Local Government

Iowa minimum wage earners eager for wage increase Jan. 1

'A little light at the end of the tunnel'

Volunteer Effie McCollum looks for empty hangers at the start of the day at the Drop Inn Resale Store in SW Cedar Rapids on Thursday, September 15, 2016. (Cliff Jette/The Gazette)
Volunteer Effie McCollum looks for empty hangers at the start of the day at the Drop Inn Resale Store in SW Cedar Rapids on Thursday, September 15, 2016. (Cliff Jette/The Gazette)
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CEDAR RAPIDS — Effie McCollum is looking forward to getting a raise at the start of 2017.

On any given weekday, the 77-year-old can be found at the Cedar Rapids resale store, the Drop Inn, 1625 J St. SW, where she sorts and hangs clothing and greets customers.

McCollum earns the state’s minimum wage, $7.25 an hour.

As someone who lives with and provides for her 17-year-old granddaughter, McCollum said it’s not enough.

“Some months I worry, Well, should I pay my light bill or should we eat? Should I pay my gas bill, or do we eat?,” McCollum said. “There are a lot of times I have to make that choice.”

McCollum is far from alone.

According to an Iowa Policy Project report released earlier this year, raising the local rate to $10.10 directly would benefit more than 18,000 Linn County workers — not including public sector employees.

In September, the Linn County Board of Supervisors did just that with the 4-1 approval of a countywide minimum wage increase. On Jan. 1, residents such as McCollum will get that raise as the minimum wage increases to $8.25 an hour.

McCollum’s employment at The Drop Inn is made possible through an AARP grant program — funded by the U.S. Department of Labor — that provides work experience and training opportunities to help low-income individuals transition into permanent employment.

McCollum is technically a volunteer at The Drop Inn, but is paid through AARP.

The wage will reach $9.25 in 2018, and in 2019 the county’s minimum wage will be $10.25 an hour.

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To the south, Johnson County’s minimum wage ordinance — the first in the state — will bring that county’s rate up to $10.10 an hour on Jan. 1. Polk and Wapello counties also have passed similar ordinances.

“Now, for me, for all the husbands and fathers, wives and mothers, we can kind of see a little light at the end of the tunnel,” McCollum said.

But as the 2017 General Assembly approaches and both Iowa Chambers now hold a Republican majority, some local and state officials say the stage is set to see the first statewide increase in the minimum wage in a decade.

“That’s, I think, why the counties started this, ... to force the state to really have a conversation and raise the minimum wage,” Linn County Supervisor Ben Rogers said.

But Rogers and several other local officials predict that discussion to come at a cost, and any minimum wage votes this legislative session will include moves to pre-empt local ordinances.

“Taking away the counties’ abilities seems like a forgone conclusion,” Rogers said.

The cost of county services

When Linn County Supervisors first broached the idea of a minimum-wage increase, one of the most-cited reasons among some on the board was because getting residents out of poverty fell in line with the county’s role to provide social services.

“The whole reason I did the minimum wage is the only pathway out of poverty is increasing wages. If the market isn’t going to do it, that’s why the county started having a discussion about Iowa’s minimum wage,” Rogers said. “I’m trying to tighten up that gap between what they are making and what they need for basic needs.”

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A June report by United Ways of Iowa, called the Asset Limited, Income Constrained, Employed (ALICE) financial hardship study, found that 381,266 Iowa households — 31 percent — struggled with financial needs in 2014.

According to the report’s county-by-county data, 35 percent of Johnson County and 24 percent of Linn County households fall under the ALICE threshold.

Meanwhile, an April report by not-for-profit Iowa Policy Project, states that a single Iowa resident must make at least $13.16 an hour — almost double the state minimum wage of $7.25 an hour — to meet basic living expenses.

The basic-needs wage jumps to $21.52 an hour for a single parent with one child.

Supervisors have said that, by increasing residents’ pay, the county should be able to reduce the number of people in need of county-funded services such as rent and utility assistance.

Rusty Goins, director of Linn County’s General Assistance Office, said the county had 2,648 appointments in fiscal year 2016. According to data provided by the department, the county provided 6,185 assistance vouchers that year.

Through the county-funded department, residents are eligible two times in a 12-month period for income-based assistance.

Residents can receive up to $350 in rent assistance and no more than $450 for all services — which also can include utility vouchers, food assistance.

Total county assistance to residents that year was about $1 million.

A countywide patchwork

While minimum wage ordinances in Johnson, Linn, Polk and Wapello are countywide, cities in each respective county have the ability to decide whether to follow the ordinance.

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In Johnson County, councils in Oxford, Shueyville, Solon and Swisher declined to follow the county rate, while Tiffin passed a separate ordinance establishing a $9-an-hour minimum wage.

In Linn County, city councils in Cedar Rapids and Marion — the county’s largest cities and home to about 75 percent of the county population — have not held formal discussion on the ordinance. So the rate will increase in both communities on Jan. 1.

Hiawatha’s council has expressed support of the county’s ordinance, and councils in Fairfax, Palo and Springville also plan to follow the county’s increases.

However, some communities have passed counter-ordinances, which means the county’s wage increases will not apply in certain cities. For those communities, the minimum wage will stay at $7.25 an hour.

City councils in Robins, Ely, Center Point and Prairieburg have passed ordinances sticking with the state minimum wage. Councils in Mount Vernon and Central City, on the other hand, will be following the county’s rate — for now.

“If the state does not clarify or take any action on the minimum wage, the city council will be reconsidering the Linn County minimum wage, prior to the second tier,” said Chris Nosbisch, Mount Vernon city administrator.

Uncertainty with the state

When supervisors in Johnson, Linn, Polk and Wapello counties passed their respective minimum wage ordinances, they cited home-rule authority to defend their ability to raise a countywide ordinance.

Some officials, including Michael Mauro, Iowa’s labor commissioner, have questioned if raising the minimum wage falls under home rule. But so far the issue has not been challenged in court.

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House Speaker Linda Upmeyer, R-Clear Lake, in November told The Gazette she expects the Legislature to revisit the minimum-wage issue, with an eye toward pre-empting local standards.

A few weeks ago, Rep. Zack Nunn, R-Bondurant, and Sen. Dan Zumbach, R-Ryan, told Iowa Chamber Alliance members pre-empting local entities from setting minimum wage levels higher than the state level are issues they expect the Legislature to tackle when its session begins Jan. 9.

Meanwhile, Gov. Terry Branstad has said he would consider a minimum-wage increase, but added he’d prefer to bring Iowa back to a single statewide wage and prevent local jurisdictions from creating a “hodgepodge” of different wages.

No one has been able to state definitively if any sort of pre-emption clause would be retroactive and nullify existing county ordinances.

For Rogers, a pre-emption clause seems more certain than a statewide increase in the minimum wage.

“I think it’s inevitable that the legislature will take away the counties’ ability to raise the minimum wage, that’s a given,” he said.

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