Labor Day: Celebrating what was, and what could be

This Labor Day could be the low-road benchmark for celebrations of improvements to be seen in the future, reversing current trends against working families.

As always, Labor Day is a day to celebrate Americans’ work ethic and spirit — things that hold promise for better times ahead.

But it is not a time to celebrate what has been happening in Iowa.

A look at the landscape for working families shows this Labor Day could be the low-road benchmark for celebrations of improvements to be seen a year, two years, maybe 10 years from now.

Iowa lawmakers repealed local minimum-wage increases in four counties that acted when state and federal leaders refused. Iowa’s minimum wage is a measly $7.25 an hour and has been held there for 10 1/2 years; some 400,000 workers — and their families — could gain with a raise to $12. (IPP report, 2016) Twenty-nine other states have acted, including all but two of Iowa’s neighbors.

In the middle, Iowa as usual lags the region and the nation, as IPP Senior Research Consultant Colin Gordon showed in a wage update for The State of Working Iowa.

Even at higher wage levels, Iowans are falling short. As Gordon noted:

Colin Gordon

“(T)he wage structure in Iowa is more compressed than it is nationally or in the Midwest. Low-wage workers in Iowa make about the same as low-wage workers everywhere else, but at the higher wages, Iowa workers fall further and further behind. Higher wage jobs are scarcer in Iowa than in most states. And wages in many professions — such as nursing or teaching — trail national and regional peers by wide margins.

“The key point here is not just that wages have stagnated, but they have done so over an era in which the productivity and educational attainment of Iowa workers have improved dramatically.”

If the wage levels weren’t lagging enough already, policy makers have utterly failed Iowa workers by refusing to assure that wages owed are actually paid. Wage theft — refusing to pay wages owed, or violating overtime and employee classification rules — is winked at by a state system that devotes too few resources to enforcement. Lawmakers have refused to act.

Lawmakers deliberately smacked working people with significant legislation in the last General Assembly in at least two other areas:

•   They curtailed collective bargaining rights of public employees, making it tougher for them to organize, and tougher for them to negotiate. In the arena where the state, counties, cities and schools should be leading by example on how to treat employees, the Legislature has chosen to push Iowa toward a race to the bottom. And make no mistake about the impact on the economy: Public-sector jobs are 1 in 6 of all jobs in the state.

•   They also passed legislation to erode workers’ protection and financial security long provided through Iowa’s workers’ compensation law. A study of the effects of one change, reclassifying shoulder injuries, found that the typical worker with such an injury could expect to receive 75 percent less under the new rules.

On top of these, we see the University of Iowa unilaterally acting to eliminate, or eliminate funding for, its own Labor Center that serves thousands and helps Iowans understand what rights they have in the workplace.

And we can count on a continuing assault on Iowa’s strong and accountable public employees’ retirement plans — not to help employees or actually save money, but to feed the ideological drive against public services that is illustrated in examples above. How better to damage those services than to lessen the attraction of jobs that provide them?

Celebrate Labor Day for the people who work to make our nation great. Keep in mind throughout the day that forces are trying to undermine the security of working families — and that Iowans can come together behind policies to support all.

Think of how much better that Labor Day burger off the grill will taste — in some future year — with a side of responsible minimum wage and workplace protection laws, topped off with a stronger economy that will result as more Americans prosper.

Mike Owen is executive director of the nonpartisan Iowa Policy Project. mikeowen@iowapolicyproject.org

 

A University ‘for’ Iowa, or just ‘in’ Iowa

If the University of Iowa is serious about its strategic plan, it would recognize that jewels like the Labor Center demonstrate a commitment to the mission of a flagship public institution.

There are lots of good reasons not to shutter the University of Iowa’s Labor Center.

For starters, any such move would be rash, shortsighted, and wasteful. The Labor Center’s core continuing education mission teaches labor leaders about workers’ rights, about civil rights in the workplace, and about occupational health and safety. Those who have benefited from these courses over the years credit the Labor Center with helping them — and their local unions — sustain workplaces which are safer and more equitable.

For the pittance in state funds (about $500,000) devoted to the Center, the returns the state — in fewer harassment claims, fewer workers’ compensation settlements, fewer cases of wage theft — are incalculable.  Closing the Labor Center, in this respect, is like taking down the stoplights at an intersection: you could claim savings in signage and electricity as a result, but at what cost?

