Common Good Iowa

The Cost of Living in Iowa | Narrative

Working families lost ground in pandemic economy

By Sean Finn and Samantha Tamborski

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Iowans deserve an economy that works for every household. Rather than making strides toward that ideal, Iowa is stepping further backward into extreme economic inequality. In 2021, 1 in 7 working households in Iowa (defined in this report as a household with at least one full-time worker) did not earn enough income to meet a bare bones budget. In 2022, 1 in 6 working households could not meet that benchmark.

Recent data reveals the extent to which the global pandemic disrupted Iowa’s economy. Causing huge upticks in inflation in countries around the world, the pandemic put additional strain on household budgets as production facilities closed, supply chains buckled, and workers left the labor force en masse. Although government interventions greatly softened the economic blow and aided a quick recovery, the pain was still felt by families across the state, especially those in lower-wage households.

Figure 1
Wages increased steadily, but two years of high inflation leave families playing catch-up

Rate of growth in U.S. wages and inflation, January 2021 to April 2023

Source: Federal Reserve Bank of Atlanta and U.S. Department of Labor Bureau of Labor Statistics

Although wage growth has climbed at a strong pace over the last two years (Figure 1), the working Iowa family struggled to make ends meet in 2022. All told, 17.5% of all working households did not earn enough income to cover a bare-bones budget. But some households were more likely to fall short than others (Figure 2). Three of every 5 single-parent households (58.9%) had incomes below basic needs — an increase of 31% since 2021. Black and Latino working households also fell short of earning enough to meet a bare-bones budget at disproportionately high rates. These profoundly disparate outcomes illustrate how discriminatory and unjust policies have resulted in a lopsided economy that overlooks the many to benefit the few.

Figure 2
1 in 6 working Iowa households,* including over half of single parents, earn too little to meet a basic needs budget

Percentage of working households earning below what is needed to meet basic-needs budget, selected households

  * Iowa households with at least one full-time worker

Despite recent wage growth, for Iowans in the workforce, securing a self-sustaining wage through full-time employment remains challenging (Figure 3). To meet basic needs:

  • A single parent with one child needs to earn at least $24.64 per hour.

  • Two working parents with two children each require $19.55 or more per hour.

  • A single working person must earn a minimum of $14.82 per hour.

Figure 3
Regardless of family type, needs of Iowa workers far exceed the minimum wage 

Wage required to meet a basic-needs budget, by family type

Figure 4
Family budgets are burdened by the high and rising costs of child care and rent

Basic-needs family budgets, statewide average, 2023

The inability of numerous working households to meet even the most modest budget with their earned income reflects a deeply unequal economic system. In this economy, too many full-time workers can’t rely on their income to cover basic needs, sometimes leaving children to babysit other children, patients to skip medication doses to put off the refill cost and children to go to school hungry. This system has been shaped by policy choices over decades that have eroded the earning potential of workers.

Rectifying this will demand policies aimed at increasing workers’ earnings, fortifying the safety net, investing in education, and dismantling barriers that have historically obstructed communities of color and other marginalized groups, denying them equal opportunities.

What is a basic-needs family budget?

This report outlines a bare-bones budget that includes essentials while leaving out many common expenses that many may consider “basic.” It assumes the presence of at least one full-time worker within the household. However, this budget doesn’t allow for retirement savings or emergency funds, nor does it cover costs like student loan payments or any existing debts. It excludes entertainment such as streaming services, impromptu takeout dinners, or additional expenses like music lessons or youth sports fees. Rather than outlining a lifestyle of prosperity, this budget focuses solely on sustaining a restricted lifestyle without fostering an environment conducive to thriving.

On the previous page are the bare-bones budgets for a single worker, single worker with one child, a working couple with two children and working couple without children (Figure 4). Budgets for these and six other household types in each of Iowa’s 99 counties can be found at These budgets are based primarily on Iowa data released in 2022.

Institutional racism has obstructed economic opportunity for Black and brown Iowans

Ever since the land that is now Iowa was first stolen from indigenous peoples and named an official U.S. state, Iowans of color have been excluded from the opportunities for financial prosperity. Generational effects and modern discrimination continue to oppress Black and brown workers and their communities. Around a third of Black workers and Latino workers support families with incomes below the bare bones budget, almost double the statewide rate, even though these workers put in full-time hours (Figure 5).

