Yes, whatever actions are taken on the Affordable Care Act will come from Congress, but state legislators may be left to pick up the pieces. Iowa legislators, are you paying attention? Are you talking to your federal counterparts about this? (Some are in the state this week.)
What many may not know is the impact the ACA has had on reducing the uninsured population in Iowa. The Medicaid expansion under the ACA is one of the big reasons we have seen a greater share of the Iowa population covered by either public or private insurance.
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the impact on Iowa, and potentially on state finances and responsibilities, if the federal Affordable Care Act is repealed.
One of many measures showing Iowa to be low or in the middle of the pack on business taxes is a study by the business consulting firm Anderson Economic Group. In its 2016 business tax rankings, Anderson ranked Iowa business taxes fourth-lowest.
In that analysis, Anderson looked at 11 taxes on business, and examined more than tax collections, but also how taxes paid by business compared to income available to pay the tax. Anderson said it used “taxes paid as share of profits, as this measure directly compares taxes paid to business income available to pay the tax.”
In fact, by the Anderson measure, Iowa ranks below all of its regional neighbors except South Dakota, which is lower only by one-tenth of a percentage point.
This finding is not unusual despite claims from the business lobby about Iowa taxes on business, as we have shown before. The latest examination by a widely known business accounting firm, Ernst & Young, puts Iowa state and local business taxes in the middle of the pack and below the national average, at 4.5 percent of private-sector GDP.
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 where Iowa rates vs. other states, by responsible measures, on business taxes.
Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs.
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. 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.
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.
 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.
 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).
Posted by Peter Fisher, research director of the Iowa Policy Project email@example.com
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.
As part of Moral Mondays at the Iowa State Capitol, Iowa advocates and lawmakers this week heard a cautionary tale from Annie McKay of Kansas Action for Children and Duane Goossen of the Kansas Center for Economic Growth.
At a time when Iowa lawmakers are considering significant tax cuts, McKay and Goossen, who analyze and promote child policies and conduct analysis of the Kansas state budget, traveled to Des Moines to outline the effects of what has become known as the “Kansas experiment,” a set of draconian tax cuts passed in 2012.
At that time, Goossen recounted, Gov. Sam Brownback promised the cuts would bring an economic boom to the state, with rising employment and personal income. People would move to Kansas. It would be, the governor said, “like a shot of adrenaline into the heart of Kansas economy.”
But, five years on, the promised economic boom has not arrived.
“Business tax cuts were supposed to be magic, they were supposed to spur job growth — and they didn’t,” said Goossen, a former Republican state legislator and state budget director under three governors.
In fact, since 2012 job growth in Kansas has lagged behind its Midwestern neighbors, including Iowa. The state has, however, seen years of revenue shortfalls and damaging budget cuts, eroding critical public services like K-12 and higher education, human services, public safety and highway construction.
In this period, the state has depleted its budget reserves, robbed its highway fund to shore up its general fund, borrowed money and deferred payments in order to balance the budget. Kansas has experienced three credit downgrades. Lawmakers have raised the sales tax twice and repealed tax credits that helped low-income families make ends meet. (In fact, the bottom 40 percent of Kansans actually pays more in taxes today than before the 2012 tax cuts went into effect.)
These actions have real impacts. Last year, Kansas saw the third biggest drop in child well-being among states as documented by Kids Count. Its 3rd grade reading proficiency ranking fell from 13th to 30th.
“What we did in Kansas – there is no proof behind it,” McKay said.
Iowans today are better positioned to stand up to damaging tax cuts than their Kansas counterparts were five years ago, McKay said. “We did not that have same people power in 2012.” She advised Iowa advocates to make crystal clear how all the issues currently generating widespread interest — education, health and water quality among them — are linked to the state’s ability to raise adequate revenue.
“You are ahead of where we were,” she said. “You have the opportunity to not be like Kansas.”
Posted by Anne Discher, interim executive director of the Child & Family Policy Center (CFPC).
McKay and Goossen’s talk Feb. 13 at the Iowa State Capitol was coordinated by the Iowa Fiscal Partnership (a joint effort of CFPC and the Iowa Policy Project) and supported by the Center on Budget and Policy Priorities. CFPC, through its Every Child Counts initiative, is one of more than two dozen sponsors of Moral Mondays, a weekly gathering during session to highlight issues that advance Iowa values like equality, fairness and justice.
Repeal of the Affordable Care Act will leave fewer people in Iowa with insurance than before the law took effect.
Editor’s Note: 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 what could be expected to happen in Iowa if Congress repeals the Affordable Care Act.
Repealing the Affordable Care Act (ACA) without an adequate replacement, as Congress and the incoming Trump administration appear poised to do, jeopardizes the health care coverage and economic well-being of the most vulnerable Iowans. About 230,000 fewer Iowans would have health coverage in 2019 if the law is repealed, including 25,000 children.
In fact, repeal of the ACA could leave tens of thousands of adults uninsured who actually had insurance prior to the ACA. Some 69,000 Iowans covered by an Iowa program, IowaCare, became part of the Iowa Health and Wellness Program with the advent of the ACA, while even more Iowans had insurance with the help of ACA subsidies.
Repeal leaves all three of those programs gone — IowaCare, Iowa Health and Wellness, and the ACA subsidies. Thus, fewer will have insurance than in 2013, prior to the ACA, and low-income Iowans will be worse off. This is an issue that state legislators may be left to address with no help from the U.S. Congress, but is not getting attention at the Iowa Statehouse.
For more information, see this Iowa Fiscal Partnership policy brief by Iowa Policy Project Research Director Peter Fisher.
Legislation to end local minimum-wage increases in Iowa would guarantee different minimums in border communities as Iowa’s state minimum wage trails those of most neighboring states.
