Rod Sullivan, Supervisor, Johnson County, Iowa

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August 14, 2015

Sullivan’s Salvos     8/18/15

In this edition:

*Minimum Wage
*Did You Know?

*Minimum Wage
The Johnson County Board of Supervisors recently took steps to raise the minimum wage on a countywide basis. The goal is to reach a minimum wage of $10.10 per hour by 1-1-17.

I recognize that this is controversial. Some business owners hate it. But frankly, too many of our citizens are in crisis. One out of every six of our kids lives in poverty. The federal and state governments refuse to address this crisis. So local government has to step up.

This is not the first time local government has intervened in the “free market”. Local governments pick winners and losers all the time. It is just the first time local government has intervened on behalf of the workers.

I served for several years as the Executive Director of a local nonprofit. It was (and is) a business. I was responsible with making certain that we finished in the black. During that time, there was a local movement afoot to require all government contractors to pay a living wage. This was going to be a challenge for us, as we were not allowed to set our own prices – the state controlled that. Yet I am proud to say that within two years, we were paying the living wage. (Though in the interest of full disclosure, only 5-6 employees had employer-provided health insurance coverage.)

It was not easy, and sacrifices had to be made. One of those was management wages. As Executive Director, I only made 2 times the wage of our lowest paid worker. But you know what? That was OK. It was totally fair.

Here are the answers to some frequently asked questions:

Why do this?
The answer is pretty simple: many of our neighbors are hurting. Families double up because they cannot afford the rents in Johnson County. Families routinely use food banks to get through the week. (19,000 Johnson County citizens are food insecure.) Cars go unrepaired. Kids go to school with clothes that do not fit. One small anomaly – an illness, something breaks down, etc. – and a family’s world comes crashing down. People work 2-3 jobs, yet still cannot get ahead.

         Personally, I cannot sit back and allow our current situation to exist knowing that I have the power to make it better. It is a moral imperative. What’s more, I truly believe this will be good for the local economy.

Will jobs be lost? 
There are businesses that will fail whether we do anything or not. While some jobs likely will be lost, even more will be gained. As low-wage workers have more money to spend, consumer demand will create jobs. Grocery stores, restaurants, bars, auto repair shops, movie theaters, clothing stores, etc. will all have more customers with more money. They will undoubtedly need to hire in order to meet demand. That means jobs. (Consumer spending makes up 70% of the US economy.) And the jobs being created will pay more than the jobs being lost. Other jurisdictions have seen increases in employment follow increases in the minimum wage.

Will jobs move elsewhere?
         Not minimum wage jobs. These are primarily service sector jobs, which simply follow population. Retail, fast food, etc. cannot move jobs to China or India. And even moving them to Cedar Rapids is unrealistic; no one is going to drive to CR just for fast food.

Will workers see their hours cut?
         Our economy is lacking consumer demand. When workers have more income, they spend it at local businesses. Those businesses will need employees to keep up with demand. So while anything can happen at any given business, most employers should see a need to fill more shifts, not less.

Why $10.10? Why not $20? Why not $50? 
Because $10.10 makes life better for a lot of people without damaging our economy. Some people honestly believe there should not be a minimum wage. Those folks are a very small minority. So if we can agree that the vast majority believes there should be a minimum wage, we are simply arguing about the level. Clearly, $7.25 is not working for our economy. We know that. All the statistics support this argument. Yes, a minimum wage of $50 would cause problems. But no one is suggesting that. We are suggesting $10.10.

Won’t raising the minimum wage only affect teenagers?
According to the Economic Policy Institute, the average age of workers who would benefit from a higher minimum wage today is thirty-five. Eighty-eight per cent are over the age of twenty.

Won’t raising the minimum wage drive up prices?
You are already paying for low wage jobs – through your taxes. What’s more, studies do not bear out a huge jump in prices. For example, if McDonald's doubled the salaries of its employees to $14.50 an hour, not only would many of them go off public benefits, but so would the company-- and a Big Mac would cost just 68 cents more (another study says only 14 cents.) At Walmart, increasing wages to $12 per hour would cost the company only about one percent, so that made-in-China $10 item would run you all of $10.10. (Source: Center for Labor Research and Education.)

Shouldn’t we instead focus on other programs, such as the Earned Income Tax Credit (EITC)?
The EITC is a great program, and it should be expanded. But increasing the EITC does not preclude a higher minimum wage. We can, and should, do both.

What’s more, programs that prop up low wage jobs are paid for by all taxpayers. Say you own a business and pay your employees well. Under all these schemes, your tax dollars make up the difference for low-wage workers. In other words, you subsidize the guys who pay low wages.

What about small businesses?
Two-thirds of all minimum wage workers are NOT employed by small businesses. Better yet, one survey shows three out of five small business owners favor raising the minimum wage; their profits depend on a strong local economy, which requires more money in local consumers' hands. Most small businesses cannot off-shore jobs, or export their way to profit, so micro-economics matter. Sad to say, 50-80 percent of most small businesses already fail for various reasons, even with a minimum wage that has not kept up with inflation (wage costs are actually lower now than in the past; in 1968 the federal minimum was $1.60 per hour, approximately $10.70 in 2013 dollars.) Factors other than labor costs seem far more significant.

Can Johnson County do this legally?
         Contrary to the statement put forth by Iowa Workforce Development (IWD), I believe we can. And so does County Attorney Janet Lyness, who reviewed all the legal issues and sees no impediments.

What Does Your Religion Say?
         This is a government proposal. Religion has nothing to do with it. And many folks are non-religious. But if you ARE a religious person – consider what your faith says about helping the poor. As you spend your time judging which poor folks are worthy, I urge you to refer to the religion of your choice. What does it say about judging others? Again, what does it say about help for the poor?

It is important to understand – this is NOT a political winner. Most of the folks who will benefit from this will not vote. Business owners will mobilize against me. I receive no personal gain from this; only personal headache. But it is not about me. It is about thousands of poor people who are in a crisis.

Whenever possible, I like to make decisions based upon data. The data here is clear – raising the minimum wage will be good for our local economy.

*DID YOU KNOW?  President Franklin Roosevelt signed the federal minimum wage into law in 1938, during the Great Depression. The stated purpose was to keep America’s workers out of poverty, and increase consumer purchasing power in order to stimulate the economy. The minimum wage was last increased January 1, 2008.

Anyone interested in learning more about County government should take a look at the County website-

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As always, feel free to contact me at 354-7199 or I look forward to serving you!



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