In turn, the threat to the future of the Labor Center — the only academic center in the Regents system devoted to work and workers in Iowa — sends a terrible message to the state’s working families. In an era of spiraling inequality, when the combination of stagnant incomes and rising tuition are putting a college education increasingly out of reach, do we really want to harden the perception that the state’s universities only serve the interests of the upper classes? There are about 1.6 million wage earners in Iowa, a quarter of whom do not earn a wage sufficient to climb above the poverty line.  These Iowans — as citizens, voters, taxpayers, and parents — should know that the state’s public institutions are for them too.

And finally, the University’s claim that the Labor Center is peripheral to its academic mission is simply not true. The University’s current strategic plan sits on three pillars: student success, research, and engagement. The Labor Center contributes on all of these fronts, and especially on engagement and outreach to the rest of the state. On this score, the strategic plan argues that the University should “enhance UI’s statewide visibility and increase access to UI expertise,” “support the translation of intellectual work into applications to enhance economic development,” and “create lifelong learning opportunities that broaden UI’s reach across Iowa.”

The Labor Center does all of this and more. It is one of the few arms of the University with a sustained and serious “extension” mission to the rest of the state. If the University is serious about its strategic plan, and about proving its value to those outside Johnson County, its best option is to nurture such forms of engagement with off-campus Iowa constituencies rather than abandon them. It is jewels like the Labor Center that demonstrate a commitment to the mission of a flagship public institution; which demonstrate that UI can and should be The University FOR Iowa and not just a University IN Iowa. 

Colin Gordon is the F. Wendell Miller Professor of History at the University of Iowa and a senior research consultant with the Iowa Policy Project. He is the recipient of the Regents Award for Faculty Excellence (2016) and the UI’s Distinguished Achievement in Publicly-Engaged Research Award (2015).

How to steal $110 million from Iowa workers

No artifice of “regulatory relief” or concern for untipped workers can justify this theft.

In most states, tipped workers are paid a subminimum “tipped wage.” In Iowa the tipped wage is $4.35/hr. The gap between the tipped wage and the minimum wage (in Iowa, $7.25-$4.35 or $2.90) is called the “tip credit.” Tips are first used to satisfy this credit (bringing the hourly wage to the minimum); once the credit is satisfied, tips are an uneven addition.

Our state and national labor laws have long operated under the assumption that tips earned by waitresses or bartenders or manicurists belong to the worker who earned them. In 2011, the federal Department of Labor (DOL) clarified and codified this rule, underscoring that, regardless of the jurisdiction or local wage, “a tip is the sole property of the tipped employee.”

In December of last year, the Trump Administration announced its attention to repeal this rule (after already announcing its intention to cease enforcement of the rule last July). Under the new regime, employers of tipped workers could retain any tips in excess of those needed to satisfy the tip credit. Forcing tipped workers to pool or kick back tips to the house has always been considered a form of wage theft. The new rule would make this wage theft perfectly legal.

The new rule, the brainchild of the National Restaurant Association, rests on the thin logic that employers would share tips with “back of the house” staff. But nothing in the rule requires them to do so, and research on wage theft in various jurisdictions suggests that tip stealing by management is already widespread. Indeed, the DOL punctured its own logic with an internal study finding that the rule would result in huge losses to tipped staff, and then — in defiance of any semblance of good government and transparency — buried the study.

Fortunately, the Economic Policy Institute (whose crack research staff includes the DOL’s former chief economist) has stepped in with its own look at the dismal impact of this rule. Using a combination of W-2 (tax) and industry data, EPI estimates a base of about $36.4 billion annually in tips (a conservative estimate, since a substantial share of tips go unreported as income). Since some of that $36 billion must be used to satisfy the tip credit, the share of that “at risk” is a little lower, about $26 billion.

Grade school economics, in turn, would suggest that almost all of that $26 billion would be pocketed by employers: There is no need or incentive, after all, to share tip revenues with bussers and dishwashers, whose wages (and willingness to work) are already established by local labor markets. Fortunately, many state labor laws offer further protection or regulations of tipped wages that would not be affected or pre-empted by the new federal rule. This brings the take of this heist down to just under $6 billion. In Iowa alone (where no state laws supplement federal rules and standards on tipped work), the annual loss would be about $110 million.

