Iowa Deserves a Raise

Studying the impact of a minimum wage increase in Iowa

February 2014
SUMMARY
The Iowa economy isnt working for everyone. The economic deck seems stacked in favor of those at the top at the expense of everyone else. We need to create an economy that works for everyone, not just the wealthy few. Raising the minimum wage will provide Iowans who work hard a better opportunity to get ahead while giving the economy a needed shot in the arm. With a higher minimum wage, workers will have more money to spend, which in turn gives businesses more customershelping them to hire more workers. This will kick-start a growing economy that will create more opportunities for those who work hard.

KEY FINDINGS
300,000 Iowans will receive a pay increase if the minimum wage is raised to $10.10 per hour; the increase in Iowa wages would spur economic activity and boost demand for goods and services, creating a virtuous cycle where businesses will need to hire additional workers to keep pace with demand. More than half of the states that increased the minimum wage during periods of high unemployment saw the unemployment rate decrease over the next 12 months. The same would be true in Iowa, with $430,462,000 in wage increases and $272,483,000 being infused into the state economy. Minimum wage workers arent teenagers any more. The average age of a minimum wage worker is 35; two-thirds of minimum wage workers are women.

RAISING THE MINIMUM WAGE IS GOOD FOR THE ECONOMY

RAISING THE MINIMUM WAGE WILL PUT MONEY INTO THE POCKET OF WORKERS AND MAY BOOST THE ECONOMY Increasing the minimum wage would immediately put more money in the pocket of workers. Workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities for all Americans [Source: Center For American Progress Action Fund]. The money gets funneled back to businesses large and small who would need to hire more workers to keep up with the demand, reinforcing a virtuous circle that will help build an economy that works everyone. Increasing the minimum wage may increase economic activity. One study showed that increasing the federal minimum wage from $7.25 to $10.10 would grow the economy by $22 billion [Source: Economic Policy Institute]. AMERICANS WOULD BENEFIT FROM INCREASING THE MINIMUM WAGE Increasing the minimum wage would raise yearly earnings for minimum wage workers. Currently, a full-time worker making the minimum wage earns just $15,080 a year [Source: Economic Policy Institute]. For a family of 3, that is $4,000 below the poverty line [Source: Families USA]. Raising the minimum wage to $10.10 would increase yearly earnings to $19,777 [Source: Economic Policy Institute]. Millions of workers would benefit from raising the minimum wage. Increasing the minimum wage to $10.10 and indexing it to inflation would raise the wages of 28 million workers by $35 billion [Source: Economic Policy Institute]. Most minimum wage workers are women. About two-thirds [Source: Center for American Progress Action Fund] of all workers who were paid the minimum wage or less were women. Raising the minimum wage to $10.10 would benefit 15 million women [Source: Economic Policy Institute].

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Iowa Deserves a Raise

February 2014

Minimum wage workers are older than you think. Minimum wage workers are not just teenagers. Nearly 90% [Source: Economic Policy Institute] of minimum wage workers are 20 years or older. The average minimum wage worker is 35 years old [Source: Economic Policy Institute].

BUSINESSES SEE VALUE IN INCREASING THE MINIMUM WAGE Businesses like Costco and Stride Rite have supported increasing the minimum wage [Source: New York Times]. Businesses see the benefits of raising the minimum wageit helps reduce employee turnover and increases employee productivity, commitment, and loyalty. This all helps increase profits. More than two-thirds of small business owners recognize that raising the minimum wage would benefit businesses and support doing so [Source: Small Business Majority]. Small business owners already acknowledge the benefits of higher wages, which is why 85% of those surveyed dont pay any of their workers the federal minimum wage of $7.25. More than two-thirds of small business owners recognize that raising the minimum wage would benefit businesses and support raising it [Source: Small Business Majority]. Small business owners already acknowledge the benefits of higher wages, which is why 85% of those surveyed dont pay any of their workers the federal minimum wage of $7.25. RAISING THE MINIMUM WAGE IS IMPORTANT FOR JOBS Studies have shown that minimum wage increases do not cause job losses. In 2010, economists studied employment levels in neighboring counties that straddle a border between states that had different minimum wage rates between 1990 and 2006. The study found that minimum wage increases did not cause job losses in counties with higher minimum wages. In fact, more than half of states that raised the minimum wage during periods of high unemployment saw the unemployment rate decrease over the next 12 months [Source: Center For American Progress Action Fund].

RAISING THE MINIMUM WAGE WILL HELP IOWA FAMILIES

IOWANS SUPPORT RAISING THE MINIMUM WAGE The majority of Iowans support raising the minimum wage. Polling shows that the majority of Iowans--53%-support raising the minimum wage from $7.25 per hour to $10.10 [Source: Public Policy Polling]. 60% of Iowans also believe that the gap between the rich and poor is getting bigger and 56% believe that not everyone in Iowa has an equal shot of getting ahead economically [Source: Public Policy Polling]. WHY RAISING THE MINIMUM WAGE IS THE RIGHT CHOICE FOR IOWA 216,000: Number of people in Iowa who would be directly affected by increasing the federal minimum wage to $10.10 [Source: Economic Policy Institute]. 90,000: Number of people in Iowa who would be indirectly affected by increasing the federal minimum wage [Source: Economic Policy Institute]. Increasing the federal minimum wage would have a total wage increase of $430,462,000 for Iowa, leading to $272,483,000 in additional GDP and 900 jobs created [Source: Economic Policy Institute]. Increasing the federal minimum wage in Iowa helps womenmore than 57% of the workers benefitting from a minimum wage increase are women [Source: Economic Policy Institute]. For more information, contact: Matt Sinovic Executive Director, Progress Iowa (515) 423-0530 matt@progressiowa.org Emma Shapiro Center for American Progress Action Fund (202) 557-5728 eshapiro@americanprogressaction.org

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Iowa Deserves a Raise

February 2014