Political Action Update

April 11, 2006

IPERS Contribution Bill Passes Legislature

 Workers Dodge a Bullet—Bill Retains Current 60-40 Contribution Formula 

A bright spot for public sector employees in this year’s legislative session occurred on April 4 when the Iowa House, on a 97 - 0 vote, sent HF 729, the bill increasing IPERS employee and employer contributions, to Governor Vilsack.  The bill had been passed by the Iowa Senate during the 2005 session.

The need for an increase in the IPERS  contribution rate has been recognized for some time.  The latest IPERS Financial Report, in 2005, put unfunded liabilities in the retirement system at $2.289 billion.  The unfunded liabilities are the result of several factors: an aging membership that is living longer; 3 years of low investment returns; previously enacted benefit enhancements; and a contribution rate that had not increased since 1979.  The unfunded liability in IPERS, while serious, is considered manageable if steps, such as increased contribution rates, are taken in a timely manner. 

The bill increases the contribution rate from the current 9.45 percent to 11.45 percent over four years.  IPERS employer contributions are currently 5.75 percent of wages paid and employee contributions are 3.70 percent of wages earned.  Those contributions will increase to 6.95 percent (employer) and 4.50 percent (employee) when the bill is fully implemented in 2010.  Contributions to IPERS at that time will still be below the current U.S. median contribution rates for public retirement plans of 7.1 percent for employers and 5.0 percent for employees.

While HF-729 passed unanimously, it was not without significant controversy.  A major point of contention during deliberations on the IPERS bill was the Republican push to change the current contribution formula (60 percent employer—40 percent employee) to a fifty-fifty formula.  Democrats opposed this change and successfully retained the current 60 percent employer/40 percent employee formula in the bill.

Also included in the final bill is some troubling language calling for a “pension flexibility review” to identify ways that defined contribution plans might be offered instead of IPERS to some employees in the  future.  For several years Republicans have pushed for the inclusion of a “defined contribution” pension option as a choice for IPERS-eligible employees.  A bill offering that option has been introduced.

This push is an obvious component of the nation-wide effort by the business community to dismantle traditional defined-benefit pensions and replace them with defined contribution plans or, to replace them with nothing at all.  Defined contribution retirement plans, which resemble 401ks, provide no income guarantee and are subject to the ups and downs of the market.  The fight for decent pensions continues as battles are increasingly moving from the private sector into the public sector.

Governor Vilsack is expected to sign HF 729.

Mourn for the Dead < Fight for the Living

OBSERVE WORKERS MEMORIAL DAY. APRIL 28 

Every day in the United States, 15 workers die from occupational injuries.  Every year, nearly 6,000 workers are killed on the job.  Most of these deaths go largely unnoticed but for the minimal coverage provided in the local press.

  From: Death on the Job—The Toll of Neglect, 14th Edition, April 2005

Everything Is About Elections

Minimum Wage Passes in Michigan

On March 28 Michigan became the latest state to increase its minimum wage.  The new law will increase the Michigan minimum wage to $6.95 in October, with an increase to $7.15 set for next July, followed by an increase to $7.40 in July of 2008.

The increase, which was signed by Democratic Governor Jennifer Granholm, was passed by the Republican-controlled legislature after backers of the minimum wage increase had organized an effort to put the issue, which has consistently polled over 80 percent in Michigan, on the ballot as a voter initiative this November.  Fearing a huge Democratic turnout that would defeat Republican candidates in November, the Republicans, after years of opposition, passed the minimum wage increase in order to avoid having the issue on the ballot.

Arkansas Politicians Scramble to Avoid Putting Minimum Wage Increase on the Ballot

Give Arkansas a Raise, a coalition of faith, labor and community groups, has been collecting signatures in order to place a minimum wage increase on the ballot this November in the form of an amendment to the state constitution.  The amendment would raise the minimum wage and would also index the minimum wage to inflation.

Business groups, including the Chamber of Commerce, are now scrambling to agree to a minimum wage increase that could be adopted in a special legislative session to be called by the governor.  Like their counterparts in Michigan, they are afraid that voters who turn out in November to increase the minimum wage are likely to defeat anti-increase candidates.

Arkansas has a Democratic legislature and a Republican governor.

Companies Could be Paying More

Workers at American companies received a smaller share of the economic pie than at any time since the Great Depression according to a Bloomberg.com report.  “Pay is rising at a slower rate than in any similar expansion since the end of WWII.  With output per hour increasing at a 3.6 percent annual rate over the past four years, companies have room to boost pay without raising prices because productivity gains reduce production costs.  But companies have little incentive to do so,” Bloomberg says, “with ready sources of low-cost labor overseas and declining union membership at home.”

$10,000,000.00 Retirement For Maytag CEO

The Des Moines Register reported on April 4 that Maytag CEO Ralph Hake, who has led the company since 2001, had announced his plans to retire.  Hake’s retirement package, totaling $10 million, is the richest provided to the Maytag executives.  The Register reports that six other executives are eligible to split up another $16.5 million on their departure from the company.

