February 3, 2017
Iowa lawmakers and the outgoing Governor have in recent weeks announced their intent to pursue dramatic changes to Iowa’s public sector collective bargaining law (Chapter 20 of the Iowa Code). While legislative leaders have yet to reveal a detailed proposal in public, they have signaled interest in a number of specific changes. Many of the changes under discussion appear to be similar to provisions of anti-union collective bargaining bills enacted in Wisconsin and Ohio in 2011, and to HF 525, an Iowa bill Governor Branstad sponsored in 2011.
The changes to collective bargaining under consideration could have devastating consequences for the people of Iowa. Lawmakers and the public should be aware of serious pitfalls associated with sweeping changes to this long-standing law, which carry implications for every school district, city, county, and state agency in Iowa. Of primary concern to all Iowans, economic impacts and ripple effects of proposed changes are likely to exacerbate existing trends — low and stagnating wages, growing uncertainty about access to affordable health care, and increasing income inequality — that are already accelerating downward mobility for many Iowa households. And these effects are likely to disproportionately harm rural communities, low-income workers, and to threaten the quality of the health care, public safety, and public education systems upon which all Iowans depend.
To remedy the absence of solid information in the current public debate, below we offer a preliminary assessment of the significant costs and consequences for Iowans of some of the primary changes that appear to be under consideration. While few of these costs and consequences have been exposed and none have yet been fully considered by the legislature, many of them are measurable or predictable based on Iowa’s past experience and the experience of other states.
Public employees are a significant share of the Iowa workforce and live and work in every Iowa county, from the most urban to the most rural. Of the nearly 1.6 million nonfarm payroll jobs in Iowa, about 1 in 7 jobs — 238,500 — are in state and local government. These workers are important to the state’s economy, as taxpayers supporting local schools and state and local services, and as consumers supporting local businesses and other private sector jobs.
About half of Iowa’s public-sector workers — over 119,000 employees — are in jobs covered by 1,203 different contracts negotiated under Iowa’s current collective bargaining law. These employees, all of whom would be directly affected by any changes to the law, include:
• 34,400 state employees
• 11,595 county employees
• 11,562 city employees
• 56,402 local school employees
• 2,948 area education agency employees
• 2,114 community college employees
Potential impact of changes in a law directly affecting the working conditions of such a large number of Iowans, who are engaged in every aspect of essential public service from the local to the state level, will be significant and widespread. From snowplow drivers to nurses, teachers to custodians, police, dispatchers, fire fighters, county clerks, librarians, social workers, corrections officers, paraeducators, and many other public employees in communities across Iowa could see changes in their pay, benefits and working conditions. Such changes would, in turn, have consequences for local economies, public services, and Iowa’s labor market as a whole.
Under Iowa’s current collective bargaining law, public employers and employees meet to discuss and seek agreement about a specified range of workplace subjects that affect workers‘ job quality and, by extension, the public services they provide. Proposals to further limit the number of topics public employers and employees may discuss — on the model of changes enacted in Wisconsin and previously proposed by Governor Branstad in Iowa in 2011 — are designed to weaken the collective bargaining system and restrict the ability of employees to advocate for job quality or improved public service.
New limitations on collective bargaining predictably opens the door to erosion of wages, benefits, and working conditions in public employment, and corresponding spillover effects of downward pressure on wages and working conditions in the private sector. Such labor market effects have become evident in Wisconsin five years after dramatic collective bargaining changes were enacted, and lawmakers in Iowa should be wary of the statewide economic impact likely to accompany any such changes here. Since 2011, Wisconsin has fallen to 40th of 50 states in job growth, and 42nd in wage growth.
