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.

 

Running against the wind?

In his visit to Cedar Rapids, President Trump rallied his supporters on many issues including energy production. His message Wednesday was not a typical one in wind-producing Iowa.

The President highlighted the opening of a coal mine in Pennsylvania last month as an example of how he was bringing back the coal industry. “I don’t want to just hope the wind blows to light up your house and your factory as the birds fall to the ground,” he stated.

Concern for the fate of avian wildlife is refreshing for a president who recently rolled back regulations that prohibit the dumping of excess spoil into streams near surface mining operations, and who proposed drastic cuts to the budget of the U.S. Environmental Protection Agency.

Given a frequently stated concern of the president — for job creation — he might want to acquaint himself with the economic value of wind energy production in Iowa.

On March 30, 2017, the Iowa Policy Project reported that Iowa produces more electricity from wind per capita than any other state, and has lower average electric rates than when the industry started. Our findings show that the state’s leadership in renewable energy production has not come at great expense to ratepayers.

“Contrary to some of the warnings we heard two decades ago, the growth of wind power to 36 percent of the electricity we use in Iowa has not hurt our competitiveness in attracting businesses. It has not hurt our efforts to keep household spending for electricity under control,” said IPP’s founder and lead environmental researcher, David Osterberg.

Additionally, the wind energy industry provides well-paying jobs that support a number of families in rural Iowa where local economies are hurting. A technician salary starts at $24.50 per hour, which is very good money in rural Iowa. See IPP’s 2003 report, “Wind Power and Iowa Economy.” It found:

“Wind-powered electricity adds slightly more jobs and economic output to the Iowa economy than coal and natural gas. Furthermore, this homegrown source of electricity offers a new cash crop to farmers, spurs the development of new industries (such as turbine manufacturers and maintenance companies) as well as existing industries, and provides stable energy prices.”

While U.S. coal industry is on the decline both in production and consumption, the wind energy industry keeps growing worldwide.

Wind energy might just be an answer President Trump is looking for.

2017-sg-166177Posted by Sarah Garvin, IPP Research Associate

sgarvin@iowapolicyproject.org