On Labor Day, don’t forget single workers

Hundreds of single workers — and millions nationally — are taxed into poverty because they do not have kids and do not qualify for the EITC. And problems with child care assistance are being used to oppose a minimum-wage increase, even though the vast majority of affected workers do not have children. On Labor Day, let’s not forget the needs of single workers.

Our focus at the Iowa Policy Project frequently emphasizes the impact of public policy on working families.

But the demand of meeting a household budget is faced by more than parents, whether in single- or married-couple families. Single workers without children also need to get by.

So, on Labor Day weekend, let’s make sure the spotlight hits those folks as well. Here are three areas:

•    the Earned Income Tax Credit (EITC);
•    the Cost of Living in Iowa; and
•    the minimum wage.

chuck_marr-5464A new report from the Center on Budget and Policy Priorities (CBPP) focuses on single working people who do not raise children and thus do not benefit from the Earned Income Tax Credit (EITC). Childless workers under age 25 are ineligible for that benefit, notes CBPP’s Chuck Marr, who states:

On Labor Day, many of these low-wage workers will be serving meals in restaurants, ringing up back-to-school supplies at the mall, or driving a truck down the highway. They deserve a decent day’s pay for a hard day’s work, but many of their paychecks are too small to make ends meet. An expanded EITC that targets this group would do more to help deliver a decent day’s pay.

There are bipartisan proposals on the table in Washington to extend the EITC to these workers, 7.5 million of whom are now “taxed into poverty,” Marr notes. The table below shows the Iowa impacts of these proposals.

Iowa Workers helped under Obama, Ryan plans Workers helped under Brown, Neal plans
Cooks  6,000  6,000
Cashiers  5,000  6,000
Waiters and waitresses  5,000  5,000
Retail salespersons  4,000  5,000
Custodians and building cleaners  4,000  4,000
Laborers and freight, stock, and material movers  4,000  4,000
Truck drivers  4,000  4,000
Nursing, psychiatric, and home health aides  3,000  4,000
Maids and housekeeping cleaners  3,000  3,000
Stock clerks and order fillers  2,000  3,000
Child care workers  2,000  2,000
Construction laborers  2,000  2,000
Food preparation workers  2,000  2,000
Grounds maintenance workers  2,000  2,000
Personal and home care aides  2,000  2,000

Source: Chuck Marr blog, Center on Budget and Policy Priorities

CBPP has done much work on this issue. See this earlier report and another report by Marr and his colleagues at CBPP.

Cost of Living in Iowa
2010-PFw5464As IPP’s Peter Fisher shows in Part 2 of our “Cost of Living in Iowa” report for 2016, more than a quarter of working single persons statewide (27.5 percent) do not make enough at work to meet a basic-needs household budget. In fact, for those workers who fall short, they fall more than $10,000 short, on average. It is worth noting that this basic needs gap is even more severe for single parents, who fall almost $23,000 short, on average.

Minimum Wage
One of the efforts being used to stop or hold down local minimum wage increases in Iowa is the issue of “cliff effects” in work support programs — particularly Child Care Assistance — in which benefits abruptly drop for a worker if he/she gets slightly higher pay.

This is a very real issue for some workers, but not for the vast majority of workers who would benefit from a minimum wage increase statewide to $12 (phased in over five years), because they do not have children.

It makes no sense to block a wage increase for the three-fourths or more of workers who are not affected by the child care issue.

Rather, Iowa could raise the minimum wage and, separately, improve access to its Child Care Assistance program so that the cliff effects are eased or erased. There are ways to do so. See Fisher’s report with Lily French from 2014, Reducing Cliff Effects in Iowa Child Care Assistance.

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


Spreading a friend’s message

“At 93 I am nearing the end of my life on this planet. As a parting message, I want to encourage you in the strongest terms to use your influence to make distributed solar energy a major source of electricity. … Please use your influence.” — Don Laughlin, in his letter to Warren Buffett

I visited an old friend, Don Laughlin, in a nursing home before he died. A stroke had paralyzed half of his body but certainly had not affected his mind. Even with his impending death he was looking toward the future as he spoke with Nathan Shepherd of IPP and me.

Our conversation was about renewable energy, which he had promoted for decades. He told us that one of his many unfinished projects was a letter to Warren Buffett, the owner of MidAmerican Energy, to ask him to be more supportive of rooftop solar power. Nathan suggested to Don that he dictate a letter and that we would send it to the billionaire. And we did.