The state minimum wage in Iowa has been stuck at $7.25 for over nine years. But because of the actions of four county boards, a third of the private-sector workers in the state are now covered by a local minimum wage ordinance. About 65,000 workers in Polk, Linn and Johnson counties already benefit from an increase in their hourly wage to more than $10.00, or will in the next two years. Another 20,000 or more will benefit indirectly.
But those wage gains would all be erased under a bill filed in the Iowa House, HSB92. That bill would nullify all of the county ordinances; in a single stroke, it would drive down the wages of about 85,000 Iowa workers.
We know something about who those workers are. Over 40 percent work full time. Many are trying to raise a family on low wages. The vast majority are age 20 or over, and one in five are age 40 or above. They are more likely to be women than men. Many live in in poverty despite working full time.
The average low-wage worker in Polk County who would be affected by the Polk minimum wage, which rises to $10.75 in 2019, could look forward to a raise of over $2,700 a year. But not if that bill becomes law.
The beneficiaries of the county wage increases are not confined to the counties that passed them. Thousands of workers commute from surrounding counties, and they come home to spend those higher wages at local gas stations, restaurants, grocery stores and other retail shops. They hire local plumbers and builders and electricians. In all, at least 12 counties in addition to Polk, Linn and Johnson will see a substantial increase in resident incomes and local purchases as a result of those three county minimum wages. Nullifying the wage increases will harm local economies, not just low-wage workers.
The bill goes beyond revoking the minimum wage laws passed recently by locally elected officials. It prevents any local elected body from enacting any ordinance in the future that is aimed at improving the lot of our low wage workforce. City councils and county boards would not be allowed to pass a law aimed at improving local wages, benefits, or sick leave policies, or reforming hiring or scheduling practices, regardless of how badly such measures are considered by elected officials to be needed, or how widely they are supported by local residents.
While some have hoped the state would grandfather in existing local ordinances, and would raise the state minimum by some amount, they stand to be disappointed. The bill leaves the state minimum at $7.25. This despite 70 percent support in Iowa for raising the minimum.
The bill reveals that the alleged concern over a “hodge-podge” of local ordinances was not the real issue. As we have argued elsewhere, the hodge-podge is a bogus argument. Labor markets are local, not statewide, and a local ordinance aimed at dealing with local market conditions makes sense. Nor is it plausible to argue that paying a different wage to different workers is a burden to businesses, who do that all the time.
Ironically, the bill would actually mandate that the current hodge-podge of minimum wages that exists in all of our border metro labor markets must remain. Quad City and Dubuque area businesses will still face an $8.25 minimum on the Illinois side. Council Bluffs and Sioux City businesses with employees on both sides of the river will still face $9.00 minimum wages in Nebraska. South Dakota’s minimum just went to $8.65, Missouri’s to $7.70. No increase in the minimum wage in an Iowa county to bring it into line with a bordering state will be allowed at the local level.
This bill, in sum, would help to guarantee that Iowa will remain a low-wage state.
These estimates are based on an analysis of data from the American Community Survey by the Economic Policy Institute.
Posted by Peter Fisher, Research Director of the Iowa Policy Project
Iowans must ask if we can continue to attract and retain good workers if we provide them no hope of gaining ground against the rising cost of living.
A bill just introduced in the Iowa Legislature would make sweeping changes to Iowa’s laws governing public employees, union and non-union, from teachers to snow plow drivers to child abuse caseworkers to nursing home inspectors.
Here we focus on one aspect of that bill, HSB84: the provisions that would drive down employee compensation on both the wage/salary side and the benefits side.
First, HSB84, prohibits an arbitrator from granting a wage increase in excess of the rate of inflation, or 3.0 percent, whichever is less. This applies to all public workers represented by a union — state, city, county, school — except for public safety workers (police and fire).
That restriction on an arbitrator will weigh against anything better than the cost of living, maxed out at 3 percent, since any impasse that leads to arbitration would enforce that limit. As the bill would remove all other topics from negotiation, there is no way for unions to negotiate for something else — better benefits, hours, working conditions or vacation — to compensate for a low wage offer.
The law also takes increases in the employee share of health insurance costs off the table. This means that any premium increase above inflation (and health care costs have been rising faster than prices generally for a very long time) will mean a loss of real wages, even in a year of low inflation overall.
What does this mean? The mathematical certainty is declining real income for public workers. Anytime inflation exceeds 3 percent, employees could lose ground. Anytime inflation is less than 3 percent, they could get no more than just enough to cover the rising cost of living, even to make up for those years of higher inflation. They could never catch up — unless the public employer agreed to it.
Suppose this mandate had been part of the collective bargaining law passed in 1974. What followed was a decade of inflation well in excess of 3 percent every year. After 10 years, the paychecks of public workers could have lost 37 percent in purchasing power. That’s a decline in your standard of living by over a third in one decade.
While inflation moderated in subsequent decades, it nonetheless exceeded 3 percent in 12 of the next 32 years (1985 through 2016). By now, wages would be just 59 percent of what they were in 1974. With employee health insurance costs thrown in, the real take-home pay of public workers could have fallen by half, or more.
Finally, the law prohibits bargaining over any wage increase or benefit based on seniority. Where public workers now can move up the pay scale through seniority, there is no guarantee that such pay scales will even exist in the future. The entire schedule of pay bumps based on experience and seniority could be eliminated by the employer. Employees would have no recourse.
We need well-qualified, experienced, dedicated workers teaching our children, taking care of the elderly, driving our buses and snow plows, protecting children from abuse and neglect. Iowans must ask if we can continue to attract and retain good workers if we provide them no hope of gaining ground against the rising cost of living.
Posted by Peter Fisher, Research Director of the Iowa Policy Project