Minimum Wage and Family Prosperity
New minimum wage would boost Polk workers, economy
Inaction by state, Congress, prompts look at local increase
NEWS RELEASE

MONDAY, MAY 16, 2016



Full report or 10-page PDF
This News Release (2-page PDF)

IOWA CITY, Iowa (May 16, 2016) — At least 60,000 to 88,000 workers would benefit, and in turn boost the local economy, if Polk County were to join the growing ranks of local governments approving minimum wage increases.

A new report from the nonpartisan Iowa Policy Project (IPP), using data from the Economic Policy Institute in Washington, shows that a $12 or $15 minimum wage — phased in over three to five years — would raise affected workers’ income by up to $5,000.

“We show that income in the local economy would rise by $230 million to $444 million,” said Peter Fisher, research director for IPP and author of the report. “This in turn would increase spending in local retail and service businesses, boosting economic activity and supporting jobs.”

Besides 29 states that have raised their minimums above the federal $7.25, many localities across the country have established minimums higher than their state levels. Johnson County already has taken this step, with a wage now at $9.15, scheduled to reach $10.10 on Jan. 1. Official committees have been set up in Polk and Linn counties to consider wage increase proposals and make recommendations.

The new report, IPP’s latest looking at state and local minimum wage increase impacts, considers three Polk County scenarios: $12 by 2021, $12 by 2019, and $15 by 2021. It found:

About 63,000 workers in Polk County would benefit from an increase in the minimum wage to $12 per hour by 2019; over 88,000 would benefit from an increase to $15 by 2022.
• Of those who would benefit from the higher wage in Polk County, 56 percent are women, 63 to 67 percent work full time, and 37 to 40 percent are age 40 or older, while only 13 percent or less are under 20. About 37 percent are parents.
• Beneficiaries of the minimum wage increase consist of workers who on average provide about half of all family income. Over 1 in 4 are sole providers.
Over half the workers who are now living below the poverty line would see a wage increase. A reduction in poverty has long term benefits not just for low-wage workers but for their children and their future life chances, and the broader community.

In terms of annual earnings, a boost to $12 by 2019 would be an average increase of $3,650 per affected worker, resulting in $230 million in additional income in the local economy. The $15 scenario would boost incomes on average by $5,000, and produce a total of over $444 million in additional income.

“Iowa is one of 21 states that have failed to recognize the impact of low wages on workers and their families,” Fisher said. “When the Iowa Legislature returns in January, it will have been nine years since the wage was raised.”

While worker productivity has risen steadily and incomes at the top have soared, wages have barely kept pace with inflation.

“If the minimum wage were increased to match the average growth in productivity since 1968, it would be over $18 per hour today,” Fisher said.

Five of the six states surrounding Iowa have minimum wages higher than the federal, Wisconsin being the only holdout. California and New York just enacted laws to phase in a wage of $15.

At least 33 cities and counties across the country now have a higher minimum wage than the federal, and the list will continue to grow. Most have set the wage above $10 per hour, and most index it to inflation. Campaigns to raise the minimum wage were planned or underway in at least 13 cities as of December 2015.

“Where states and localities have responded, they are finding that the usual talking points against the increase are wrong,” Fisher said, noting studies have found no discernible effects on jobs. We have to get past the scare tactics and focus on the research.“

“Studies of moderate increases in the minimum wage have found no discernible effect on jobs,” he added. “And this makes sense, when you consider the resulting boost in local spending, reduced employee turnover and hiring costs, and the ability of employers to make other adjustments.”

The Iowa Policy Project is a nonpartisan public policy analysis organization in Iowa City. Reports are at www.iowapolicyproject.org.

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