Common Good Iowa

The Cost of Living in Iowa 2022 | Policy agenda

April 2022 | Download a PDF of the full report

The fact that so many working households can’t meet even an exceptionally frugal household budget is a function of our highly unequal economic system. That system is shaped by public policy choices over decades that have eroded the earning power of workers. Here are key state and federal strategies to help the tide and help families meet a basic-needs budget and set a path into the middle class.

Many are part of a robust racial equity economic agenda, essential because Iowans of color, especially Black Iowans, are overrepresented in low-wage jobs due to generations of discrimination in housing, education and employment. Improving the economic well-being of Iowa families will require intentionally addressing the legacy and ongoing effects of racism.

It’s worth noting these recommendations reflect a range of ambition; some should be immediately actionable (and are parts of state or federal legislation that are currently in play or have come close to passing); others will require time and effort to build political will.

Increase the minimum wage

The minimum wage sets a floor — a bare minimum — for what workers must be paid. Increasing the minimum would move thousands of Iowa workers over, or at least closer to, a basic-needs budget. The increase would help not just those workers getting a raise up to the new minimum, but thousands more who earn just above the new minimum who would get a raise as employers adjust overall pay scales.

Federal

  • Raise the minimum wage to at least $15 per hour, then index it based on median wage, and eliminate the subminimum wage for tipped workers.1

Iowa

  • Raise the minimum wage to at least $15 per hour, then index it based on median wage, and eliminate the subminimum wage for tipped workers.2

  • Restore local governments’ ability to raise the minimum wage above the state floor when local conditions warrant.

Raise reimbursement rates to boost care workers’ wages

Workers in the caring economy, including those in child care and a variety of health care settings, perform essential services but are among the lowest paid — even as families needing care struggle to pay for it. The underlying economics of these fields are so strained it simply requires more robust public-sector investment to fill the gap.

Federal

  • Include provisions to increase the pay of early care and education workers in any new federal initiatives to help families afford child care.3 

  • Increase Medicaid reimbursement for Home- and Community-Based Services to improve the pay of direct-care workers.5 

Iowa

  • Increase Child Care Assistance reimbursement rates paid to Iowa providers to the federal standard and expand investments in WAGE$, a salary supplement for child care workers.4 

  • Regularly adjust Medicaid reimbursements for services by direct-care workers so they earn at least a basic-needs wage.

End wage theft and worker misclassification

Iowa workers should always take home the pay and benefits they earn. Enforcing wage and hours laws and eliminating the misclassification of workers improves fairness in the workplace, promotes an even playing field between competing companies and prevents business tax evasion. 

Iowa

  • Strengthen penalties for businesses that violate wage and employment laws. Expand the Iowa Department of Labor’s capacity to stop wage theft — when an employer evades a contract or otherwise breaks the law to avoid paying owed wages — and misclassifying employees as independent contractors.6  

Protect workers’ rights to unionize and bargain collectively

Iowa workers should have the right to negotiate for higher compensation and safe working conditions. Strengthening collective bargaining gives workers more say in improving their wages and work environment.

Federal

  • Pass the PRO Act to help restore workers’ ability to organize and negotiate for better pay, benefits and working conditions.7

Iowa

  • Restore collective bargaining on a broad range of issues to Iowa public-sector employees. Public-sector bargaining rights should be an example for the private sector.

Ensure public contracts & economic development funds lead to good jobs

The state should focus on policies that attract good-paying jobs and the workers needed to fill those jobs, keep young people in our state, and build the skills our workforce needs to thrive, not giveaways to wealthy corporations for activities they would do anyway.

Federal

  • Include prevailing wage requirements, based on the average wage for similar workers in a project’s geographic area, in all public contracts.8 

Iowa

  • Include prevailing wage requirements in all public contracts and eliminate Iowa’s federal-aid swap program that lets companies to evade wage standards in federally funded projects.

  • Reverse Iowa’s prohibition on project labor agreements, which set wage and local hiring requirements for public projects in return for a prohibition on work stoppages.

  • Reform subsidy programs to limit assistance to businesses paying above the median wage, and recapture subsidies from firms that violate labor laws or don’t meet wage or employment targets.

Expand and strengthen tax credits

Tax credits are an important strategy to help families bridge the gap between their wages and a basic budget. They have a proven track record of keeping children out of poverty, rewarding work and compensating for regressive elements of our tax structure, such as sales and property taxes.

Federal

Revive and make permanent temporary federal tax credit expansions that expired in late 2021:9

  • Child Tax Credit that, expanded, lifted millions more American children out of poverty.

  • Child and Dependent Care Credit to help families cover the costs of care.

  • Earned Income Tax Credit (EITC) for low-paid working adults not raising children in the home.

