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Editorial: Dying unions and flat wages in Iowa

BY DI EDITORIAL BOARD | SEPTEMBER 06, 2013 5:00 AM

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Over the past century or two, labor unions brought about several positive changes: better safety standards, eight-hour workdays, health-insurance benefits, pensions, and many other aspects of the workplace that are taken for granted today.

But unions’ power has faded substantially in recent decades because of plummeting membership, according to data from the Current Population Survey. In 1983, 22 percent of Iowa workers belonged to a union; in 2012, that number was just 12 percent. Unions in private manufacturing were hit hardest, losing nearly two-thirds of total membership.

Workers in states with anti-union right-to-work laws such as Iowa have lower wages, fewer benefits, and have no competitive advantage compared with states without these union restrictions, according to a report by the Economic Policy Institute.

Indeed, wages for most Iowans have stagnated or fallen. Iowa must ensure that wages are growing to at least match the cost of living.

Current Population Survey data show that since 1979, the median wage in Iowa have grown by just 3.4 percent when adjusting for inflation. The situation is deplorable for the bottom 10 percent of Iowans, whose wages have fallen by 2.9 percent.

If the cost of living simply followed inflation, this wouldn’t be so bad, but many basic expenses have easily outpaced inflation and left Iowa’s meager wage growth in the dust.

Although once relatively stable, since 2006, the U.S. Department of Agriculture reports that food prices are becoming more volatile, and rising food prices usually drive up the costs of other products. From 2006 to 2012, food prices grew faster than inflation. This is particularly unfortunate because food is necessary to live. It is a nonnegotiable expenditure and unpredictable prices hit those at the bottom the hardest. Recall that their wages since 1980 have actually shrunk.

Fuel prices have grown by 60 percent from 1980 to 2013, about 18 times faster than wages. The number of miles traveled by vehicle in Iowa has also grown by 43 percent over this period.

The cost of an education has also risen dramatically. Since 1980, in-state tuition (including fees) at the University of Iowa has grown by more than 240 percent, according to data from the Office of the Registrar. This is over 71 times faster than median wage growth. Out-of-state students saw their tuition rise by an astronomical 400 percent.

Higher education is extremely useful to lift the poor up into the ranks of the middle class, but with skyrocketing tuition and flat wages, that is becoming infeasible.

These flat wages in concert with higher costs are reverberating throughout the state. From around 2000 to 2010, child poverty in Iowa jumped by 50 percent, the number of people on food-assistance programs tripled, and 30 percent more people received the earned income tax credit, which goes to workers with low to moderate incomes.

Flat wages are costly to the government because it has to shell out more benefits and gets less revenue in taxes, they hurt families whose budgets are stretched too thin, and threaten economic development because everyone is strapped for cash.

Iowa needs to focus on crafting policy that encourages wage growth, and there are many feasible options including increased access to higher education, a higher minimum wage, scrapping right-to-work laws, and other measures, according to “The State of Working Iowa” 2013 report.

Iowans are seeing the disastrous consequences of flat wages coupled with a rising cost of living. We encourage the Iowa Legislature to act decisively to curb this dangerous trend.


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