Today’s virtual House graphic: Who gains with local raises

Local power to raise the minimum wage allows higher-cost-of-living communities to adopt wages that better match their housing and living costs.

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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.[1] 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.[2]

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.

[1] 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.

[2] 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).

2010-PFw5464Posted by Peter Fisher, research director of the Iowa Policy Project
pfisher@iowapolicyproject.org

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.

Erasing local minimum wage gains

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.[1]

Iowa 03-BLUE-countiesxljpBut 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 ofIowa 03-BLUE-counties 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.

[1] These estimates are based on an analysis of data from the American Community Survey by the Economic Policy Institute.

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

pfisher@iowapolicyproject.org