Iowa Badly Lags Neighbors On Minimum Wage; Time For A Change

Photo via AFL-CIO

In July of 2019, the United States entered the longest period of time without an increase in the federal minimum wage since its creation in 1938; every day since has set a new record. For Iowa, that pause in wage growth has been even longer.

The state, once a leader in workers’ rights and fair labor laws, implemented the current rate of $7.25 per hour on January 1st, 2008 – beating the federal government by over a year and a half. But as the minimum wage stretches into its twelfth year with no increase, Iowa now languishes among the bottom tier of wages in the country.

Even compared to just the Midwest, Iowa continues to drag its feet. Nebraska and South Dakota have $9 and $9.10 minimum wages respectively. In Illinois, the minimum is set to incrementally increase up to $15 per hour by 2025. Missouri and Minnesota already automatically index minimum wage increases to inflation, and Missouri is on track to meet $12 an hour by 2023.

The last two states raise an interesting thought: what if Iowa indexed its minimum wage to inflation? If the minimum wage in Iowa was indexed to inflation – meaning it rose or fell by a fractional value equal to the annual change in the Consumer Price Index – then from 2008 to now, the minimum wage would already be $8.88.

If that doesn’t sound like much – you’re right, it isn’t. And neither is our actual minimum wage of $7.25. At that rate, the rent a single worker could realistically afford by working at the minimum wage of $7.25 an hour would be $377 per month. To afford a one-bedroom apartment in Polk County with a fair market rent of $736 per month, a person would have needed to work 78 hours per week in 2019. A two-bedroom apartment, at $910 per month, comes out to 97 work hours per week at the minimum wage.

These figures raise another question: were people even meant to live off the minimum wage? The answer to which is an unequivocal “yes, they were.” In fact, as the name implies, it was conceived of as the absolute minimum an employee would need in order to live. In 1933, five years before he would even sign the minimum wage into law, President Franklin Delano Roosevelt said:

“It seems to me equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country … and by living wages I mean more than a bare subsistence level – I mean the wages of decent living.”

When it was finally created with the passage of the Fair Labor Standards Act (FLSA) in 1938, the minimum wage was set to $0.25 an hour, or about $4.57 today. Over time, various acts of Congress have amended the FLSA to update the minimum wage, with the strongest wage of $1.60 per hour in 1968 – that’d be $11.86 in 2020!

So, if the minimum wage was meant to provide a living and if our current rate can’t provide one, why are we still at $7.25 per hour? It certainly isn’t because of a lack of effort. In 2017, Polk, Johnson, Linn, and Wapello Counties passed ordinances increasing local minimum wages to various levels above $10.00 per hour to increase worker incomes. However, they were nearly immediately usurped by the state government. The Republican-held State House and Senate expedited the passage of a bill to prevent counties from setting wages higher than the state’s, which was signed by then-Governor Terry Branstad. These four counties, home to over 850,000 Iowans, saw their local minimum wages lowered as a result.

This is especially important now, considering many of the positions often referred to as “introductory” for those new to the workforce now find themselves operating as critical lifelines for their communities: grocers, food preparers, and delivery drivers to name a few. But despite their value to our society, the FLSA allows tipped and young or disabled workers to be paid below the standard hourly minimum wage that applies to everyone else.

There is some good news in all of this. In 2019, the U.S. House of Representatives passed the Raise the Wage Act, which would increase the minimum wage to $15 per hour over six years. After that, it would be indexed to inflation so increases become automatic and don’t stall out for a decade at a time. The bill is now in the Senate where… no action has been taken on it yet. So, if you are isolating yourself (which you should be!) and you need something to do to pass some time, call your Senators and tell them you think it’s about time they recognize the real value of work.

 

 

by Zaak Barnes
Barnes formerly served as a legislative assistant to U.S. Representative Cindy Axne and is currently a member of AFSCME Local 1868. He is attending Drake University, where he is pursuing a master’s degree.
Posted 4/7/20

2 Comments on "Iowa Badly Lags Neighbors On Minimum Wage; Time For A Change"

  • I’d like to see minimum wage eliminated completely. Make employers compete for talent instead of setting such a low bar and low standards for workers. Anyone who has owned a business and had to make a payroll realizes productivity varies greatly by employee. Minimum wage should not be a “destination”.

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