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Minimum Wage Myth Busting

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This is the report Paul Iversen presented at Iowa CCI's event to bust minimum wage myths!

Published in: Government & Nonprofit
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Minimum Wage Myth Busting

  1. 1. MINIMUM WAGE MYTH BUSTING CCI MINIMUM WAGE FORUM JUNE 28, 2016
  2. 2. HIERARCHY OF LAWS IN THE UNITED STATES
  3. 3. PROBLEM: FEDERAL AND STATE INACTION
  4. 4. SOLUTION: LOCAL INITIATIVES
  5. 5. LOCAL MINIMUM WAGE LAWS •Washington, D.C. •Six Counties, including Johnson County, IA •28 Cities, including Chicago, St. Louis, Kansas City, and Portland and Bangor Maine
  6. 6. IT IS LEGAL FOR IOWA COUNTIES TO PASS MINIMUM WAGE ORDINANCES LOCAL ORDINANCES PLAY A VITAL ROLE IN KEEPING MINIMUM WAGE MEANINGFUL
  7. 7. FAIR LABOR STANDARDS ACT •Passed 1938 •During Depression. •Stated Purpose –To keep America’s workers out of poverty, and –increase consumer purchasing power in order to stimulate the economy.
  8. 8. OPPONENTS PREDICTED ECONOMIC RUIN “Do not let any calamity-howling executive with an income of $1,000.00 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company's undistributed reserves, tell you -- using his stockholders' money to pay the postage for his personal opinions -- tell you that a wage of $11.00 a week is going to have a disastrous effect on all American industry.” - FDR fireside speech, June 24, 1938
  9. 9. FLSA ALLOWS HIGHER COUNTY MINIMUM WAGES • No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter 29 U.S.C. §218(a)
  10. 10. IOWA COUNTY HOME RULE • Counties . . . are granted home rule power and authority, not inconsistent with the laws of the general assembly, to determine their local affairs and government, except they shall not have power to levy any tax unless expressly authorized by the general assembly. Constitution of the State of Iowa, Article III, Section 39A.
  11. 11. STATE LEGISLATURE DOES NOT NEED TO GIVE COUNTY POWER •The proposition or rule of law that a county or joint county-municipal corporation possesses and can exercise only those powers granted in express words is not a part of the law of this state. Constitution of the State of Iowa, Article III, Section 39A.
  12. 12. COUNTY HAS POWER UNLESS LEGISLATURE SPECIFICALLY TAKES IT AWAY •A county may exercise its general powers subject only to limitations expressly imposed by a state law. Iowa Code § 331.301 ¶ 3.
  13. 13. COUNTIES ALLOWED TO SET HIGHER LOCAL STANDARDS •A county shall not set standards and requirements which are lower or less stringent than those imposed by state law, but may set standards and requirements which are higher or more stringent than those imposed by state law, unless a state law provides otherwise. Iowa Code § 331.301 ¶ 6.a.
  14. 14. IOWA MINIMUM WAGE LAW • Short Statute. • Adopts Fair Labor Standards Act except –Changes Jurisdiction Amount to $300,000 in revenue instead of $500,000; –Allows training wage for first 90 days for any age worker; and –Sets tipped minimum to 60% of minimum wage. • Does not say Municipal Ordinances are unlawful.
  15. 15. POLK COUNTY NEEDS A RAISE MINIMUM WAGE TOO LOW TO FULFILL ITS INTENDED PURPOSE
  16. 16. 2016 FEDERAL AND STATE OF IOWA MINIMUM WAGE •$7.25 per hour
  17. 17. MINIMUM WAGE TODAY BUYS LESS THAN IT DID IN 1968 $11.05 $7.25 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 1968 2016 Min.Wagein2016Dollars Year
  18. 18. PERCENTAGE OF IOWANS EARNING LESS THAN 1968 MINIMUM WAGE Occupation Percent below 1968 Min. Wage Number of Workers (approx.) All Occupations 25% 381,737 Food Preparation and Serving Related Occupations 77% 100,962 Personal Care and Service Occupations 58% 26,256 Sales and Related Occupations 45% 66,744 Building and Grounds Cleaning and Maintenance Occupations 45% 21,087
  19. 19. THE PEOPLE SUPPORT A HIGHER MINIMUM WAGE COUNTIES AND CITIES AROUND THE COUNTRY ARE RAISING THE MINIMUM WAGE
  20. 20. August 13-18 2015 McLaughlin Associates Poll of Likely Voters in 7 Swing States 77% 97% 87% 87% 23% 3% 13% 13% 0% 20% 40% 60% 80% 100% 120% Republicans Republicanos Democrats Demòcratas Independents Independientes All Likely Voters Do You Support Raising The Minimum Wage? Yes No
  21. 21. 71% 75% 63% 29% 25% 37% 0% 10% 20% 30% 40% 50% 60% 70% 80% $11.00 $12.50 $15.00 Do You Support Raising the Minimum Wage to the Following by 2020? Support Oppose Source: Hart Research Associates Poll of 1002 Adults Nationwide, conducted from January 5 to 7, 2015
  22. 22. 92% 53% 73% 75% 8% 47% 27% 25% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Democrats Republicans Independents Total Do You Support $12.50 Minimum Wage By 2020? Support Oppose
  23. 23. WHEREVER VOTERS GOT TO DECIDE: A HIGHER MINIMUM WAGE WON + Illinois passed a non-binding referendum, but legislature expected to listen to voter
  24. 24. MINIMUM WAGE EFFECT ON JOBS NO LOSS OF JOBS
  25. 25. WHY DOES HIGHER WAGE NOT MEAN FEWER JOBS? Low Wage Workers Have More Money Buys Things couldn’t afford before Store orders more goods Factory makes more goods Economy Grows, creating Jobs
  26. 26. RESEARCH CONFIRMS EFFECT OF HIGHER COUNTY MINIMUM WAGE • University of California, Berkeley Study • 288 US counties who raised their minimum wage while a neighboring county did not, • Between 1990 and 2006 • Found no evidence of lower employment in counties with a higher minimum wage compared to the lower-wage county next to it. Michael Reich, Arindrajit Dube, and T. William Lester, “Minimum Wage Effects Across State Borders,” Review of Economics and Statistics
  27. 27. RESEARCH CONFIRMS EFFECT OF HIGHER COUNTY MINIMUM WAGE • Center for Economic Policy and Research Study • City minimum wage increases in San Francisco, CA and Santa Fe, NM • Found that “citywide minimum wages can raise the earnings of low‐wage workers, without a discernible impact on their employment…” John Schmitt, Why Does the Minimum Wage Have No Discernable Impact on Employment? (February 2013), Center for Economic and Policy Research
  28. 28. LOWER EMPLOYER COSTS OFFSET SOME OF THE COST • University of California, Berkeley study • Effect of a wage increase for workers at the San Francisco Airport from $6.45 to $10 per hour. • Found that annual turnover among security screeners plunged from 95 percent to 19 percent. • Reducing turnover saved employers a significant amount by reducing recruitment, re-training and re-staffing costs. Michael Reich, Peter Hall, Ken Jacobs, “Living Wages and Economic Performance: The San Francisco Airport Model” 2003.

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