Iowa is already a relatively low-wage state in a low-wage economy. The median hourly wage in Iowa, adjusted for inflation, has risen just 1 percent since 1979. It now stands at just $16.04, compared to $17.80 for the U.S. as a whole. State leaders have frequently acknowledged that these conditions pose significant challenges to attracting and retaining young college graduates, including professionals in health care, education, and technology sectors. Surveys summarized in the state’s 2008 “Generation Iowa Commission” report clearly identified the primary problem as a lack of good jobs: “Starting salary is almost unanimously the #1 concern of young Iowans who do not already have a job here and have the option of leaving the state… It is the assertion of the Generation Iowa Commission that enacting policies to address the wage gap should be of highest priority.”
Following trends in much of the country, wages in Iowa have stagnated across recent decades, even as the productivity and educational attainment of Iowa workers have improved dramatically. Underlying the weakness of wages and earnings — in Iowa and across the nation — is a dramatic decline in the quality of jobs. A nasty combination of recession, inflation, union decline, and deindustrialization through the 1970s and early 1980s undercut wages for those at the median wage and below. This has been accompanied by a steady erosion of workplace benefits, so that workers’ real compensation has slipped even further.
Any weakening of Iowa’s collective bargaining system likewise threatens to worsen the already alarming degree of income inequality in the state. The richest 1 percent of Iowans have an average income of $725,000, 14 times the average income of the remaining 99 percent — $51,250. Economists have long noted a close relationship between collective bargaining, workers’ ability to garner incomes that keep pace with inflation and productivity gains, and reductions in income inequality. Nationally, the erosion of collective bargaining is arguably the “single largest factor suppressing wage growth for middle wage workers” whose wages have now stagnated for over a generation. For both union and nonunion workers, the decline of collective bargaining can explain one-third of the increase in wage inequality among men since 1979, and one-fifth of the increase among women. Implementing state policies that erode public sector bargaining will only serve to widen the already stark gap between haves and have-nots in Iowa’s economy.
Any decline in the number or quality of public sector jobs will have a disproportionate effect on Iowa’s rural communities because, as the USDA notes, the public sector is a “major source of earned income in rural areas” that tend to attract far fewer of the financial, professional, or information service activities concentrated in urban areas. Eroding the quality of public sector jobs in Iowa will further exacerbate recent effects of unprecedented declining public-sector employment levels following the last recession, which USDA data suggests are already causing negative effects in rural counties, along with negative multiplier effects on private-sector employment.
Iowa’s labor market challenges are particularly acute in fields like education and health care. For example, Iowa is dead last — 50th among all states — in average annual pay for registered nurses,]12] and 54 Iowa counties are now fully or partially designated as primary care Health Provider Shortage Areas based on numbers of physicians per capita. Many Iowa school districts are already reporting difficulty in recruiting teachers, and a 16 percent decline in Iowa graduates obtaining degrees in education suggests more intense shortages loom on the horizon.
Five years after the implementation of Act 10 in Wisconsin, surveys and interviews with school district administrators and employees alike document harmful effects on public education. Having lost the ability to negotiate over health insurance and other working conditions, 75 percent of Wisconsin school districts report losing teachers more often because they cannot offer competitive salary or benefits, with some districts experiencing 25 percent annual staff turnover rates. The elimination of stable bargaining relationships, combined with steep declines in school funding, have resulted in acute teacher shortages, especially in STEM areas and especially in rural districts. For example, 54 percent of Wisconsin districts reported an extreme shortage of math teachers in the 2015-16 school year. Related directly to collective bargaining changes enacted through Act 10, Wisconsin has seen the steepest declines in school employee benefits in the nation, contributing to teacher shortages that have in turn led districts to report unavoidable lowering of educational standards.
Public employment and collective bargaining have been major factors in reducing persistent wage disparities between men and women. Collective bargaining changes designed to erode the quality of public sector jobs will disproportionately affect women, who make up 61 percent of the public sector workforce in Iowa. Teachers, predominantly women, disadvantaged by widespread wage discrimination in public schools, were a major force advocating for the right to bargain collectively in the public sector in the early 1970s. The collective bargaining law passed in 1974 has no doubt been a factor in reducing the overall disparity between men’s and women’s wages in Iowa in the decades since. The median wage for women in 1980 was just 60 percent of the median wage for men; by 2015 the ratio had risen to 84 percent.
