Will local wage laws spark state action?

The question in October is a question for January: Will local minimum wage efforts force a serious debate and action on a meaningful minimum wage for Iowa?

The pressure is building in Iowa for a minimum wage increase.

Polk County last week became the latest county to take matters into its own hands as Iowa lawmakers and Congress have left the state and national minimum wages at $7.25. Four counties have now approved minimum wage increases above $10 per hour by 2019, with one of them — in Johnson County — scheduled to be fully phased in by Jan. 1.

Within several days of that, the Iowa Legislature will convene and the ball will be in state lawmakers’ court.

In the meantime, Iowans tired of the nine-year wait for an increase may keep acting locally to boost prosperity for low-income working families — which is critical as about 1 in 5 Iowa do not earn enough for a basic-needs household budget.

Here is the current local minimum-wage lineup in Iowa:

Johnson County is currently at $9.15 in the second step of its three-step increase to $10.10 on Jan. 1, indexed to inflation after that.
Linn County has approved an increase to $10.25 by 2019 (three $1 steps, Jan. 1, 2017-19).
Wapello County will move to $10.10 by 2019 (three 95-cent steps, Jan. 1, 2017-19).
Polk County approved a wage of $10.75 by 2019 (three steps: $1.50 April 2017, $1 more in January 2018 and 2019), indexed to inflation afterward. Includes exception for workers under age 18.

There has been discussion or interest in a similar move in at least four other counties: Lee, Woodbury, Des Moines and Black Hawk. For some, this has become a county supervisor campaign issue.

The question in October is a question for January: Will the pressure of these local efforts, which are growing, be enough to force a serious debate in the Legislature on a statewide increase? And if it is, will that effort produce a wage that pushes Iowa closer to a cost of living wage? (Hint: Even $10 an hour is nowhere close.)

Stay tuned.

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

Is it time for Woodbury County to join the party?

This week, two more counties in Iowa — Linn and Wapello — joined Johnson County in setting a countywide minimum wage. In Linn County, the wage will rise to $10.25 by January 2019, while Wapello County followed Johnson County’s lead in raising the wage to $10.10 in three installments. Polk County is expected to take up a proposal soon to raise the wage there to $10.75 by 2019. Lee County supervisors, meanwhile, have appointed a study group to consider a minimum wage.

Unlike these counties, Woodbury is part of a three-state metropolitan area that includes counties in Nebraska and South Dakota where the state minimum wage has already been raised above the federal. The minimum wage is currently $8.55 in South Dakota and $9.00 in Nebraska. Sioux City employers are already competing in a labor market with wages above the Iowa minimum of $7.25.

Using data from the U.S. Census Bureau’s American Community Survey, economists at the Economic Policy Institute estimate that about 10,000 workers in Woodbury County would see an increase in their hourly wage if the county set a minimum equal to Nebraska’s $9.00 by January 2018. Those 10,000 workers on average would see their annual income rise by about $1,500.

If the Woodbury County wage were raised further, to $10.25 by January 2019, putting it on a par with Linn County, the number of workers benefiting would grow to about 12,600. The average gain in income would about double, to $3,000.[i]

The Census data dispel the usual myths about low-wage workers. In Woodbury County, over 80 percent of those benefiting from the $9.00 or $10.10 minimum would be age 20 or over, with about a third over age 40. Well over half of them work full time. About 26 percent are parents, and 3,400 to 4,700 children live in a family that would see a rise in income.

Raising the minimum wage puts more disposable income in the pockets of the work force. Much of that income would be returned to the local economy as workers spend more at grocery stores, car dealerships, clothing stores, restaurants, theaters — in fact, throughout the local retail and service sectors. Increased sales in turn would create a need for more workers.

It is this increase in local spending that is a major reason that studies of local minimum wage laws have found no effect on employment. The higher labor costs to employers are offset in part by increased demand for their goods and services, and in part by lower employee turnover and greater productivity.

The Iowa Policy Project’s 2016 Cost of Living in Iowa shows what it takes for families to get by, just covering basic expenses for food, rent, transportation, child care and health care. In Woodbury County, a married couple who both work and who have two children needing child care would each need to earn at least $13.00 an hour to get by, even with health insurance provided by an employer. Without health insurance, they would need to make over $16 an hour. Even a single person living alone would need a wage of $12.46 to get by without public assistance, or nearly $11.00 an hour in a job with health benefits.

While $9.00 or $10.10 does not represent a living wage in Woodbury County, it gets workers closer to that goal and helps thousands of families, many struggling below the poverty line. And it provides a significant boost to the local economy through increased spending.

 

[i] These estimates include those affected directly and indirectly. About three-fourths of the workers gaining a higher wage represent those earning less than the new minimum. But the other fourth represent those a little higher up the wage scale who would benefit as employers adjust pay levels to remain competitive or to restore parity within a business.

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

pfisher@iowapolicyproject.org

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