On Thursday Governor Terry Branstad signed two of the most mean-spirited bills to come out of the Republican-controlled legislature this year. House File 295 prevents local governments from raising the minimum wage, potentially affecting an estimated 85,000 people working in five Iowa counties. (Lee County supervisors voted this week to raise the minimum wage, following the example set by leaders in Johnson, Linn, Polk, and Wapello.) House File 518 overhauls the workers' compensation system in ways that guarantee fewer Iowans will qualify for benefits, and those who do will receive less money, especially for shoulder injuries.
Amid several false or misleading statements in the news release on the latest bill signings, one true fact emerges: Lieutenant Governor Kim Reynolds enthusiastically endorses these new laws. She will own their every harmful consequence.
BRANSTAD AND REYNOLDS ON LOWERING WAGES FOR THOUSANDS OF IOWANS
From the governor's March 30 press release:
After signing the bill [House File 295] Branstad said, “Different county minimum wages create confusion, especially for cities that are in more than one county. This bill provides uniformity through the state on Iowa’s minimum wage. It does nothing to force businesses to pay employees less than they are currently paying. I want to thank all of those who worked hard to provide local governments and Iowa businesses with predictability.”
“We know most employers in the state are paying well above the minimum wage, but different county minimum wages creates confusion and prevents Iowa from growing,” said Lt. Gov. Kim Reynolds. “Our focus has always been on creating an environment where businesses can succeed and we can attract more good paying jobs. This legislation takes the necessary steps to eliminate the confusion that exists today.”
Yet again, the governor who promised seven years ago to raise family incomes by 25 percent finds a reason to oppose any concrete step toward increasing wages for Iowans on the lower rungs of the ladder.
Supporters of House File 295 never demonstrated that local minimum wages are too confusing for business owners to handle. Few businesses pay every employee exactly the same salary or hourly wage.
Branstad crowed about "predictability" while trying to evade responsibility for the predictable result of his law: thousands of people in Johnson, Linn, and Wapello counties will get a pay cut when their employers reduce their wages from the higher local minimum to the statewide level of $7.25. (About 25,000 people who work in Polk County would have benefited from a new minimum wage of $8.75 starting on April 1.)
The governor noted that House File 295 "does nothing to force businesses to pay employees less than they are currently paying." Some business owners in the Iowa City area have promised to keep paying all of their workers more than $7.25 an hour. But the many corporations and advocacy groups that lobbied for this bill wouldn't have wasted their time if they weren't hoping to pay as little as legally possible to some employees. That this law will take money out of Iowans' pockets is a certainty, not just something "critics say."
The lieutenant governor looked on proudly as Branstad signed the local pre-emption bill. The news release quotes her as asserting, "We know most employers in the state are paying well above the minimum wage, but different county minimum wages creates confusion and prevents Iowa from growing." I have asked the governor's office for any evidence supporting that statement. Why would local wage ordinances cause problems for employers "paying well above the minimum wage"?
Do Branstad and Reynolds believe Iowa is not growing? Johnson County was the first to raise its minimum wage, and the Iowa City metro area has experienced stronger population growth recently than most other Iowa metros that did not raise their minimum wage.
Iowa State University economist Dave Swenson shared this graph, based on the most recent jobs data from the Bureau of Labor Statistics. As you can see, job growth in the Iowa City metro has remained stronger than the statewide average since Johnson County raised its minimum wage.
Studies of nine cities with higher minimum wages have found, "Businesses absorbed the costs through lower turnover, small price increases at restaurants, which have a high concentration of low-wage workers, and higher worker productivity." That research covered ten years of data from San Francisco.
Two years after the city of Santa Fe raised its minimum wage,
the University of New Mexico Bureau of Business and Economic Research found “no discernible impact on employment per firm.” Employment in the city actually went up slightly, and did better when compared with Albuquerque, which didn’t raise its minimum wage.
Iowa's minimum wage has been stuck at $7.25 (the same as the federal level) for the last ten years. Someone working 40 hours per week at that wage earns just $15,080 per year. Thirteen states with higher minimum wages "have added jobs at a faster pace than those that did not." Those numbers don't prove that minimum wage policy caused job creation, but they indicate that higher minimum wages don't stifle economic growth.