160810-CLIP-dmr-openletterBut we realized that with probably hundreds of letters every day, Warren Buffett might never hear of Don’s letter. We spoke with the Des Moines Register’s opinion editor, who loved the idea of publishing Don’s letter as an open letter to Buffett. So, two days after we spoke to Don, a third of the Register’s op-ed page was Don’s letter, an introduction by Nathan and me, and a huge picture of solar panels. (Click on image.)

Within several days, Don Laughlin would be gone at the age of 93.

At a celebration of Don’s life at Scattergood School near West Branch August 27, my neighbor Deborah Dakin suggested that while she was sure Don was happy to do one last act to encourage solar power and reduce the effect of climate change, more could be done.

Basic RGBShe suggested that everyone who reads this write to Warren Buffett to ask him to pull his company back from efforts to reduce the return to homeowners from their own rooftop solar. That is because MidAmerican is trying to kill net metering, the ability of a homeowner or business to receive retail rates for any excess electricity they generate beyond their own usage.

Your letter would honor Don Laughlin’s last public activity, and, if it succeeds, each of us will be doing our part to stave off the worse and worst effects of climate change.

IPP-osterberg-75David Osterberg, Co-Founder and Environmental Researcher, IPP


The hope for nonpartisan dialogue to practical strategies on issues

Editor’s Note: This post ran on Charles Bruner’s blog as “Light at the end of the party conventions.” Bruner is a former co-director of the Iowa Fiscal Partnership, the fiscal policy analysis collaboration of the Iowa Policy Project and the Child and Family Policy Center, two Iowa-based nonprofit, nonpartisan organizations.

By Charlie Bruner

America needs every one of us to lend our energy, our talents, our ambition to making our nation better and stronger —where you can get a good job and send your kids to a good school, no matter what zip code you live in, where all our children can dream, and those dreams are within reach.

When I am President, I will work to ensure that all of our kids are treated equally and protected equally. Every action I take, I will ask myself: Does this make life better for young Americans in Baltimore, in Chicago, in Detroit, in Ferguson who have in every way the same right to live out their dreams as any other child in America?

There is an old saw that says: “I went to a hockey fight and, lo and behold, a game broke out.” I watched much of both political party conventions – and, lo and behold, amidst all the partisan rhetoric and campaigning, at least one common “issue/concern” was raised.

The above are direct quotes from Hillary Clinton and Donald Trump as they accepted their party’s nomination for President. The first paragraph is from Clinton’s speech, the second from Trump’s. Taking them at face value, the challenge is now for a public dialogue to “break out” that begins to build consensus around responses.

The common sentiments these statements express require actions that cannot be achieved by whoever is elected President, through the power of that office alone. Ultimately, as an electorate and as stewards of our future, we need to insist on a dialogue that goes beyond expressing these sentiments to developing practical and proximate strategies — public and private, professional and voluntary — that will enable us to realize them.

In such a dialogue, Democrats may stress the need for public responses that provide additional income and service supports and a proactive government that ensures a living wage to reduce material poverty. Republicans may stress the need for greater personal responsibility and community initiative based upon indigenous leadership that fosters more points of light within poor communities to enhance personal efficacy. In the end, the solution (for reasons of achievable politics and most effective policy) is not a matter of either/or, but of both/and.

These statements should be seen and used as an opportunity for us to insist on further, deliberative dialogue — dialogue that goes beyond sound bite proclamations mapping out a partisan political position. It is incumbent, for our children and our nation, that this dialogue does “break out” in ways that lead to that action, not only at the Presidential campaign level but in our states, communities, and neighborhoods.

At least that’s my story, and I’m sticking to it.

08-Bruner-5464 Charlie Bruner is Director Emeritus of the Child and Family Policy Center, which he founded as he completed 12 years as an elected Iowa state legislator. Prior to that, he received his Ph.D. in political science from Stanford University and has had different stints at both teaching and research. Thus, he brings three dubious backgrounds — academic, politician, and advocate — to his current work as a co-principal investigator for the Learning Collaborative on Health Equity and Young Children (see: childequity.org for his website).

Join us Sept. 15 to celebrate IPP’s 15th anniversary

The Iowa Policy Project is 15 years old and we’re having a party. Join us for our anniversary reception and help us move forward to the next 15!

Bill Stowe on clean water • Peter Fisher on work supports •
and more!


Hors d’oeuvres, cash bar — 6 p.m. • Program — 6:45 p.m. to 7:30 p.m.
Tickets $50 per person • Sponsorships available • RSVP TODAY!

Featuring: Bill Stowe, Des Moines Water Works
Hear from the CEO and General Manager of Des Moines Water Works, one of Iowa’s most prominent advocates of clean water stewardship.

