Dubuque chamber voices concerns over proposed minimum wage hike

The Dubuque Area Chamber of Commerce recently announced it has “significant concerns” about a proposal to increase the federal minimum wage to $15 per hour.

The local economic development organization stressed that some local businesses in its membership are struggling to survive in an economy that has been upended by the COVID-19 pandemic.

“This is what we’re hearing from small restaurants, retail, mom-and-pops (and) seasonal especially,” said chamber CEO Molly Grover. “Small businesses are suffering significantly in this economic and health crisis.”

Chamber officials indicated they were open to discussing increases after the economy recovers.

“While we do believe there is room for a nuanced conversation about adjustments in the minimum wage, we do not believe now is the time,” a press release stated.

President Joe Biden and congressional Democrats have proposed raising the hourly minimum wage from $7.25 to $15 by 2025 as part of the next round of COVID-19 pandemic relief. The proposal also would phase out the credit that allows employees receiving tips, such as servers and bartenders, to earn a lower hourly wage.

While Biden has expressed some willingness to compromise on including the wage increase in his relief proposal, congressional Democrats have pushed back against that concession.

Iowa Republicans U.S. Sen. Joni Ernst and U.S. Rep. Ashley Hinson are among those who have been vocally opposed to the proposal.

“I’ve heard from countless Iowans about how this would destroy livelihoods in our rural communities and our rural main streets,” Hinson said while touring the district last week.

But Democrats such as U.S. Reps. Ron Kind and Mark Pocan, both of Wisconsin, and Cheri Bustos, of Illinois, have pushed for such an increase for years.

Iowa’s minimum wage currently matches the federal rate, but a recent report from Gov. Kim Reynolds’ Economic Recovery Board, which outlines the next steps for pandemic recovery, indicates that the average renter earning $13.43 per hour would need the equivalent of 1.2 full-time jobs to afford the cost of an average apartment.

“To afford the current level of rent and utilities — without paying more than 30% of income on housing — a household must earn $2,679 monthly, or $32,151 annually,” the report reads.

The federal Congressional Budget Office found that 7 million workers would see big benefits from the minimum wage increase but also that more than 1 million workers likely would lose their jobs.

Eric Munshower, head of the economics department at University of Dubuque, said that projection aligns with existing research into minimum wage increases.

“The overwhelming majority of academic studies shows that increasing minimum wage causes unemployment, especially among the least skilled and the very young,” he said, pointing to studies from Seattle after the minimum wage was raised there to $15 per hour. “What happened was that life improved for the people who had jobs and kept working the same hours. But the average worker saw a significant reduction in hours.”

Brian Peckham, an economics professor at University of Wisconsin-Platteville, said such unbalanced impacts are typical with any economic reform.

“There has never been any type of government program — state, federal, what-have-you — that hasn’t had winners and losers,” he said. “We just have to find some way to compensate the losers, so they don’t find themselves in dire financial straits.”

Peckham also pointed out that conditions vary drastically by location, so making a guess as to the proposal’s impact on the tri-state area specifically would be difficult.

Munshower said phasing in a wage increase at least should soften any blow to employers and allow for reassessment of its impact. He also said the move could benefit one group of people in particular.

”The interesting question is going to be, does the higher minimum wage bring in more of the young, non-employed workers?” he said. “For the last 15 years, we’re just learning a lot of young workers — usually male, usually around 20 years old, tend to be high school graduates or dropouts — they’re just not showing up on our payroll data.”

A possible preview of how a minimum wage increase might play out exists in Jo Daviess County, which is in the middle of Illinois’ phased-in minimum wage increase to $15 per hour.

“I have not heard anything from business owners about it being detrimental to their business moving forward,” said Galena Area Chamber of Commerce Director Angela Devere. “There’s a lot of people out there in the workforce who could benefit from having the $15.”

In particular, she said the city’s lack of affordable housing has made it challenging to keep shops and restaurants open downtown.

“For the workforce we do have, we don’t have the housing to support them. And what we do have is not affordable,” Devere said. “I’m hoping with the increase in wages, some of our housing comes within their reach.”