On Iowa Blocking All Local Minimum Wage and Employment Benefits Laws

In response to Iowa Governor Terry Branstad’s signing today of the legislature’s bill blocking all past and future local minimum wage and employment benefits laws, Christine Owens, executive director of the National Employment Law Project, issued the following statement:

“Iowa Governor Terry Branstad and the Republican-controlled legislature today became the first state government in the U.S. to take away raises from low-wage workers who already received them.  The decision to invalidate minimum wage increases adopted by five counties across the state is a shockingly callous act that is a new low in the corporate-driven push to block living wages for the state’s lowest-paid workers.

“Around 29,000 Iowans in Johnson and Linn counties, whose pay increased under local laws, could see their wages cut from $10.10 in Johnson County and $8.25 in Linn County to the state minimum of $7.25 per hour.  Another 36,000 workers in Polk County who were about to see their pay increase to at least $8.75 starting tomorrow, will have those raises snatched away. All told, more than 85,000 workers in Johnson, Linn, Wapello, Polk, and Lee Counties will be denied scheduled raises to between $10 and $10.75 in the next few years.

“Years of economic research show that increasing the minimum wage does not lead to job losses, yet lowa’s state government leaders have chosen to stifle local power in order to maximize corporate profits.  Their decision comes at the expense of hard-working Iowans who power those businesses but still can’t make ends meet.

“Governor Branstad pledged to raise family incomes on his watch.  Today, he did the opposite.  Tens of thousands of struggling Iowa families will remain stuck with poverty-level incomes as a result of this appalling act.”

Background

HF295, nullifying all past and preempting all future local minimum wage and employment benefits laws, was a direct response to the growing movement for higher wages across the country and in Iowa. To date, Johnson, Linn, Wapello, and Polk Counties have all adopted minimum wage increases to between $10.10 and $10.75 by 2019.  Just yesterday, Lee County became the fifth county to set a higher local minimum wage, adopting a schedule of raising it to $8.20 on May 1, and to $10 by 2020.

The Iowa Policy Project estimates that around 29,000 Iowa workers have already benefitted from increases, and about 85,000 would have seen wage increases by 2019. This bill also bans all future local laws addressing virtually all types of employment benefits, including scheduling practices and paid sick or family leave.

As NELP recently outlined, state legislatures are responding to the success of the nationwide movement for higher wages by passing laws that prohibit cities and counties from adopting their own higher minimum wages. More than 40 cities and counties have adopted higher minimum wages. While state legislators will claim that these preemption laws are necessary to ensure uniformity of wages within a state, this argument is a distraction from the true corporate agenda behind these laws. Stripping localities of power over wages (and a range of other pro-worker, pro-environment, and pro-civil rights policies) has become a major priority of the American Legislative Exchange Council (ALEC), a corporate-backed group with extensive lobbying resources and influence in our state legislatures. ALEC drafts “model” minimum wage preemption bills for conservative legislatures to simply copy and paste.

The real facts about the effects of local minimum wage increases expose the hypocrisy of legislators’ ideological objections to local action improving wages and working conditions.

The lion’s share of recent rigorous research on the minimum wage has found these increases delivered significant raises with little negative effect on job growth.  For example, the White House Council of Economic Advisors released a new study in December 2016 of all U.S. minimum wage increases since the recession. At the local level, studies of minimum wage increases in Santa Fe (2006) and San Francisco (2014) found that both cities fared better in employment growth than surrounding jurisdictions without increases. In fact, in San Francisco, food service jobs—the sector most heavily affected by the increase—grew about 17 percent faster than in surrounding counties during the period studied. Moreover, one of the most sophisticated studies of minimum wage increases looked at more than 250 pairs of neighboring counties where one county’s minimum wage was higher than the other county’s minimum, effectively isolating the true impact of minimum wage differences because neighboring counties tend to have similar economic conditions. The study found no difference in job growth rates.

Employers have also attested to the positive impact of local wage hikes. Molly Moon Neitzel, owner of Molly Moon’s Homemade Ice Cream (with seven locations throughout Seattle) and a member of the Main Street Alliance of Washington, explained: “Raising the wages of the lowest-paid workers creates a wave of new consumers who previously weren’t able to spend money at local businesses. Working long hours at multiple jobs doesn’t leave much time for low-wage workers to get out into their community and spend time with loved ones. Families struggling to make ends meet can’t afford the luxury of taking their children out for ice cream. Now that Seattle businesses are paying a living wage I look forward to seeing new customers in my shops and welcoming new fans of our products.”

The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org and raisetheminimumwage.com.