Third in a series:The Issue: Minimum Wage
Those proposing an increase point to the current $7.25 an hour minimum wage as being inadequate for a person to support himself or, if a head of household, to support a family.
Opponents argue that raising the minimum wage is counterproductive because it will encourage employers to rely on automation and reduce jobs and hours. Instead, they say, improving the business climate will lead to more and better job opportunities.
In addition to raising the minimum wage from $7.25 an hour to $10 or more, other issues that will be part of the debate are whether to raise it in steps and pegging the minimum wage to inflation.
Where We’re At
The current minimum wage is $7.25 an hour. Iowa’s first minimum wage became effective Jan. 1, 1990 — after being signed into law by Gov. Terry Branstad — with a wage rate of $3.85 per hour. It was last raised by state lawmakers in 2007 from $5.15 to $6.20 and again in 2008 to $7.25. Iowa’s
rate matches the federal minimum wage. Based on the cost of living in Iowa, a single parent in Iowa needs to make $17.91 an hour after taxes to support her family with one child, $24.06 with two children. Pointing to the declining buying power of the minimum wage, numerous groups are calling for a minimum wage hike – some asking for as much as $15 an hour. A cost-of-living analysis by the Iowa Policy Project found a family with two children needed a “family-supporting” hourly wage of $24.06.
- Sen. Tom Courtney, D-Burlington, drafted minimum wage bills
- Rep. Mark Smith, D-Marshalltown, House Minority Leader
Courtney has a bill drafted to introduce once the Legislature convenes Jan. 13. Passage appears likely in the Democratic-controlled Senate, but unlikely in the Republican-controlled House.
Some suggest that the timing is right for a minimum-wage increase. Not only is Iowa unemployment low, but some businesses have been hiring as the economy emerges from a recession.
Some lawmakers may be unwilling to take a potentially unpopular vote in an election year. Whether a lawmaker votes for or against a minimum wage hike, it’s likely to be used against them by interest groups come campaign time.
Also, it challenges philosophical differences over the best way to encourage job and income growth. Labor-backed Democrats believe raising the pay of those at the bottom of the income ladder will not only improve their standard of living, but provide an economic stimulus because those workers will spend their higher wages to meet their needs and, generally, help improve wages across the board. Business backed Republicans believe flattening and simplifying income taxes for individuals and corporations will lead to investment in business and industry that will result in more and better job opportunities.
Prospects for Progress
It seems unlikely a change will happen in one legislative session. Courtney noted it took him four years to win approval when he last proposed a minimum-wage increase in 2003. President Obama supports a $10.10 minimum, as does Senate Labor Chairman Tom Harkin. Some lawmakers suggest letting the federal government address the issue, but given the split control of Congress the likelihood of action is about the same as at the Statehouse.