Editor’s note: Iowans’ Ideas is a guest column featuring the views of different Iowans each edition of Iowa Ideas magazine. This column was featured in the Oct. 27, 2019, magazine.
The Iowa economy appears to be doing well by some measures — our unemployment rate is among the lowest in the nation — yet many Iowa families are struggling to make ends meet. Even as the economy has “recovered” from the Great Recession, Iowa wages and incomes have grown little, and nearly one in eight Iowans live below the official poverty line set by the federal government.
Iowa’s low unemployment rate masks the reality that many Iowans work low-wage jobs with no benefits, or piece together income from multiple part-time jobs. There continues to be a disconnect between popular narratives about the economy and the real-world experience of working Iowans.
The cost of living in Iowa has outpaced any gains in wages or incomes. The poverty line, which sets eligibility for programs such as Medicaid, is not a very helpful measure; it is based on outdated assumptions about family spending and fails to take into account the high cost of child care, housing and health care.
The Iowa Policy Project’s Cost of Living 2019 analysis shows that most working households would have to make more than twice the poverty level to be able to make ends meet.
The 2019 Cost of Living analysis finds one in five Iowa working households are unable to meet basic needs without the help of work support programs, such as the Earned Income Tax Credit, Supplemental Nutrition Assistance Program (formerly food stamps) and Medicaid. This means many households with at least one full-time worker are unable afford basic expenses.
Job security and job quality have withered as the cost of living has risen. Wages in Iowa have stagnated over the past four decades though worker productivity — the value workers add to the economy — has steadily increased. Businesses are capturing worker productivity as profits and not sharing the prosperity with Iowa’s working families.
Iowa has not raised its minimum wage in more than a decade. At $7.25 per hour, the Iowa minimum wage now purchases 20 percent less than it did in 2008 due to the rising prices of goods and services. In turn, Iowa undermines the bargaining power of its workers — sustaining a “right to work” law, which undermines union support, and — in recent years — rolling back the security of public sector employment. When labor power is weakened, wages are lower.
What does poverty look like in Iowa? A family struggling to afford school supplies. A mother skipping meals to make sure her children have enough to eat. A couple whose retirement is jeopardized by medical debt due to cancer despite saving throughout their entire working lives.
These realities are unfolding in Iowa neighborhoods, elementary schools and extended families.
Women and Iowans of color face additional hurdles to affording basic expenses. Although Iowa women are employed at a high rate, a gender wage gap persists. The average earnings for women are just 79 percent of men’s earnings — more than $4 less per hour. This disparity helps explain why nearly half of female-headed households with children under 5 years old in Iowa live below the poverty line.
Historical barriers to equal access in employment, education and housing continue to shape the opportunities available to working families of color in Iowa. We see stark and persistent wage disparities by race in Iowa and across the Midwest, where African-American and Latino workers make $5 per hour less than white workers.
These differences arise from discrimination and differential treatment before and after the hiring process, and a loss of (primarily union) manufacturing jobs in the Midwest.
Poverty is created, sustained and compounded where policy makers ignore it. The challenge is even greater for Iowans of color and women, who continue to face barriers to prosperity that are rooted in a history of discrimination that still is alive today.
The Iowa Legislature has the ability and responsibility to address structural hurdles to opportunity for communities of color. Public policies can offer a chance to get ahead financially.
Options include increasing the minimum wage while indexing it to the cost of living and investing in education.
Iowans would benefit from policies that improve job quality and strengthen worker protections, such as paid family leave, expanded child care assistance, wage-theft enforcement and restoration of collective bargaining rights to workers.
Investing in our workforce means increasing per-pupil student aid to keep up with the costs of education, boosting college funding to lessen pressure on tuition and ensuring health care for all Iowans.
The reality of low wages and a rising cost of living is felt at kitchen tables across Iowa, despite claims that the economy has recovered. Legislators have an obligation to improve opportunity for Iowans and address historic barriers to prosperity for women and Iowans of color.
Poverty in Iowa is shaped by policy, and must be addressed by policy.
Natalie Veldhouse is research associate with the Iowa Policy Project in Iowa City.