During Hake’s reign, Maytag stock fell by approximately one-third and over 1,600 Newton plant employees and Newton 1,000 management employees were laid-off.

As employees are laid-off while corporations downsize and outsource, CEO pay and perks just keep increasing.  For more information on CEO pay visit the AFL-CIO website 2006 Executive Paywatch at: www.aflcio.org/paywatch

International Union Group Critical of Anti-Worker Policies in the United States

A report by the International Confederation of Free Trade Unions (ICFTU) harshly criticizes President Bush for serious violations of workers’ fundamental rights in the United States.  The report also disparages the National Labor Relations Act (NLRA) for not providing collective bargaining rights for agricultural workers, domestic workers, supervisors, independent contractors or government employees.

The ICFTU report points to breaches of international standards concerning workers’ rights to collective bargaining, freedom of association and use of child labor in the United States, saying there is a clear trend towards lower standards under the Bush administration.

The report not only criticizes the NLRA’s lack of coverage for many workers but also cites its weak protections against anti-union discrimination .  Consequently, the report says, employers are taking advantage of the weak law by running vicious anti-union campaigns, in which 82 percent of employers hire union-busting consultants to stop workers from forming unions.

A copy of the report can be downloaded at http://privatenet.aflcio.org.

Leaker-in-Chief

It now appears that President George W. Bush and Vice-President Dick Cheney did have a direct involvement in the leaking of previously classified information in an attempt to discredit a critic of the administration’s rationale for war.

According to David Sanger and David Johnston of the New York Times, "A senior administration official confirmed for the first time on Sunday (April 9, 2006) that President Bush had ordered the declassification of parts of a prewar intelligence report on Iraq in an effort to rebut critics who said the administration had exaggerated the nuclear threat posed by Saddam Hussein."

Earlier in the CIA leak controversy President Bush told Americans, "I've constantly expressed my displeasure with leaks, particularly leaks of classified information. . . . If there's a leak out of the administration, I want to know who it is.”

Bankrupt Employer Wage Recovery Bill Sent to Governor Vilsack

Employees who are owed wages from a bankrupt employer received some help on March 29 when the Iowa Senate sent HF 2507 to Governor Vilsack.  The bill removes the archaic and ridiculously low $100 cap from the Iowa law that grants a preferred status to workers with wages owed when the assets of a company are seized or placed in receivership.  The new law will make it more feasible for an employee to take legal action to recover unpaid wages.

Quotable…

      “If there is no struggle, there is no progress.  Those who profess to favor freedom, and yet depreciate agitation, want crops without plowing the ground.  They want rain without thunder and lightning.  They want the ocean without the awful roar of its many waters.  This struggle may be a moral one; or it may be a physical one; or it may be both moral and physical; but it must be a struggle.  Power concedes nothing without demand.  It never did and never will.”

… Frederick Douglass

A Tax Credit/Cut/Exemption Sampler

(a partial listing of tax reductions proposed in Iowa this session)

      ...beginning farmer tax credit, charitable bingo operations sales tax exemption, child care tax credits, concrete facilities credit, cultural and entertainment district tax credit, dog breeder exemptions, energy efficient appliances sales tax exemption, environmental test lab services sales tax exemption, ethanol tax credits, historic preservation tax credit, horse sales tax exemption, income tax credit for certain teacher expenses, income tax exemptions for border cities residents, individual income tax deduction for dentists who receive state medical assistance reimbursement less than their normal fee (this is really true), insurance industry new jobs tax credit, math and science teacher practical experience incentive, media production tax exemption, multi-fuel pellet stoves sales tax exemption, paint and refinishing supplies sales tax exemption, pollution-control and recycling tax credit, preschool credit, sales tax exemption for coins, sales tax exemption for substance abuse facilities, sales tax exemption for solar energy equipment, sales tax holidays for purchases of computers, sales tax TIF, Social Security/pension tax cut, software and technology-related tax credit, soy transformer fluid credit, targeted jobs tax withholding pilot program, telecommunications central office sales tax credit, venture capital investment tax credit, volunteer firefighter tax credit.

Democratic Candidate for Governor, Mike Blouin and Iowa Federation of Labor, AFL-CIO Executive Vice-President Jan Laue.

Blouin Visits Federation Office in Des Moines

Democrat Mike Blouin, endorsed candidate for Governor stopped in at the Iowa Federation of Labor, IFL-CIO office on April 27 for a question and answer session with Federation officers about his campaign.  A summary of the discussion will be printed in an upcoming Iowa AFL-CIO News.

Ask a mayor, county supervisor, or other local elected official to sign this proclamation and deliver it to a local newspaper for publication.

Proclamation 

 I,__________________ , of ___________________ do hereby proclaim April 28 as Workers Memorial Day in recognition of workers killed, injured and disabled on the job.

Signed:_______________________________