FROM THE DESK OF

REPRESENTATIVE DE BOEF

January 25, 2007

Things are heating up around the Capitol.  Several controversial bills have been introduced in committee, the first one being voted on Tuesday in the House Chamber.  HF 1 raises the minimum wage from the current rate of $5.15 an hour to $6.20 an hour by April, and $7.25 an hour by January 1,2008.

 During floor debate, House Republicans were committed to keeping Iowa business-friendly as well as increasing the minimum wage in a responsible manner.  House Republicans sponsored and supported two key amendments:

 House Amendment H-1002 - Small Business Health Insurance Pooling:

This amendment was based on an agreement reached last week between the Association of Business and Industry and the Federation of Iowa Insurers.  Amendment H-1002 would have allowed legitimate business groups to offer a small group health insurance plans to their small business members.  Under current law, each small business is required to purchase on their own health insurance plan.

 House Amendment H-1004 - Minimum Wage Increase by 2009:

This amendment would have increased the minimum wage in three increments:

• On April 1, 2007 the minimum wage would have increased from $5.15 an hour to $5.85

• On April 1, 2008, the minimum wage would have increased to $6.55

• On April 1, 2009, the minimum wage would have increased to $7.25

I am very disappointed that we were unable to get the amendments adopted.

 Some important facts on the minimum wage.

• Iowa Minimum Wage Numbers*
  • 26,000 Iowans earn the current $5.15 or less (exempt employees or tipped workers)
  • 100,000 Iowans earn between $5.15 - $7.25
  • The following percentages reflect the 126,000 Iowans noted above:
    • 53% live with a parent or relative (teenagers)
    • 16% are a dual earner in married couple with or without kids
    • 24% are single or a married single earner with no kids
    • 93% - Total

• Only 7% of Iowans earning from below minimum wage to the proposed

      $7.25 are a single earner with kids

• A minimum wage increase would give more money to the “working poor” assuming their jobs are not eliminated or hours reduced, but it also gives a pay raise to a lot of teenagers (53%) still living with their parent(s).

• Small businesses do not have unlimited income.  A wage increase means reduction of hours, reduction of employees, or increases in prices making that business no longer competitive.  (Survey of NFIB members conducted in 2006).

• Less than 1% of all employees over the age of 25 still work for minimum wage (Congressional Budget Office.  This is a nationwide figure).

• A Restaurant owner in southern Iowa, currently paying minimum wage for high school workers will have to deal with a 41% increase in labor costs.

• Also, every other employee up the line, fry cook to head cook will want an increase as well, which means costs of eating out will increase.

 I have very serious concerns about the “unintended consequences” of passing the minimum wage bill.  One example is a single Mom with children in government subsidized child care could very possibly find she no longer qualifies for assistance with the increase in pay she will receive.  This could mean she will actually be worse off than before. 

 HF 1 passed with a 79-19 vote in the House, but my vote was one of the ”nay” votes.  It was a very hard vote for me to take, but I believe it was the best vote for the struggling small businesses in my district, since we were not able to amend the bill.  If we truly want to help the low income wage earners, there are much more efficient ways of doing it. 

 Senator Grasley’s office inquired of the Congressional Budget Office on the impact of a federal minimum wage increase.  The response he received showed that at $7.25 an hour up from $5.15, $11 billion will be paid out in increased wages, but only $1.6 billion (15%) would actually be received by workers in poor families.  A much more efficient way to help these people would be with an earned income tax credit, which would result in payments of $2.4 billion, with working poor families receiving $1.4 billion.  

This issue is much more complex than it seems at first flush. 

Visitors to the Capitol 

Mark Kennett with the Iowa Soil Conservation Commission visited on Tuesday.  On Thursday there were seven FFA students from Tri-County High School visiting the Capitol, along with teacher Ashley Workman. 

 Question of the Week…

We will be debating a bill which would make car title loans illegal.  These loans are often used by people who do not qualify for more conventional means of credit and often have very high interest rates.  Do you believe we should outlaw these types of loans?

I would appreciate your input.  My phone number at the Capitol is 515-281-3221, or e-mail me at betty.deboef@legis.state.ia.us.  I would welcome visitors at the Capitol, too!