Because insurance is a necessity for accessing health care and a central component of economic security for most working Iowans, any changes in the means by which over 100,000 Iowa households access health care should be considered very carefully. Under Iowa’s existing law, public employees have the right to discuss insurance issues with their employers. Discussions between public employees and employers have resulted in hundreds of agreements about insurance that take into consideration cost, efficiency and unique needs and circumstances of each city, county or school district around the state.
Governor Branstad has in the past decade advocated for several types of significant change to health insurance coverage for public employees. Most recently, in his 2017 Condition of the State address, Branstad proposed that in the future, all public employees in Iowa should be limited to seeking insurance plans offered through a statewide pool, though no such pool currently exists, and no specific proposal on how such a pool would be structured has been presented. Previously, in a 2011 bill proposing changes to Iowa’s collective bargaining law, Branstad proposed removing insurance from the list of topics that public employers must discuss with public employees. In the same bill, he also proposed that all public employees be required to pay a minimum of 30 percent of their health insurance premium costs.
At present, employee insurance premium payments and plan designs vary widely throughout the state based on local conditions, local bargaining history, occupational or regional peculiarities (including local differences in available health care provider options), and other factors reflected across and within individual contracts. Over four decades and in thousands of separate rounds of negotiations, public employers have reached agreement with employees on health benefit levels that are often customized to their mutual benefit.
Under current Iowa law, local governments are free to negotiate benefit packages that can serve as retention and recruitment tools. Offering a total compensation package that has lower pay but better benefits is in some cases attractive to employers and employees alike, since there usually are no payroll or income taxes on insurance benefits. An employer may also recognize a benefit in presenting a more attractive contract package to prospective employees, while also saving state and local taxpayers money.
Given the reality and complexity of these issues, it is clear that a sudden shift to a one-size-fits-all mandate on plan designs and premium payments would have wildly disparate effects on workers and employers alike.
Proposals on the scale of those floated by the Governor deserve thorough examination and study. Indeed, the scope of analysis required by such a massive change in a complex system is not possible within the timetable of a 110-day legislative session. So far, the Governor has offered no rationale for the removal of health insurance from the collective bargaining process, no details about the hypothetical statewide insurance pool that he has proposed, nor even proposed a potential process for developing such a system. Unanswered questions about such a potentially far-reaching package of changes include:
• How would changes affect health care access and cost for thousands of affected Iowa families, and how would such effects differ across the state?
• How much would changes cut into employees’ net compensation?
• How would changes affect employers’ ability to retain or recruit employees?
Were the Governor to resurrect his 2011 insurance proposal as part of a bill to amend public sector bargaining, a mandate that all state and local government employees pay at least 30 percent of the premium costs of their insurance plans would also have a significant impact on some public employees and little impact on others.
While it would require extensive study to determine the comprehensive impact of a blanket mandate that all employees pay 30 percent of premium costs, what is clear is that such a mandate would have wildly disparate impacts, and would in many cases have the “regressive” impact of affecting the lowest-paid public employees the most. Some local government employees may already be paying 30 percent of the cost of their family health insurance premiums. In contrast, many state employees currently pay only 1 percent of the premium for a single plan. Suddenly requiring a newly hired Clerk, whose wages start at $11.86 an hour under the state’s current contract with AFSCME, to pay 30 percent of her health insurance premium would be the equivalent of a $2.40/hour pay cut, effectively reducing the Clerk’s annual take-home pay by 20 percent. The impact on higher paid employees would be less. By contrast, for a state employee making Governor Branstad’s $130,000 salary, imposing the same immediate premium increase would still be equivalent to a $2.40/hour pay cut, but would amount to a 3.8 percent annual reduction in take-home pay.