Institutional racism refers to the patterns and systems of action (or inaction) by institutions, such as governments, that cause disproportionate harm to communities of color. Decades of policies that disadvantaged and directly harmed Black and brown workers and their families, both overt and subtle, shape who has access to opportunity today.

Figures 5 & 6
Most Iowa workers below basic needs are white, but shares of insufficient income are roughly twice the average for Black and Hispanic workers

Share of households with incomes not meeting basic needs by race and ethnicity


Harms of the pandemic economy were felt particularly strongly by Latino workers. From 2021, the proportion of Latino workers whose earnings fell below basic needs increased from 25.8% to 31.3% (compared with 17.5% statewide). That equates to an additional 1,600 households who put in the work but still faced the choice of sacrificing basics or going into debt.


Legally sanctioned until the late ’60s,[1] redlining refers to the systematic denial of home loans or insurance to individuals and families living in neighborhoods deemed too risky for investment based on their racial composition.[2] Redlining practices were institutionalized during the Great Depression, when the federal government acted to help homeowners falling behind on mortgage payments and bail out lenders. Appraisers were dispatched to survey cities to determine where, and where not, to make help available. Neighborhoods deemed too risky for loans, outlined in red on city maps (like one for Waterloo, Figure 7), were those with the most Black and brown residents and those nearby.[3]

Figure 7
Map of Waterloo that guided home lending during Great Depression ‘redlined’ large areas of the city based on racial composition

Source: Mapping Inequality, public domain image


This practice disproportionately constrained Iowans of colors, especially Black Iowans, in economically disadvantaged neighborhoods, which limited access to well-resourced schools, employment and the ability to build generational wealth by owning a home that appreciates in value.

Even after housing discrimination was banned in the Fair Housing Act of 1968, implicit bias has persisted from lenders who continue to devalue and deprioritize Black and brown neighborhoods.[4] This stigma contributes to persistent poverty of Black communities and hinders the chance of upward mobility.

Excluded from Protections

In 1938, the Congress passed the Fair Labor Standards Act (FLSA), which established the national minimum wage, overtime rules, and numerous worker rights.[5] In order to pass the bill, it was modified to exclude protections for agricultural and domestic workers, which accounted for a large swath of the Black population. This was no coincidence, and representatives from Southern states plainly stated their concern for the FLSA’s effects on the plantation economy.[6]

The long-term effect of these exclusions was that while many middle-class Americans bought houses and gained wealth, Black workers were economically suppressed by low wages and denied wealth-building opportunities, which had cascading effects on their children and beyond.

Unequal Before the Law

Census data from 2016 reports that a staggering 25% of incarcerated individuals in Iowa were Black, despite Black Iowans only making up 4% of the state population. A study from the sixth judicial district of Iowa (counties Benton, Iowa, Johnson, Jones, Linn and Tama) reported that despite comprising just 4% of the district’s population, Black individuals made up 14% of the probation population, 24% of the parole population, and 32% of the prison population.[7]

These disparities accumulate throughout the levels of the law enforcement system. It is well-documented that arrest rates of Black residents are several times higher than that of white residents, even controlling for behavioral and contextual factors, and that Black detainees are given longer sentences for the same crimes.[8] From arrests, to sentencing, to parole decisions, the system’s compounding racism leads to the highly inequitable outcomes that threaten progress toward economic opportunity.

Figure 8
The average gap between household income and a basic-needs budget is over $14,000. It’s higher for single parents 

Annual income required to meet a basic-needs budget versus federal poverty level, by household type

High costs mark the pandemic recovery

The increases in household budget needs since our last Cost of Living in Iowa report, reflecting 2019 data, illustrate the pandemic-induced inflation that affected countries all over the globe.[9] Disruptions to the labor force due to mass illness and safety precautions had large, cascading effects on global supply chains and economic forces. Aside from health insurance costs, which actually ticked down between 2019 and 2022, household costs increased significantly across the board. The largest increases were seen for child care, transportation, food and household expenses.

While wages have made strong gains in the past two years — median wage in Iowa increased from $19.19 in 2021 to $21.32 in 2022, a gain of 11% — a quarter of working Iowans still make less than $15.17 per hour. Clearly, wage gains have not kept pace with increased costs, as one in six working households have earnings that cannot cover a bare bones budget.

