January 13, 2004

Thank you for the opportunity to comment on proposed rules to amend Chapter 53, "Community Economic Betterment Program," Iowa Administrative Code.

The Iowa Federation of Labor, AFL-CIO, supports the proposed amendments to increase the wage threshold requirements that applicants must meet in order to be eligible for the assistance through the Community Economic Betterment Program.

The Iowa Federation of Labor, AFL-CIO, also supports the goal of the legislature and the Department to "raise the average wage of Iowans." (Iowa currently ranks 38th in the nation in wages.)

However, even with the increase in the threshold from 90% to 100%, there are still provisions in the current rules that will thwart efforts to raise the average wage.

First, the threshold applies to only half the jobs that will be created. Setting no standard for the remaining 50 percent of the jobs could actually lower the average wage in many areas, perhaps statewide. If, for example, half of the jobs pay 100% of the average wage and the other half pay 80%, the county or regional average wage would decrease.

Second, the IDED-calculated average wage for a county understates the actual average wage in many counties by leaving out agricultural and government workers' wages. Also, the regional average greatly understates the wage rate in high-wage counties.

A brain trust convened in 2003 by the Department of Economic Development Director Michael Blouin concluded that wages must be at least $28,200 a year or $13.55 per hour, for a worker to "pay his own Way" in terms of state taxes. Using the 2004 IDED calculated county wage at 100% of the county or regional average would result in only 4 counties paying $13.55 or more. According to the Iowa Workforce Development Employment Statistics Bureau, the average wage for all Iowans whose wages are covered by unemployment insurance is $14.58. Incredibly, applying the 100% standard to the county-regional average wage would result in no county exceeding the $14.58 average. That is, applying the IDED-calculated 100% threshold would lower the state average wage even if all jobs paid 100% of the wages.

Although the proposed amendments do not go far enough, they are a step in the right direction.

Iowa will always be a low-wage state as long as we continue to provide incentives to businesses that pay low wages. You cannot raise the average wage with lower than average wage jobs.