BRANSTAD AND REYNOLDS ON NEW BURDENS FOR INJURED IOWA WORKERS
The March 30 news release included these comments on House File 518:
“In the past 10 years, Iowa’s workers’ compensation system has mutated into a system benefiting trial lawyers at the expense of Iowa businesses and Iowa workers,” said Branstad. “Today, that ends by rebalancing the scales to ensure employees are compensated fairly for being injured on the job, while ensuring that abuses are curtailed. This legislation prevents attorneys from taking fees from injured workers when the employer was voluntarily giving benefits, ends the burden on the employer to demonstrate that intoxicated workers incurred injuries as a result of the intoxication, and ends an individual’s ability to receive workers’ compensation while receiving unemployment insurance. I’m pleased to sign this common sense legislation into law.”
Lt. Gov. Reynolds commented, “For too long, Iowa’s workers’ compensation system has been plagued with frivolous lawsuits and abuses that drive up the cost of doing business in Iowa. High costs for workers’ compensation makes Iowa uncompetitive, hurts job growth and Iowa’s economy. I want to thank the business community and the Legislature for sending Gov. Branstad a common sense bill to restore our workers’ compensation laws to what was originally intended – a safety net for injured workers.”
At the signing ceremony (audio here), Branstad said of the workers' compensation overhaul, "This is a bill I've been waiting for for a long time." He went on to repeat some false claims advanced by Republican lawmakers and business lobby groups: "We had a lot of problems and the costs were going up and we’re not competitive with our neighboring states."
Contrary to Reynolds's grammatically-challenged claim that "high costs for workers’ compensation makes Iowa uncompetitive," Iowa’s Economic Development Authority touts low workers’ compensation rates, as Democratic State Representative Bruce Hunter pointed out during the House floor debate.
The Des Moines Register's Kevin Hardy and Brianne Pfannenstiel examined the available data, which don't support assertions by Reynolds and Branstad about widespread abuses or rising costs for employers.
Records from the National Council on Compensation Insurance, which sets workers' compensation insurance premiums for Iowa and many other states, show no large increases in premium costs, claims or medical costs associated with workplace injuries. In fact, Iowa employers saw their workers' compensation premiums decrease 4.7 percent last year. [...]
The numbers of Iowans injured on the job and the number of those cases litigated by state administrative courts have not increased in recent years, state figures show.
Adjusting for wage growth, NCCI data show that the average medical cost of a workers' compensation case has ticked up in recent years from $27,223 per case in 2007 to $31,622 per case in 2014. But that 2014 cost was 2.5 percent less than the $32,443 per case in 2013.
Other inaccuracies in Branstad's statement:
• "This legislation [...] ends the burden on the employer to demonstrate that intoxicated workers incurred injuries as a result of the intoxication"
Republicans including State Representative Peter Cownie, who introduced the workers' compensation bill in the House, have propagated the myth that people can collect benefits for injuries that happened when they were intoxicated. Not true: under current law, workers are not entitled to compensation for injuries that occur while they are drunk or stoned. State Representative Mary Wolfe, a defense attorney by trade, explained the facts during the House floor debate (around the 1:35:45 mark here).
The new law lets employers avoid paying compensation to injured workers if tests indicate any amount of drugs or alcohol--even if the trace levels are due to drinking a beer the night before, smoking a joint weeks earlier, or eating food containing poppy seeds. Former administrative law judge Marlon Mormann handled workers' compensation cases for years and shared with me his assessment of that provision in House File 518 (emphasis added):
Section 1, the intoxication defense is ridiculous. It asks for the mere presence of a drug or alcohol. Thus if someone tests with a detectable level of anything it is now intoxication which caused the accident. This is in no way related to reality. If VP Smith has a lunch meeting and has one lite beer, then incurs an accident on the way back to the office, Smith now is presumed to be intoxicated and the intoxication is responsible for the accident. The presumption is not scientifically defendable. The presence of a chemical in no way proves nor relates to intoxication causing an accident. It should be deleted in its entirety or modified to relate to the amount of drug or alcohol that based on current science would render a person intoxicated. For example, in the case of alcohol testing .08 would create a presumption.