Looking at this on a smaller scale drives home the avarice and the injustice. Consider Francesca, a waitress at a mid-price, full service restaurant. Her base wage is $4.35. On a typical four-hour dinner shift, she serves eight tables. The average bill for those tables is $25.00, and the average tip is 15 percent or $3.75 — making her take home pay $47.40 ($17.40 in base wages and $30 in tips), or just under $12/hour. Under the new rule, Francesca would keep only enough of that $30 in tips to bring her wage — the base wage plus the tip credit — to the federal and Iowa minimum wage of $7.25. She takes home $29. If we follow EPI’s assumption, about half of the remaining tips would go to other employees, and about half would go in the employer’s pocket.

No artifice of “regulatory relief” or concern for untipped workers can justify this theft. The new rule, as Christine Owens of the National Employment Law Project notes, is “nothing more than robber barons masquerading as Robin Hood.”

Colin Gordon, professor of history at the University of Iowa, is senior research consultant at the nonpartisan Iowa Policy Project. He has authored or co-authored many IPP reports on jobs, wages and wage theft issues including The State of Working Iowa. cgordonipp@gmail.com

More from IPP on wage theft:
Wage Theft in Iowa by Colin Gordon, Matthew Glasson, Jennifer Sherer and Robin Clark-Bennett, August 2012
Stolen Chances: Low-Wage Work and Wage Theft in Iowa by Colin Gordon, September 2015

Unions overcome unbalanced bargaining law

ALEC-friendly lawmakers, eager to crush public-sector unions, may have instead given them new organizational life.

If Iowa lawmakers thought that their Draconian revisions to Chapter 20 could break the back of public-sector unionism, the last two months have proven them spectacularly wrong. Since early September, almost 500 of Iowa’s public-sector bargaining units have been forced into recertification elections.

Under the new rules, locals had to pay for the election themselves — and then win a majority of the entire bargaining unit (not just the votes cast). AFSCME’s Danny Homan remarked that of those pushing the new restrictions, “not one … could win an election under the rules they gave us.”

As is evident in the returns, public-sector workers have not only dug in their heels against the attack on their rights to bargain, but have begun to push back. ALEC-friendly legislative leaders, so eager to crush public-sector unions and silence their political voice, may have instead given them new organizational life.

Consider some of the numbers from the September and October elections (summarized in the graphic above). Of those voting, almost 98 percent voted to keep the union. In 229 elections, all the votes cast were “yes” votes.

Of the 32 bargaining units (accounting for about 1,000 workers) decertified, only five lost the majority of votes cast; in 21 units, nonvoters — counted as “no” under the new rules — tipped the balance. In six other units, no one voted.

A look at the 32 decertification returns suggests results that are starkly undemocratic: At Broadlawns Medical Center in Des Moines, for example, nurses voted 74-27 to stick with SEIU 199. But, because they needed 99 votes to capture half of the bargaining unit, they lost. In the Iowa Falls Community School District, a Teamsters 238 local voted 27-0 to certify. But because they needed 33 votes to capture half of the bargaining unit, they lost.

As an example of the success of strong organizing in the face of the rules imposed upon workers, Iowa State Education Association locals in 233 locations mobilized for recertification votes — winning 229 of those and losing only four by a total of 15 votes. Even in those four isolated cases, ISEA was favored by a majority of those actually voting — just not enough to satisfy the special restrictions placed on them by lawmakers.

Colin Gordon, senior research consultant to the Iowa Policy Project

cgordonipp@gmail.com

Labor Day 2017: Disappointing trends for Iowa working families

A higher minimum wage, union representation and investments in education produce growth and productivity in local and state economies that tax cuts never deliver.

Editor’s Note: This piece by Colin Gordon, senior research consultant at the Iowa Policy Project, ran as a guest opinion in The Des Moines Register.

Hear Colin Gordon’s Sept. 7 interview on Michael Devine’s “Devine Intervention program on KVFD-AM 1400 Fort Dodge.