Earnings of low-income families fall far short of covering basic needs

Despite working long hours at often-demanding jobs, low-income workers’ take-home pay does not stack up against the cost of living in Iowa. Among those whose earnings don’t meet basic needs, the average size of the gap between a bare bones budget and household income is over $14,000. Single-parent families face an annual gap of $20,620 — an increase of over $4,000 increase from last year (Figure 8).

When household budgets show such large deficits, families making do with very little must turn to their communities for support, whether that means doubling up on housing, using a local food pantry or skipping routine medical care. Not only is this stressful for the family, but it holds back local economies, raising public health costs and putting strain on support systems like the food safety net.

Public support policies reduce budget gaps but remain inadequate

Families supported by low-wage workers who struggle to cover basic needs despite working full time are often eligible for public support programs that can lift household incomes significantly and put economic opportunities within closer reach. For example, the federal Earned Income Tax Credit (EITC) and Iowa’s state EITC, which matches 15% of the federal credit, is highly effective at reducing poverty, increasing workforce participation and improving health and education outcomes across generations.[10] The Supplemental Nutrition Assistance Program (SNAP), which provides food benefits to supplement family grocery budgets, also reduces poverty, by an estimated 14% to 16%, as it simultaneously boosts economic activity.[11] Child Care Assistance (CCA) subsidizes child care for eligible low-wage workers so they can afford reliable care while they work.

Figure 9
A single parent with a child in Iowa can be penalized for getting a raise due to many support programs’ strict eligibility cut-offs 

Annual income required to meet a basic-needs budget versus federal poverty level, by household type

Although these policies demonstrate strong economic benefits, most fall short of reaching their potential. The state’s disjointed public support system is confusing for residents to navigate and burdensome to apply for, causing utilization rates among eligible families to be remarkably low and highly variable among programs.[12] Eligibility for these supports is also complex, varies greatly by program and always includes an income criterion based on the federal poverty level (FPL).

The federal poverty level is an outdated measure of families’ financial needs, created 80 years ago when food costs were expected to make up about a third of a family’s budget.[13] The FPL for a family of three in 2022 was $23,030 (also referred to as 100% of FPL). A typical Iowa worker needs to make an income that is about 200% to 250% of the FPL in order to cover a bare-bones budget.

Due to FPL-based income measures and low program eligibility thresholds, public support programs do not reach everyone whose earnings fall short of a bare-bones budget. They also phase out well before the household’s earnings are enough to sustain basic needs. The result, called the “cliff effect,” means many workers who get raises or higher-paying jobs end up financially worse-off from losing access to support programs.[14]

We propose several ways to strengthen Iowa’s public support policies, including expanding eligibility to more low-income families and increasing refundable tax credits. Implementing these recommendations would have life-changing effects for hundreds of thousands of Iowans. Ideally, though, we would make the economic reforms necessary to greatly reduce the need for these programs.

The inability of 1 in 6 families with at least one full-time worker to afford a bare-bones budget is not due to personal failings. Rather, it is an outcome of an economy where wealth becomes more and more concentrated, where full-time workers legally make as little as $15,000 per year, and where medical and child care costs leave families with nothing left. Public support policies demonstrate our collective desire for equal economic opportunity, but for now we remain far from that objective.

Key assumptions in basic-needs budgets

  • The family cooks and eats all meals at home, at the cost of the USDA Low-Cost family food plan.

  • The family pays for rent and utilities at the 40th percentile level for a house of appropriate size in each county based on the HUD Fair Market Rent.

  • The family’s health care expenses include insurance premium and out-of-pocket costs. Costs represent an average of the employee share of employer sponsored insurance costs and the household’s health costs after premium assistance with a bronze plan purchased on the exchange.

  • Workers drive to work, and the family has other basic transportation needs, such as getting to school and the grocery store.

  • Except for those in two-parent families with only one parent working and those age 12 or older, all children attend a licensed child care center during normal working hours when not in school. Child care costs, calculated from county Iowa Child Care Resource and Referral data, are for a toddler, a preschooler and a school-aged child.

  • The family has expenses for clothing, phone service and basic household maintenance items.