Iowa

  • Boost the state Child and Dependent Care Credit, which now covers at most 8% of the average cost of full-time care.10

  • Double the state EITC from 15% to 30% of the federal credit.

  • Convert Iowa’s meager dependent “exemption credits” into meaningful, refundable child tax credits.

  • Fund the low-income renters’ and homeowners’ property tax credit and raise its income brackets to reflect current rents.11

Ensure access to affordable health insurance

Comprehensive, affordable health insurance has short- and long-term benefits for working Iowa families — and their budgets. Insured people are healthier and better able to participate in the labor force, and are less likely to get swamped with high medical bills.

Federal

  • Extend the temporary increase in premium tax credits for health insurance purchased on the ACA marketplace that have made ACA plans much more affordable. They are currently scheduled to expire at the end of 2022.12 

Iowa

  • Help eligible Iowans maintain Medicaid and CHIP coverage by using enrollment processes that accurately assess eligibility without unnecessary red tape.13 The state should take comprehensive steps to smooth the process of redetermining Medicaid eligibility once the federal COVID public health emergency, which paused disenrollments, expires.14 

  • Extend Medicaid eligibility for pregnant people from 60-days to 12-months postpartum to assure continuity of care for new parents as they recover and navigate parenting and work.15 

Limit what families pay for child care

Iowa has one of the nation’s highest rates of labor force participation among parents of young children. Yet child care costs, which in some cases rival college tuition, can make working difficult or impossible. Lowering what families spend on care is an essential strategy to help stretched parents get to work and get ahead.

Federal

  • Invest more in Child Care Development Block Grants, the main source of child care subsidies, and pursue other proposals to limit the share of income families pay for child care.16 

Iowa

  • Increase the Child Care Assistance family entrance eligibility income level for Iowa’s program from 145% of poverty — among the nation’s lowest — to at least 185% of poverty.17

Strengthen other elements of our safety net

We all need adequate material support — food, shelter and utilities — to learn, work and thrive. Being able to meet basic needs, including having enough to eat, is linked to better child development, higher educational attainment and increased lifetime earnings.

Federal

  • Expand Community Eligibility, which allows low-income schools to provide free school breakfast and lunch to all students, decreasing administrative work and reducing stigma.18 

  • Extend recent expansions and flexibilities for school breakfast and lunch programs and the Summer Food Service Program.20 

  • Increase funding for The Emergency Food Assistance Program, which allows food banks to purchase nutritious food from U.S. farmers.21

  • Expand the number of Housing Choice Vouchers. The supply of these vouchers, which help low-wage households rent a housing unit, currently falls far short of meeting demand.23 

Iowa

  • Take and retain federal SNAP options that maximize SNAP, such as the flexibility Iowa uses to boost its income eligibility cap from 130% to 160% of the federal poverty level, smoothing what would otherwise be a steep “benefits cliff” as earnings rise.19

  • Make state investments in nutrition, including in food banks serving families who may not quality for SNAP or who face short-term crises. The state should also fund Double Up Food Bucks, which stretches family budgets by doubling the value of SNAP dollars spent on fresh fruits and vegetables.22

  • Expand state policies and programs to increase the supply of affordable housing, including boosting incentives to build affordable units and protecting rights of mobile home residents.

Invest in education for the long term

The single most important predictor of state prosperity is the level of education of its residents. More, and higher-quality, education from preschool through college, means higher lifetime earnings. Better-funded schools also contribute to local economies.

Federal

  • Make college more affordable by increasing Pell grants, an essential support for low-income students, lifting restrictions on Pell grants for people without documented immigration status, and pursuing other proposals to help college students minimize student loan debt.24 

Iowa

  • Invest in our public education system:

    • Boost funding for the statewide 4-year-old preschool program so no child enters school without a quality early-learning experience.

    • Reverse recent shortfalls in K-12 state aid that have eroded our commitment to public schools as a springboard for opportunity.25 

    • Restore historic funding levels for community colleges and universities to ensure broad access to higher ed and reduce student debt.

Give marginalized groups access to equal opportunity

A rising tide does not lift all boats, and adopting only universal policy approaches to expanding economic well-being will likely fall short. Historically, our state’s policies have prioritized and safeguarded the accumulation of wealth for white communities at the expense of others. Undoing these patterns requires analyzing policy impacts by race and ethnicity and then crafting and implementing targeted, data-informed policies and practices that give all Iowans the opportunity to thrive.

Iowa

  • Repeal restrictions on training and discussion of racism that have had a chilling effect on how state agencies analyze the effects of policies and practices on communities of color.  

  • Analyze the impact of proposed policies and practices on communities of color and other marginalized groups as a regular part of the lawmaking process.

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