Labor Day is always a good time to take stock of the state of working Iowa. Patterns of employment, job creation, and wage and income growth across the Iowa economy are telling — and disappointing.

This long-term economic pattern combines with the most disheartening legislative changes for working families in the lifetimes of most Iowans. The year 2017 poses great challenges to Iowans’ economic security, let alone opportunity for those coming to, serving in or retiring from the job market.

The Iowa Policy Project’s upcoming State of Working Iowa review finds the following:

•   Recovery is elusive. The Great Recession is over, but the national and Iowa economies are still struggling to recover. While Iowa regained its pre-recession threshold of jobs in June 2013, our economy and population have continued to grow — leaving us a jobs deficit of 34,000 jobs as of July.

While the unemployment rate has come back down to a healthy 3.2 percent, the labor force participation rate is still well below its peak and rates of underemployment and long-term unemployment are still higher than they were before the financial crisis hit in 2007.

•   Despite job gains, we have fewer good jobs. Counting jobs lost or added is important, but so is the quality of those jobs. Since the 1970s, Iowa has shed many good jobs in sectors like manufacturing, and replaced too many of them with lower-wage service jobs.

But the real damage has been done by the collapse of security and job quality within sectors and occupations. We have traded good jobs for bad jobs, due to economic shifts, loss of union representation, lax enforcement of labor standards, and alarming growth in contingent work relationships.

•   We are treading water. Wage growth is anemic for all but the highest earners, underscoring both low job quality. In Iowa, the median wage in inflation adjusted dollars inched up less than 1 percent, across the last generation (since 1979).

The constraints on wage growth are mostly political: a weak commitment to full employment, the declining real value of the minimum wage, and loss of voice and bargaining power with the loss of union representation.

•   We are choosing the wrong policies at the wrong time. The last year in state and national politics has only made things worse. The Trump Administration has moved to roll back both the substance and enforcement of key labor standards, and trade, tax, and financial policies have lavished the economy’s rewards on the highest earners. In Iowa, the legislative fusillade of the last session took aim at precisely the policies — including public sector collective bargaining and local minimum wage initiatives — that were helping to contain the damage.

Recent experience across the states offers us a good sense of what works and what doesn’t. A higher minimum wage lifts families out of poverty with no decrease in employment or economic growth. Union representation and collective bargaining offer a robust defense against income inequality and the erosion of job quality. Investments in education produce growth and productivity in local and state economies that tax cuts never deliver.

When states ignore these facts — as Kansas and Wisconsin have — they undermine the prosperity, security and mobility of their citizens.

The high road to economic growth and worker security is the better course for Iowa.

Colin Gordon is a professor of history at the University of Iowa and senior research consultant at the nonpartisan Iowa Policy Project in Iowa City. He is the author of reports in IPP’s “State of Working Iowa” series. Contact: cgordonipp@gmail.com.

 

Iowa follows U.S. patterns on loss of employer-sponsored coverage

new report from the Economic Policy Institute traces the erosion of job-based health coverage across the last decade — and the slowing of that decline in the last year. Nationally, as EPI Director of Health Policy Research Elise Gould underscores, job-based health coverage has shed almost 14 million non-elderly Americans since 2000. But slow improvement in the national economy over the last year, coupled with key components of the Affordable Care Act (most notably the provision that young adults are allowed to stay on or join their parents health insurance policies) have slowed those losses since 2011.

The other important trend across this decade is the dramatic growth in public health insurance. Medicaid and CHIP (hawk-i in Iowa) have picked up coverage for at least some of those who have lost job-based coverage. While losses (2000 to 2012) in employer-sponsored insurance were greater among children than among non-elderly adults, for example, the share of children without any coverage actually fell 1.8 percentage points.

Basic RGBMuch the same pattern has played out in Iowa.  In 2000-2001, Iowa’s rate of job-based coverage for those under the age of 65 was 76.9 percent — one of the highest rates in the nation; by 2011-2012, that had fallen to 64.5 percent — closer to the middle of the pack among states.

As the graphic below shows (Iowa is the red dot), this was one of the steepest rates of loss in the nation (coverage down 12.4 percent) and represented a net loss in job-based coverage of over 200,000 non-elderly Iowans. Of those losing coverage, about half (97,075) were working-age adults and about half (111,839) were kids (indeed, the share of kids losing job-based coverage in Iowa, at 16 percent, was the highest in the country).

