa Code for filling vacancies in legislative seats to assure people are represented when decisions are made for them.

None of what was mandated for public workers in Iowa is good enough for the majority of state legislators who passed the anti-bargaining legislation that Governor Branstad signed into law last week. For workers who want team representation of their position when they negotiate compensation to provide services to fellow Iowans, long-accepted notions of electoral fairness in America do not apply.

 

owen-2013-57Posted by Mike Owen, executive director of the Iowa Policy Project

mikeowen@iowapolicyproject.org

Today’s virtual House graphic: Big checks, no taxes

Iowa’s lucrative research subsidy provided as much in 2016 to companies that do not pay Iowa state income tax as legislators recently approved as an increase in state school aid.

Editor’s Note: The Iowa House of Representatives now denies the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, on several days this session we are offering examples. Here is today’s graphic, to illustrate the cost and nature of Iowa’s tax subsidies to companies to do research.

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Iowa’s lucrative research subsidy provided as much in 2016 to companies that do not pay Iowa state income tax as legislators recently approved as an increase in state school aid.

Unlike the typical use of a tax credit, the Research Activities Credit (RAC) is refundable and provides a check to the recipient for the amount of the credit not needed to erase taxes. In other words, if the company does not owe income taxes and has a research credit, it gets a check for the amount of the credit remaining.

A new report from the Department of Revenue (DOR) shows that in 2016, 207 corporate refunds were issued totaling $40.4 million (see graph above). Corporate claimants used another $8.7 million from the credit to erase tax liability, leaving the total cost of the corporate credit at $49.1 million.

For context, Iowa lawmakers this session provided $40 million as an increase in state aid for local school districts, defending the 1.11 percent increase as all the state could afford.

In most cases, beneficiaries of this tax credit and the tax credit “refunds”* are very large companies, DOR reports show. The graph above shows the overall cost of corporate claims on the RAC (beige), with the blue share of the bars showing the share of corporate claims paid out in checks to companies that paid no corporate state income tax to Iowa.

For more information and a list of companies that benefited from over $500,000 in RAC claims in each of the last seven years, see this Iowa Fiscal Partnership news release.

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* To refresh, these tax credit “refunds” are not refunds of taxes paid above what was owed, but of tax credits that exceed the amount of taxes owed. In 2016, the share of these research tax credits paid as “refunds” accounted for $4 out of every $5 of the cost of the credits.

For more information about Iowa tax credits and breaks for business, see this page on the Iowa Fiscal Partnership website: http://www.iowafiscal.org/category/research/taxes/tax-credits/

See also this related “Virtual House graphic” on Iowa’s growth in tax credit spending.

 

Today’s virtual House graphic: School funding in Iowa — a 20-year slide

The Iowa House of Representatives voted Monday to deny the ability of lawmakers to use visual aids in debate on the floor. To help Iowans visualize what kinds of graphics might be useful in these debates to illustrate facts, we will offer examples. Here is today’s graphic, to illustrate state trends in Supplemental State Aid, formerly known as “allowable growth,” which governs per-pupil spending growth in local school budgets.

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Supplemental State Aid is the basic building block of a school budget, which is tied to enrollment, and is a combination of state funding and local property tax.

It is important to understand that an increase in state aid or per pupil growth, in other words, does not guarantee growth in an individual school district budget. That depends also on enrollment in the district. In some cases, an increase in SSA may still mean an actual decrease in funding available to a district, both in state aid and property tax. The percentages in the graphic above do not necessarily reflect what is happening in a given school district.

Join us Feb. 10 in Iowa City

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When: Friday, Feb. 10, 2017, 7 p.m.
Where: Old Brick, Iowa City, corner of Clinton and Market streets
What: Brief, 10-minute-or-less factual presentations from IPP staff and friends on key issues.
Who: You, and folks who have been watching developments on these critical policy issues:

Minimum wage • Collective bargaining • Education • Clean water policy • Taxes

One month into the 2017 Iowa legislative session, where do we stand on big issues facing our state? What are the real facts? What are responsible solutions? Let’s talk about them.
There is no admission charge for this event, but we do take donations. Sponsorships are available. Join us for presentations by IPP staff and good discussion with fellow Iowans!
 
Tickets not necessary, but please let us know you’re coming so we can plan.
RSVP to mikeowen@iowapolicyproject.org

The Governor’s health plan for public employees: A solution in search of a problem

We’ve seen this before; why would we try it again?

DSCN5662-detail240200Governor Branstad’s plan to remove health benefits from negotiations on state, county, city and school employee contracts presents more questions than answers.

The first question: What again is the problem? The Governor has not identified one with any specificity.

The second: What would be the effects? Local decisions on health care coverage reflect local realities; the Governor has not shown why a statewide plan would (1) cover employees adequately; or (2) save a dime.

And perhaps the most important: We’ve seen this movie once in the last year with the Governor’s Medicaid privatization, and many would have preferred to walk out. So why would we go again?

Perhaps we need to take a deep breath and study the issue first.
The Governor is giving us a solution in search of a problem. There is no problem. He has not identified one — just vague and unsubstantiated concerns that won’t be repeated here because they are vague and unsubstantiated. You have to do better than that, Governor.

Next, we have no specifics from the Governor about his suggested statewide pool — who would run it, what options employees might have, not even what it would cost, or any idea about where the costs would be greater than they are now.

We do have experience with that, in this Governor’s unilateral decision to privatize Medicaid, which has been both costly and disruptive thus far. This experience leaves a serious question whether the state should be rushing into another big change with health coverage that would affect as many as 1 in 7 workers in the state, with no more study than has been apparent.

In fact, according to the Des Moines Register, a big issue with the Governor is making employees pay a greater share of their health costs. What is missing from that concern is the fact that employees have given up pay increases through the years in negotiating the health-benefit arrangement. Will the Governor be permitted to ignore this?
For good context, our 2011 report “Apples to Apples” demonstrates that benefit packages move public employees closer, on average, to the overall compensation of private-sector employees with similar skill sets — though still below private-sector compensation.

If the Governor’s goal is to reduce state expenditures by reducing public employee health benefits or increasing the employee share of costs, it should be recognized that this would widen the compensation disadvantage already experienced by public sector workers.

Many public employers — school districts, etc. — like the ability to offer something that might not cost as much as a straight pay increase, and that is a benefits package that includes health insurance. Where employers and employees agree on such a package, why would the state object?

A responsible approach by legislators would keep all of these considerations in the forefront in discussing any such changes to employee benefits.

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

Contact: mikeowen@iowapolicyproject.org