• "ends an individual’s ability to receive workers’ compensation while receiving unemployment insurance"
Some injured workers apply for unemployment as a way to make ends meet while they are waiting for workers' compensation to come through. Iowa already has a mechanism for recovering unemployment benefits paid to people who later qualify for workers' comp. A narrowly-focused bill could have addressed any flaws in that process.
• "ensure[s] employees are compensated fairly for being injured on the job"
As mentioned above, some Iowans will be denied workers' compensation if a blood test reveals any measurable amount of drugs or alcohol.
In addition, Iowans who suffer shoulder injuries will receive an about 68 percent less money under the new law. Cownie was unwilling or unable to reveal the inspiration for those provisions, which appear to be tailor-made for the meatpacking industry. Not coincidentally, the CEO of a major meatpacking company (Eldon Roth of Beef Products Inc) has been the top campaign contributor to Branstad over the past seven years and among the largest donors to Reynolds in 2015 and 2016.
In Mormann's view, the shoulder language will be "a windfall for the employer and extra work for the injured worker," creating "a huge disincentive to prevent shoulder injuries. If a company has a problem with shoulder injuries due to working conditions they now have little incentive to fix the issue."
Mormann explained how other portions of House File 518 would cut benefits for workers (emphasis added):
[Section 9]X is a wrongful taking. It cuts off PPD [permanent partial disability] if claimant had any injury that causes permanent total disability. It is a windfall to other employers who cause an injury where it is not fully paid out at the time of PTD. It makes no sense to end PPD where another injury causes PTD. It is just a way to cut benefits. Public policy should not reward an employer for causing an injury in such an arbitrary way.
Section 10 is much like 9x above. It does not make sense to cut off a PPD benefit where PTD has been awarded. Thus, if VP Smith has a leg amputated and is receiving PPD for the lost leg, then goes to work for a new company and has an injury causing PTD, the leg PPD stops. A windfall for the first employer and poor public policy for Iowa. This is just stupid. I can kind of see this if the claimant worked for the same employer for both injuries but not where different employers cause the injuries.
Section 11 causes forfeiture of PTD benefits if a claimant earns about $430 in a week. This makes no sense to me at all. The statewide average wage is about $860. PTD benefits can go up to about $1,600. This would cut off a $1,600 a week payment completely if someone earns $430 per week. This is not good public policy. It discourages PTD claimant's from trying to go back to work. It should be an offset of 2/3 for every dollar earned against the PTD payment so as to encourage workers to go back to work. Not a cut off of benefits completely for earning $430. It is the worst provision in this bill. It is a windfall for business and poor public policy for Iowa. We should encourage people to get off Comp by finding other jobs or starting businesses not punish them for earning $430 a week.
The Iowa Policy Project denounced Branstad's actions as "a triumph of ideology, spin, and brute political power."
The Governor ignored solid economic and demographic analysis to slash wages for thousands of Iowans--potentially for more than 85,000 Iowa workers through 2019. He gave cover to disingenuous and sparsely defended arguments made in the House and Senate to justify attacks on workers' rights that were hatched behind closed doors.
The lieutenant governor was right there with him and shares responsibility for every low-wage worker who will struggle more to pay the bills.
Branstad made clear at the bill signing that his views on workers' compensation were shaped entirely by complaints he has heard from employers over the years. Reynolds likewise appears to have little understanding of the issue beyond business lobbyist talking points, and no empathy for people who will be shut out of the system or receive far lower benefits after disabling injuries.
The voters of Iowa should hold her accountable in 2018.
UPDATE: Hours after Cownie stood directly behind Branstad at the workers' compensation bill signing, a source saw him schmoozing with patrons at Jesse's Embers steakhouse in Des Moines. How better to celebrate screwing over future Iowans who hurt their shoulders at beef processing plants?
Cownie is rumored to be on the short list for lieutenant governor under Reynolds, once Branstad leaves for China.