ESI changes in statesclick on graph for interactive version

Again, public programs pick up some of this slack. Since 2000, Iowa has enrolled about 120,000 more working age adults in Medicaid, and added another 80,000 to the ranks of the uninsured. For Iowa’s kids, public coverage (Medicaid and hawk-i) has been much more effective — picking up 140,000 Iowans under the age of 18 since 2000, while actually reducing the number of kids uninsured.

Colin GordonPosted by Colin Gordon, Senior Research Consultant

Defending the Top 1 Percent — and Failing at It

The counter argument — that the 1 percent’s gains reflect distortions of the market, and losses for the rest of us — is pretty powerful.

An academic heavyweight from Harvard has taken up the cause of America’s most affluent 1 percent. But his defense has done the nation’s rich no favors.

Note: This piece by IPP Senior Research Consultant Colin Gordon appeared July 2 on inequality.org at this link: http://inequality.org/defending-top-1-percent-failing/

By Colin Gordon

Harvard economist Greg Mankiw
Harvard economist Greg Mankiw

Harvard economist Greg Mankiw has made quite a splash with his spirited defense of the top 1 percent. His argument in a nutshell: Gains hoarded by the very rich amount to nothing more than an “entrepreneurial disturbance” in an otherwise egalitarian setting. High earners are high earners because they have made “significant economic contributions,” according to Mankiw — who goes on to proffer J.K. Rowling, Stephen Spielberg, and Steve Jobs as evidence.A lot of virtual ink has already spilled in response, much of it by the other contributors to the forthcoming issue of the Journal of Economic Perspectives that features the Mankiw essay. And the verdict, pretty decisively, is that Mankiw has it all — the backstory, the logic, the evidence, and the consequences — spectacularly wrong.

Consider the central claim that the gains of the top 1 percent are all about the supply and demand of skilled labor, that “changes in technology have allowed a small number of highly educated and exceptionally talented individuals,” as Mankiw concludes, “to command superstar incomes in ways that were not possible a generation ago.” This claim has three large holes.

First, Mankiw’s use of Rowling, Spielberg, and Jobs as examplars of the 1 percent is more than a little disingenuous. As Larry Mishel points out, drawing on the work of Jon Bakija and others, the 1 percent is largely populated by corporate executives and financial sector professionals, for whom the plaudits “innovator” and “significant economic contributor” seem somehow less apt. And, as Dean Baker reminds us, even the incomes of Rowling, Spielberg, and Jobs owe as much to government intervention — in the form of copyrights and patents — as they do to the genius of the market.

Second, there is no evidence — at the bottom of the income distribution or the top — that education or innovation has that sort of payoff. John Schmitt and Jannelle Jones, most recently in a paper on the prospects of black workers, have tirelessly made the case that wages and job quality have plummeted across the last generation — even as the experience and educational attainment of workers has shown dramatic gains. And Mishel shows that the trajectory of top incomes runs far ahead of any reasonable educational benchmark.

And finally, the counter argument — that the 1 percent’s gains reflect distortions of the market, and losses for the rest of us — is pretty powerful. In their contribution to the same Journal of Economic Perspectives issue, Mishel and Josh Bivens make the case that most of these gains, especially those flowing from a bloated financial sector and excessive executive pay, come in the forms of economic rent — income either generated through preferential status or income that exceeds the real market value of the service provided.

Mankiw closes his paper with a number of other unsupported — and unsupportable — claims, arguing in turn that the rich are already taxed enough and that rising inequality poses no threat to either economic efficiency or social mobility. By this point his argument has a sort of “pay no attention to that man behind the curtain” tone to it. Once he equates social policy with involuntary kidney donations, the tired economic orthodoxy seems more like a furious distraction than any argument at all.

Colin Gordon
Colin Gordon

Colin Gordon is Professor of History at the University of Iowa. For more on this issue, and the broader sources of our inequality, see our Inequality.Org interactive guide, Growing Apart: A Political History of American Inequality.

– See more at: http://inequality.org/defending-top-1-percent-failing/#sthash.JXRd5UmQ.dpuf