Revenue forecast: A confirmation of failure

Iowans need a handle on what the budget surplus means, and what it doesn’t.

With new revenue information in hand, it is apparent that:

•   Large cuts to higher education were unnecessary
•   Continuing to short-change K-12 schools was needless
•   Concerns about large tax cuts were warranted.

During the 2018 session we saw legislators craft mid-year cuts and an FY2019 austerity budget behind closed doors. The effect will be the same as it has been for several years now: Iowa lawmakers won’t have much to work with when the 2019 legislative session convenes in January due to large tax cuts, leaving tight purse strings for education.

The October 2018 Revenue Estimating Conference (REC) projections show a $127 million surplus — up $95.6 million from what was expected for fiscal year 2018, which ended in June.[1] Many in the state are searching for factors they think contributed to the surplus. In reality, the discrepancy in expected and actual revenue is related to errors in forecasting. The REC used a slower rate of growth in calculating these projections after overestimating revenues for the past two fiscal years.

A significant factor contributing to the surplus is a state revenue boost caused by new federal tax cuts, especially for higher-income families. Iowa has a special state break for federal taxes paid. But because fewer federal taxes are being withheld, additional income is subjected to state tax.

Proponents of the state tax cuts seek to attribute the budget surplus to the cuts themselves. First, it is impossible to credit the budget surplus to the 2018 state tax cuts, most of which will not take full effect until 2019 and beyond.

Second, even the REC estimates do not predict continued growth at the FY18 levels. Iowa will have already given away the FY18 surplus before the beginning of the next legislative session, because tax cuts mean less revenue. The FY20 budget will be tight. This will steer the legislative discourse to hold down K-12 spending, to push higher-ed costs toward tuition and student debt, and to threaten needed services and institutions — as the administration is doing right now to the University of Iowa Labor Center.

Sustainable budgeting requires realistic forecasts and working to help all Iowans understand the impacts of budget and tax choices. It also means generating adequate revenue to pay for essential services such as education, health care and environmental quality, and helping to create opportunity for all.

[1] Iowa Department of Management, “Iowa budget closes with higher-than-expected revenue, $127 million surplus.” September 2018.

Natalie Veldhouse is a research associate for the nonpartisan Iowa Policy Project in Iowa City. nveldhouse@iowapolicyproject.org

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

 

Labor Center: Inviting public discussion

These Labor Center public hearings are an example of what the University of Iowa should have done, on its own — before the decisions were made.

One of the most unsavory parts of the threats to the University of Iowa Labor Center — though not the only one — was the lack of public input into the decision by university officials.

The decision was “announced” under the public radar. Only after the word started spreading about the decision already made, the university decided to go public.

Increasingly, this is how decisions are being made in Iowa by government institutions — the Legislature has been a great example of it in the last two years with attacks on protections for working families and on equity in the tax code. The UI handling of the Labor Center decision is right in line.

These approaches defy Iowa values of transparency and public spirit once treasured in a state once proud of its openness. As we shall see in the coming days, there is an alternative: A reintroduction to the concept of a public hearing.

The “Save Our Labor Center” coalition will hold four such hearings in the coming days in various locations around the state. Each is an hourlong event starting at 6 p.m. Here are the dates and locations:

  • Tuesday, Aug. 14, Des Moines — UAW Local 450 Hall, 4589 NW 6th Drive.
  • Thursday, Aug. 16, Cedar Rapids — IBEW Local 405 Hall, 1211 Wiley Blvd SW.
  • Wednesday, Aug. 22, Bettendorf — USW Local 105 Hall, 880 Devils Glen Road.
  • Tuesday, Aug. 28, Sioux City — UFCW Local 222 Hall, 3038 S. Lakeport St.

As the group notes in flyers it has produced for these hearings:

“University leaders took NO INPUT from any of the workers, students, faculty, or community members who rely on the Labor Center’s education and research prior to announcing their decision. Iowa’s public universities must hear from the public before making major decisions with significant, permanent impact on students, working Iowans, and communities across the state.”

For more information, you can contact saveourlaborcenter@gmail.com.

The Iowa Policy Project works with the University of Iowa Labor Center at times to enhance an understanding of public policy issues, and our staff has found the center to be a tremendous resource for Iowans.

A public university has a fundamental responsibility to the public and to public decision making that is being lost. These hearings are an example of what the University of Iowa should have done, on its own, well in advance of a backroom decision being dumped in the laps of Labor Center staff and the many Iowans who benefit from its work.

It might be interesting to see if anyone from the University of Iowa administration or the Board of Regents shows up at any of these hearings. It would be to their credit to do so, and to listen.

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).

Time to address wage theft in Iowa

Annually, wage theft deprives low-wage Iowa workers of an estimated $600 million, deprives state and local government of revenue, and puts law-abiding businesses at a competitive disadvantage.

Every year, far too many Iowans experience “wage theft” when they are cheated out of wages they have earned. Some are not paid for all of the hours they actually worked; some are paid “off the books” at less than the legally mandated minimum wage; some earn tips they do not get to keep; some are not paid at the legally mandated rate for overtime; some leave a job or contract arrangement and never receive their final paycheck.

What is Wage Theft?

Wage theft occurs whenever a worker is robbed of legally owed wages because an employer breaks the law or a contract. Common forms of wage theft include:

•   Nonpayment of wages: An employer fails to pay workers for some or all hours of work performed, or fails to pay workers in a timely fashion.

•   Underpayment of wages: An employer pays workers less than they were promised or less than they are legally owed under state or federal minimum wage or overtime statutes.

•   Tipped job violations: An employer pays tipped employees less than the legally mandated minimum wage for tipped jobs, forces tips to be “shared” with managers or steals workers’ tips.

•   Deduction violations: An employer diminishes workers’ pay by making unauthorized or illegal deductions from paychecks

•   Misclassification of employees: An employer falsely labels an employee as an “independent contractor” in order to avoid obligations to pay minimum wage and overtime (along with a host of other employment laws, and unemployment insurance, workers’ compensation, and income tax payments). The “independent contractor” exemption is not meant to apply to those providing services under the direction and control of others; one example of misclassification would be to call a cashier a “salaried manager” to avoid the overtime provisions of federal law.

Annually, wage theft deprives low-wage Iowa workers of an estimated $600 million, deprives state and local government of revenue, and puts law-abiding businesses at a competitive disadvantage. A new report for the Iowa Policy Project estimates the impact of wage theft in Iowa, assesses the current state of public policy and enforcement systems intended to prevent wage theft, and surveys effective models for addressing the problem so that communities, state agencies, and policymakers in Iowa can begin to address it.

Posted by Jennifer Sherer
Director, University of Iowa Labor Center
President, Iowa Policy Project board of directors