Sneak Preview: The Cost of Living in Iowa Part 3 — Work Supports
IPP Research Director Peter Fisher will offer a peek at upcoming analysis of how Iowa can enhance eligibility for child care assistance so that working families are not penalized if they work more or achieve a slight boost in pay.

Special recognition by co-founder David Osterberg of early IPP supporters
Mark L. Smith, G. David Hurd and Fred and Charlotte Hubbell

And a silent auction you won’t want to miss!

RSVP today — download this response form to order tickets or become a sponsor.

INDIVIDUAL TICKETS: $50 per person

LOOPHOLE CLOSER — $1,000 and above
POLICY WONK — $500 to $999
JOB COUNTER — $200 to $299

PIE ENLARGER — $5,000 and above
PLAYING FIELD LEVELER — $2,500 to $4,999

Give us a call at (319) 338-0773 for more information. Thank you!

Fix both ‘cliff effect’ and low minimum wage

Past failures to improve both the minimum wage and child care eligibility should not end up as an excuse to fix neither.

As the debate over a Polk County minimum wage continues, the so-called “cliff effect” is being cited as a reason to limit the increase in the wage. This is unfortunate. Capping the wage at a low level would hurt thousands of families, including many with burdensome child care costs.

cliffs3The “cliff effect” results from the design of Iowa’s Child Care Assistance program (CCA), which pays a portion of the cost of care for low-income families. Iowa has one of the lowest eligibility ceilings in the country: 145 percent of poverty. When a family’s income hits that level ($29,120 for a single mother with two children), benefits disappear.

While most work support programs, such as food assistance, taper off gradually, with CCA you just fall off a financial cliff — the “cliff effect.”

We do need to fix that program. But the failure of state lawmakers and the governor to address the CCA cliff effect is not a good reason to forgo needed wage increases for thousands of working families. An estimated 60,000 workers would benefit from an increase to $12 an hour in Polk County; 88,000 by an increase to $15 (phased in over several years).

Of those who would benefit from a higher minimum, 36 to 38 percent are in families with children. To put the CCA cliff in context, recognize:

•     Thousands have high child care costs and incomes below 145 percent of poverty but do not receive CCA. A 2007 study estimated that only about 1 in 3 Iowa families eligible for CCA were actually receiving it. The two-thirds with low wages but without assistance still need higher wages.

•     Second, a low wage cap would not help many families barely above 145 percent of poverty, but still facing child care costs of $4,000 to $5,000 a year per child. These families, in many cases married couples with one or both working at a low wage, can’t make ends meet.

•     Third, the other 62 to 64 percent of low-wage workers do not have children, and many families whose children are older do not need child care. A cap on the minimum wage hurts all of them.

Moreover, we need to keep in mind that the cliff is not as sudden as it appears. Because Iowa moved to one-year eligibility, a family whose income rises enough to push them above 145 percent of poverty can continue to receive assistance for another year. In that time, they may find ways to adjust, such as quitting the second or third job or reducing hours or overtime, to stay eligible for CCA but have more time with their children. This is surely a benefit from a higher minimum wage.

Policies that move families toward self-sufficiency are widely supported. We want workers to increase their earnings by furthering their education, finding higher paying jobs, gaining experience that earns them promotions — and have time to care for their families.

Yes, we should fix our child care assistance program, which can penalize all of those efforts. But we should also fix a minimum wage stuck at a level well below what even a single person needs to get by. Past failures to fix one problem should not end up as an excuse to fix neither.

2010-PFw5464Posted by Peter Fisher, Research Director of the Iowa Policy Project



“Reducing Cliff Effects in Child Care Assistance,” Peter Fisher and Lily French, Iowa Policy Project, March 2014, PDF

Enriching the minimum wage discussion

History shows the minimum wage was meant to be a meaningful policy tool to help working families, not limited to “entry level” work or teens. In fact, efforts to establish the wage came as policy makers were trying to remove young teenagers from the workforce.

The spin against any minimum wage increase — or even having a minimum wage — has become predictable. This should surprise no one. Policy makers since President Franklin D. Roosevelt have battled the same stuff.

A little relevant history might be just what is needed as Iowans consider the arguments for a national, state or even local increase, which passed in Johnson County.

History shows the minimum wage was meant to be a meaningful policy tool to help working families, not limited to “entry level” work or teen wages. In fact, efforts to establish the wage came at the same time policy makers were trying to remove young teenagers from the workforce.

The U.S. Department of Labor website has an interesting paper published almost 40 years ago by a DOL historian, Jonathan Grossman: Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage In it, Grossman relates a story about a young girl’s note to Roosevelt, telling of pay being cut from $11 a week to between $4 and $6 a week. 