  • Property taxes are included in rent; sales taxes in spending.

  • Workers are employed full time and year-round; income consists of wages and salaries. Payroll taxes are paid on all income, and federal and state income taxes and credits are calculated assuming the standard deduction. The family uses all available credits and exemptions.

Refer to the methodology and data appendix for more on calculating family budgets.


[1] U.S. Department of Housing and Urban Development, “History of Fair Housing.” Retrieved from
[2] Polk County Housing Trust Fund, “Redlining in DSM.” Retrieved from
[3] Todd M. Michney, "How and Why the Home Owners' Loan Corporation Made Its Redlining Maps," Mapping Inequality: redlining in New Deal America. Retrieved from
[5] Aaron Glantz and Emmanuel Martinez, “For people of color, banks are shutting the door to home ownership.” February 2018. Reveal. Retrieved from
[6] U.S. Department of Labor Wage and Hour Division, “Wages and the Fair Labor Standards Act.” Retrieved from
[7] Rebecca Dixon, “From Excluded to Essential: Tracing the Racist Exclusion of Farmworkers, Domestic Workers, and Tipped Workers from the Fair Labor Standards Act,” National Employment Law Project, May 2021. Retrieved from
[8] Helen Ho et al., “Examining Racial Disparities in the Sixth Judicial District of Iowa’s Probation Revocation Outcomes.” April 2014. Urban Institute. Retrieved from
[9] Cydney Schleiden et al., “Racial Disparities in Arrests: A Race Specific Model Explaining Arrest Rates Across Black and White Young Adults.” May 2020. Child and Adolescent Social Work Journal. Retrieved from And M. Marit Rehavi and Sonja B. Starr, “Racial Disparity in Federal Criminal Sentences.” December 2014. Journal of Political Economy. Retrieved from
[10] Drew Desilver, “In the U.S. and around the world, inflation is high and getting higher.” June 2022. Pew Research Center. Retrieved from
[11] John Good, “Iowa’s Earned Income Tax Credit: Tax Credit Program Evaluation Study,” December 2021. Iowa Department of Revenue. Retrieved from And Chuck Marr, Chye-Ching Huang, Arloc Sherman and Brandon DeBot, “EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds,” October 2018. Center on Budget and Policy Priorities. Retrieved from And Margot L. Crandall-Hollick and Joseph S. Hughes, “The Earned Income Tax Credit (EITC): An Economic Analysis,” August 2018. Congressional Research Service. Retrieved from
[12] Laura Tiehen, Dean Joliffe and Timothy Smeeding, “The Effect of SNAP on Poverty,” October 2013. University of Madison Institute for Research on Poverty. Retrieved from And Patrick Canning and Rosanna Mentzer Morrison, “Quantifying the Impact of SNAP Benefits on the U.S. Economy and Jobs.” July 2019. U.S. Department of Agriculture Economic Research Service. Retrieved from
[13] Suzanne Macartney and Robin Ghertner, “Participation in the U.S. Social Safety Net: Coverage of Low-Income Families, 2018.” November 2021. U.S. Department of Health & Human Services. Retrieved from
[14] U.S. Census Bureau, “The History of the Official Poverty Measure.” Retrieved from
[15] Amelia Coffey and Hannah Sumiko Daly, "Benefit Cliffs Underscore the Need for a Stable, Accessible Social Safety Net," January 11, 2022. Retrieved from

About this report

This is the 9th Edition of the Cost of Living in Iowa, produced originally by the Iowa Policy Project and now by Common Good Iowa. Explore state and local data and appendices at

About the authors

Sean Finn is a Policy Analyst for Common Good Iowa, working primarily on labor and fiscal policy. He holds a Master of Applied Statistics from Loyola University Chicago.

Samantha Tamborski is Common Good Iowa’s policy intern for Summer and Fall 2023. She is pursuing a Master of Public Affairs from the University of Iowa and expects to graduate in May 2024.

About Common Good Iowa

Common Good Iowa’s team of policy advocates and analysts leverage reliable data, solid analysis and collaborative relationships to craft policy solutions to Iowa’s most pressing problems. Our vision is a state where children and families are healthy and secure, workers thrive, and clean air and water contribute to a healthy future for all. 

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