Branstad signs law freezing Iowa minimum wage at $7.25

DES MOINES – Legislation signed Thursday by Governor Terry Branstad will make sure Iowa’s minimum wage will be set at $7.25 and nullify hikes in four counties.

Gov. Branstad signed House File 295, an act prohibiting counties and cities from establishing certain regulations relating to employment matters.  The new law deems that a city shall not adopt, enforce or otherwise administer an ordinance, motion, resolution, or amendment providing for any terms or conditions of employment that exceed or conflict with the requirements of federal or state law relating to a minimum or living wage rate, any form of employment leave, hiring practices, employment benefits, scheduling practices, or other terms or conditions of employment.  It freezes the state’s minimum wage at $7.25 until the state legislature enacts a new wage.

The bill passed the Iowa House on March 9, 56-41 and the Iowa Senate on March 27, 29-21.

Todd Prichard, a Floyd county Democratic legislator who is mulling a run for governor, said “the Branstad/Reynolds administration just signed a law lowering wages for hard working Iowans in 4 counties. Once again proving we need a Governor who will work for EVERY Iowan.”

In response to the new law, Christine Owens, executive director at the National Employment Law Project, issued the following statement:

“The Iowa legislature’s decision today to invalidate minimum wage increases adopted by counties around the state is a new low in the callous, corporate-driven push to block living wages for the state’s lowest wage earners. The bill’s passage marks the first time anywhere in the U.S. that state lawmakers have actually taken away raises from workers who already received them. About 29,000 Iowans in Johnson and Linn counties, whose pay increased under local laws, will see their wages cut from $10.10 in Johnson County and $8.25 in Linn County to the state minimum of $7.25/hr. And about 85,000 workers in Johnson, Linn, Wapello, and Polk Counties will be denied scheduled raises between $10.10 and $10.75 by 2019. Years of economic research show that increasing the minimum wage does not lead to job losses, yet legislative leaders have chosen to stifle local power in order to maximize corporate profits. Their decision comes at the expense of hard-working Iowans who power those businesses but still can’t make ends meet.”

Background

HF295, preempting all past and future local minimum wage and employment benefits laws, was a direct response to the growing movement for higher wages across the country and in Iowa. To date, Johnson, Linn, Wapello, and Polk Counties have all adopted minimum wage increases to between $10.10 and $10.75 by 2019. The Iowa Policy Blog estimates that about 29,000 Iowa workers have already benefitted from increases, and about 85,000 would have seen wage increases by 2019. This bill also bans all future local laws addressing virtually all types of employment benefits, including scheduling practices and paid sick or family leave.

As NELP recently outlined, state legislatures are responding to the success of the nationwide movement for higher wages by passing laws that prohibit cities and counties from adopting their own higher minimum wages. More than 40 cities and counties have adopted higher minimum wages. While state legislators will claim that these preemption laws are necessary to ensure uniformity of wages within a state, this argument is a distraction from the true corporate agenda behind these laws. Stripping localities of power over wages (and a range of other pro-worker, pro-environment, and pro-civil rights policies) has become a major priority of the American Legislative Exchange Council (ALEC), a corporate-backed group with extensive lobbying resources and influence in our state legislatures. ALEC drafts “model” minimum wage preemption bills for conservative legislatures to simply copy and paste.

The real facts about the effects of local minimum wage increases expose the hypocrisy of legislators’ ideological objections to local action improving wages and working conditions. Studies of minimum wage increases in Santa Fe (2006) and San Francisco (2014) found that both cities fared better in employment growth than surrounding jurisdictions without increases. In fact, in San Francisco, food service jobs—the sector most heavily affected by the increase—grew about 17 percent faster than in surrounding counties during the period studied. Moreover, one of the most sophisticated studies of minimum wage increases looked at more than 250 pairs of neighboring counties where one county’s minimum wage was higher than the other county’s minimum, effectively isolating the true impact of minimum wage differences because neighboring counties tend to have similar economic conditions. The study found no difference in job growth rates.

Employers have also attested to the positive impact of local wage hikes. Molly Moon Neitzel, owner of Molly Moon’s Homemade Ice Cream with seven locations throughout Seattle and a member of the Main Street Alliance of Washington, has explained: “Raising the wages of the lowest paid workers creates a wave of new consumers who previously weren’t able to spend money at local businesses. Working long hours at multiple jobs doesn’t leave much time for low-wage workers to get out into their community and spend time with loved ones. Families struggling to make ends meet can’t afford the luxury of taking their children out for ice cream. Now that Seattle businesses are paying a living wage I look forward to seeing new customers in my shops and welcoming new fans of our products.”