To a reporter’s question, the President replied, “Something has to be done about the elimination of child labor and long hours and starvation wages.”

“Starvation wages” are your concern if you expect the wage to be meaningful to a household budget.

Interestingly, Iowa Policy Project research shows what is needed for a household budget. In Linn County, where a very low $8.25 has been suggested by a split task force, a single parent needs to make between $21 and $25 an hour to support a household on a bare-bones, basic-needs budget without public supports. In Polk County, it takes between $22 and $27 for a parent in similar circumstances.

IPP and Economic Policy Institute analysis also show this issue is scarcely about teens. Statewide, more than 4 out of 5 workers affected by an increase to $12 are 20 years old or older. A quarter of them have children. Over half of them work full time. On average, they account for over half of their family’s total income.

County supervisors in Johnson County have taken the baton across generations from FDR, to assure families have a chance. They acted last year to raise the local wage in three steps to $10.10 by next January 1, and they have already taken two steps, to $9.15.

Discussions are moving ahead in Polk County, Linn County and Lee County. Passing a local wage is a significant signal to state leaders that they are through waiting for action. Any county must consider whether the content of its action is significant as well — however bold it may seem to pass local law on this issue, the amount does matter.

And for those who say, “Let the market handle it,” just wake up. Clearly, it does not. As FDR stated in 1937:

The truth of the matter, of course, is that the exponents of the theory of private initiative as the cure for deep-seated national ills want in most cases to improve the lot of mankind. But, well intentioned as they may be, they fail…. (T)hey have no power to bind the inevitable minority of chiselers within their own ranks.

Though we may go far in admitting the innate decency of this small minority, the whole story of our Nation proves that social progress has too often been fought by them. In actual practice it has been effectively advanced only by the passage of laws by state legislatures or the National Congress. [1]

Do we value history? Do we value work? Do we value families? Do we value practical solutions through public policy? We are about to see.

[1] Franklin D. Roosevelt: “Message to Congress on Establishing Minimum Wages and Maximum Hours.,” May 24, 1937. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=15405.

owen-2013-57By Mike Owen, Executive Director of the Iowa Policy Project.

Contact: mikeowen@iowapolicyproject.org

Ignore ideologues — IPERS sound, stronger

Time seems to be running out on those who do not want a stable, secure and sustainable retirement program for public employees. IPERS, the Iowa Public Employment Retirement System, is well on the way to recovery before its opponents can kill it. But they’re still trying.

The criticism this time comes in a Des Moines Register opinion piece, from a familiar source, the Public Interest Institute (PII) in Mount Pleasant.

In its latest ideological attack on IPERS, PII offers no data — not a single financial indicator — to demonstrate a problem. In fact, IPERS is rebounding from troubles brought on by the Great Recession and inadequate state contributions in the latter half of the last decade.

According to the latest IPERS annual report, IPERS’s ratio of funded actuarial assets to liabilities — which had dropped from 89.1 percent in FY2008 to a low of 79.9 percent in FY2011 — has continued to rebound, rising in FY2015 from 82.7 percent to 83.7 percent.

In an Iowa Policy Project report in late 2013, Imran Farooqi, Peter Fisher and David Osterberg showed that contrary to high-profile examples of public pension problems with the city of Detroit and the state of Illinois, the public employee pension systems in Iowa and most states were generally healthy and well-managed for the long term.

“Iowa’s public pension plans have sufficient assets to pay benefits now and well into the future. And recent improvement in the plans’ designs have already enabled them to begin recouping losses incurred during the recessionary stock market decline,” they wrote. Now, 2 1/2 years later, there is no indication of a change in that positive trend.

That report did recommend ways to strengthen IPERS and other public employee retirement plans in Iowa, such as increasing contributions and meeting actuarial recommendations for those contributions.

What we need to remember is that the purpose of IPERS is not to see how little we can pay public employees, but to attract good employees partly with a promise of a secure retirement. It is to “improve public employment within the state, reduce excessive personnel turnover, and offer suitable attraction to high-grade men and women to enter public service in the state.” This is the stated purpose of the law, Chapter 97B.2.

The biggest problem for PII is that IPERS may fully recover before PII gets the law changed to a less secure “defined contribution” system. A defined benefit system provides financial security by pooling risk in the group — more efficient than having everyone on their own based on defined contributions that they might outlive.

So let’s be clear: Shifting from a defined benefit plan like IPERS to a defined contribution plan, such as a 401(k), is a way to cut benefits and reduce retirement security.

We can spend our time better addressing real concerns to assure our public employees can deliver on public education, overseeing human services, policing our streets and guarding prisoners — and making sure they can retire securely when they are done working for us.

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