Report: Inflation gobbles up slight wage gains in Iowa

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By Charlotte Eby | Thursday, August 28, 2008 12:17 AM CDT | () comments

DES MOINES — A report by The Iowa Policy Project shows working Iowans have made little wage gains this decade, a trend made more difficult by rising gas and food costs.

The report, released by the Mount Vernon-based think tank, is being released ahead of the Labor Day weekend to highlight the struggles facing Iowa workers.

The study found no big winners among working Iowans.

“In this economy, you’re a winner if you’re treading water,” said Colin Gordon, one of the authors of the study and a professor of history at the University of Iowa.

The report argues that Iowa remains a low-wage state, with a median wage of $14.30 per hour in 2007. That’s down from the median wage of $14.32 in 2000 when adjusted for inflation.

“In the absence of strong wage growth, the spiraling cost of health care and energy and food shrinks paychecks and widens the gap between family incomes and family needs,” the report said.

Median wages for those with a college education have flattened out and have dropped significantly for those with a high school education or less and for younger workers, Gordon said.

He argues the state should resist the idea that Iowa’s wages have fallen because of factors such as the housing bubble or globalization.

“If you look at the states that are doing better, it’s usually a result of public policy initiatives” such as a higher minimum wage or economic development programs that set higher targets for wages and benefits, he said.

Sen. Bill Dotzler, D-Waterloo, said the state needs more jobs with a livable wage.

“If we don’t set our goals high, then I think the numbers are going to be a lot lower than they are,” Dotzler said.

Gordon said he hadn’t expected Iowa’s wages to fall in comparison with its regional peers such as Minnesota, Wisconsin and Illinois.

Iowans with less than a high-school education are facing grim prospects. According to the report, they saw their unemployment rate drop as low as 5.6 percent in the 1990s. But that figure grew to 11 percent in the early part of this decade and has essentially stayed there since, the study found.

“What you’re starting to see is a business cycle that pushed a lot of people out of the labor market, and they’ve stayed out of the labor market,” Gordon said.

The burst of the housing bubble also has eroded a lot of the economic security that people had, Gordon said.

“You can no longer use your house as an ATM machine,” Gordon said. “You can no longer get by in a weak-wage labor market because you have these other forms of financial security, because they’re evaporating.”

One of the biggest losses for the Iowa work force was the decline in job-based health care coverage. The percentage of workers who had job-based coverage was 73 percent in 1998, but by 2007 had dropped to less than 58 percent, the report said.

Charlotte Eby can be contacted at (515) 243-0138 or chareby@aol.com.