There is also an inherent unfairness in forcing differently situated employees and employers into a standard system that allows no accommodation for local circumstances or accumulated history—factors over which current employees and employers often have little control. For example, those employees working under contracts where in past rounds of negotiations health insurance premium payments were limited in order to offset lower wages, might face devastating drops in household income should they suddenly be forced into a two or three-fold increase in insurance payments. By the same token, some employers might see little effect from having their ability to offer attractive benefit packages revoked, while others might face an exodus of employees for whom stable benefits are a primary attraction of lower-paid public employment, particularly in rural areas or in hard-to-fill occupations.
Finally, removing health insurance as a subject of bargaining promises to widen the existing public-private sector wage gap. Recent research has shown that workers of similar age, gender and education level already earn more in total compensation (wages and benefits) in private sector jobs than in public sector jobs in Iowa. For men, the compensation penalty for public sector work was 8 percent, while for women it was nearly 11 percent. Placing strict statutory limits on fringe benefits for public sector workers will only widen that disparity, while revoking the ability of employers and employees to negotiate benefits that might off-set it.
Currently, Chapter 20 allows any group of public employees to request that the Public Employment Relations Board (PERB) conduct an election to give them a chance to form a union if they don’t have one (certification) or to remove an existing union if they no longer want one (decertification). PERB’s obligation to conduct such elections must be triggered by significant interest—from at least 30 percent of eligible workers in a given group — in having an election. Legislators are reportedly considering a proposal, similar to provisions of Wisconsin’s Act 10, to require annual elections to take place in every bargaining unit, even if no one has requested such an election. Administering such elections requires a substantial amount of time and effort from all parties involved, including PERB, unions, and local public employers.
Results to date from Wisconsin suggest that required “no interest” elections are largely a bureaucratic exercise that serve no clear public purpose, yet do expend public resources. In 2016, Wisconsin’s state labor board conducted required recertification elections in two “batches” of about 100 elections involving city and county bargaining units in April, and approximately 300 bargaining units of school district employees in November. Workers voted to retain their existing union in every single election in both batches. Such stunningly consistent results suggest that elections required by statute (rather than triggered by actual worker interest) generally result in no outcome other than imposing new burdens on existing unions. If similar changes were made to Iowa law, PERB would be required to conduct over 1,200 “no interest” elections every year. Likewise, employers (state, city, county, and school districts) would need to devote clerical or human resources staff time to preparing employee mailing lists and administering more than 1,200 separate elections each year. It is difficult to see how legislators might justify costs to taxpayers of forcing state and local government units to go through the motions of conducting such a high number of elections, when Wisconsin’s track record suggests they would likely yield no change in workers’ representational status.
Under current law, public employers and employees in Iowa may negotiate systems whereby individual employees can request to pay their union dues via automatic deduction from their paychecks. Such elective payroll deductions are similar to many others employers may offer and employees may request for other purposes—to make charitable contributions or insurance payments, for example.
Banning payment of union dues via payroll deduction was part of Act 10 in Wisconsin, and some legislatures in other states have attempted to pass similar legislation. Such proposals have frequently sparked litigation because barring employees from using payroll deduction to make voluntary payments to one type of nonprofit organization (labor organizations) raises questions of equity with other nonprofits (including charitable federations such as United Way or Iowa Shares) to which employees can also currently contribute via payroll deduction. In other cases, legislation designed to bar employees from authorizing payroll deduction for union dues has intentionally or unintentionally expanded to encompass broader categories of payroll deduction systems that employees, employers, and third parties all find highly beneficial and convenient. For example, a Kansas proposal to prevent employees from paying union dues via payroll deduction caused great concerns for United Way chapters when the concept extended to a potential ban on all forms of voluntary deductions. The potential for broader unintended consequences and possible litigation exists should Iowa’s legislature attempt to single out union-related deductions for such a ban.
