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Should the Iowa legislature raise the minimum wage?

BY DI EDITORIAL STAFF | FEBRUARY 03, 2011 7:10 AM

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YES

During a time when officials are talking about putting people back to work, it may seem counterintuitive to support a measure that could cause a job loss, however negligible. But Iowans will be better off if the Iowa Legislature approves an increase in the minimum wage, as proposed Monday by Rep. Bruce Hunter, D-Des Moines, to $7.50 by Jan. 1, 2012, and $8 by June of the same year.

In theory, raising the minimum wage will result in an overall increase in unemployment because businesses may not be willing or able to hire workers at a higher price. Given Iowa’s current and projected economic climate, concerns of a massive drop in hiring are unfounded.

Iowa’s unemployment rate was 6.3 percent as of December 2010, and it is trending downward, according to the University of Iowa’s Institute for Economic Research. Iowa’s business income is rising, as well, so businesses can reasonably afford to hire workers at slightly higher wages. As Iowa moves closer to the ideal level of unemployment, it is important to ensure that Iowans can earn enough money to support their families — a living wage.

The living wage is the amount of hourly income a family needs to pay basic expenses, such as childcare, medical bills, and housing costs. Minimum wage is supposed to be an amount that can support a family, but modern living-wage calculations show that the current amount comes short of accomplishing this goal.

With minimum wage at $7.25, a family of two adults with one wage earner lives below the poverty line. Even with two minimum-wage earners working full-time, the family still cannot make a living wage.

Raising the minimum wage will be a huge benefit for Iowans who are underemployed — individuals who are working fewer hours than they would like or are overqualified for their job. If a family’s provider has recently lost her or his job as a result of the economic downturn and is forced to work for the current minimum wage, the effects on that family could be devastating.

The Legislature should vote to approve the increase in the state minimum wage, moving it closer to the living wage needed to support Iowa families.

— Will Mattessich

NO

At long last, the country looks to have fought its way out of a crippling recession. So, the common-sense plan of action for our neck of the corn field is to keep the economic ball rolling by passing a bill that has been proven throughout history to cut jobs — lots and lots of jobs.

Wait, what?

Rep. Bruce Hunter’s proposed bill would increase state minimum wage to $8 per hour, a measure that would undoubtedly discourage many employers from hiring additional employees, as well as provide incentive to limit the hours of those they do hire.

When federal legislators proposed a $1.50 minimum wage increase in 2001, the Congressional Budget Office estimated job loss totals between 200,000 and 600,000 — between 12 and 38 percent of the minimum-wage workforce at the time. The correlation between minimum-wage growth and job loss is well-documented. It exemplifies the most basic aspect of economic theory: supply and demand. In this particular case, as wages increase, the supply of workers increases — and vice versa.

But what of those poor people below the poverty level who have no choice but to be abused by the shortcomings of a lower minimum wage? They’re lucky to even have jobs. Statistics released earlier this month show that only 47 percent of working-age people had full-time jobs in December 2010.

Most employers that offer minimum-wage jobs provide the opportunity to work toward higher-paying positions within the company. If not, the experience will surely help when applying for more attractive careers outside of that particular establishment.

Hunter’s bill is clearly well-intentioned, but the consequences of a minimum-wage increase will more likely harm those he is trying to benefit. By increasing the minimum wage, unskilled workers are further disadvantaged, because it will limit access to careers capable of supporting low-income households in the long-term.

— Chris Steinke


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