On Sunday, Iowa becomes the 29th state with a state minimum wage higher than the federal level.

“This
increase is long overdue for low-income families in Iowa,” said David
Osterberg, executive director of the nonpartisan Iowa Policy Project.
“The wage has remained at $5.15 for almost 10 years — and remains there
at the federal level.

“Iowa lawmakers and the governor have
given low-wage workers a chance to make ends meet. As our research has
shown, Iowa’s new minimum wage will ultimately help 257,000 workers and
their families build better lives.”

The law passed this year in
the Legislature and signed by Gov. Chet Culver increases the wage by
$2.10 in two steps, to $6.20 on Sunday, and to $7.25 on Jan. 1, 2008.

“We
kept hearing that Iowa should wait for Congress to act,” Osterberg
said. “Well, we’re still waiting for Congress and we still don’t know
when the federal law will change.”
 
Iowa joins Illinois, Wisconsin, Minnesota and Missouri among states with a minimum wage above the federal $5.15.

IPP Research Associate Elaine Ditsler noted other state policies “could help families cope with higher costs of living.”

“First among them is an expansion of the state’s Earned Income Tax Credit,” she said.

In
Iowa, 168,000 households benefit from the federal Earned Income Tax
Credit (EITC), but almost half do not claim the state credit, which is
6.5 percent of the federal. The federal credit, unlike the state
credit, is refundable and provides the full benefit of the credit to
taxpayers who qualify. Filers receive a check for the balance if their
tax obligation is not as big as the federal credit, but not for the
state credit.

“Making the state credit refundable would reach
more families,” Ditsler said, noting there are proposals in the House
and Senate for an expanded and refundable state EITC.

The Iowa Policy Project (IPP) is a nonpartisan, nonprofit research and policy analysis organization based in Mount Vernon.