Iowa’s collective bargaining law has been amended only occasionally (and never significantly) in over four decades, and the absence of major changes reflects a desire for stability in the employment relationship that has held through legislatures and governors of both parties. Abrupt changes to the law governing this relationship invite responses in kind down the road, which can only undermine the security of a public-sector worker and the public services they provide, as well as harm recruitment of appropriate personnel for public-sector jobs.
Among the most significant, though difficult to measure, long-term effects of upsetting the law’s current balance between employee and employer rights is a loss of accountability in government services. Erosion of collective bargaining rights threatens the critical role that front-line public employees — when confident of their ability to speak freely with management about concerns and to advocate for the Iowans they serve— have historically served in drawing attention to problems, proposing improvements, or when necessary reporting mismanagement or abuse.
The general assembly declares that it is the public policy of the state to promote harmonious and cooperative relationships between government and its employees by permitting public employees to organize and bargain collectively; to protect the citizens of the state by assuring effective and orderly operations of government in providing for their health, safety, and welfare; to prohibit and prevent all strikes by public employees; and to protect the rights of public employees to join or refuse to join, and to participate in or refuse to participate in, employee organizations.
— Public Employment Relations Act, Code of Iowa, Chapter 20.1.1
Iowa’s long-standing public sector collective bargaining law places a high value on traditions of cooperation, protection of citizens’ interest in the effective and orderly operations of government, and balancing prevention of public strikes with protection of employee rights. By any objective standard, Iowa’s uniquely designed public sector collective bargaining system appears to be achieving the goals of balance, fair play, and stability sought in the 1974 law, which was passed by a Republican majority legislature and signed into law by Republican Gov. Robert D. Ray.
The long list of predictable negative consequences of weakening this law begs the question: what problems do state leaders aim to remedy by proposing dramatic changes? Beyond vague complaints that some aspect of the system may be “outdated,” state leaders proposing sweeping changes have yet to specify what is to be gained by undermining or eliminating a carefully crafted law that has and continues to achieve its stated public policy goals.
Under the current law:
• Ninety-eight percent of public-sector contracts negotiated in Iowa each year are settled voluntarily.  This is what the law is designed to encourage.
• The remaining 2 percent are resolved by a neutral arbitrator, who is jointly selected by the employer and employees.  Under Iowa’s law, arbitrators listen to presentations by the two parties and are then required to choose the proposal that is most “reasonable” after considering four factors spelled out in the law: (1) comparability — how do employees’ wages, benefits and working conditions compare to other similar employees? (2) bargaining history — what has happened in prior negotiations? (3) the ability of the public employer to pay — can the public employer afford the cost of proposals? and (4) the public interest — what impact would the proposed change have on citizens in the community? As the law’s preamble states, these constraints are designed to protect and equally balance interests of Iowa employers, employees, and taxpayers.
• Not only do very few contracts require arbitration under this system, but even mediation is used less now than when Chapter 20 was passed. In 1975-76, 13.4 percent of contracts were resolved without a mediator and mediation helped to resolve another 63.9 percent. In 2015-16, by contrast — with 40 years of Chapter 20 experience behind all parties —mediators assisted in 32.2 percent of open contracts and 65.7 percent were resolved on their own. 
• No public sector strikes have occurred in Iowa since passage of the law.
Chapter 20 as it stands is designed to promote balance and stability in employment relationships and enhance the ability of state and local governments to provide reliable and efficient public services. It is also designed to encourage public employers and employees to seek a joint stake in promoting fair employment practices, and to seek agreement on ways to make more of Iowa’s jobs good jobs. Overreach by legislators — some driven by what can be described as simply anti-union sentiments or perhaps template legislation offered by anti-labor organizations such as the American Legislative Exchange Council  — threatens to disturb or even destroy this balance.
Because dramatic erosion of collective bargaining laws poses serious, statewide consequences —
for Iowa’s economy, education and public service systems, and labor market — the public has a strong interest in requiring that legislators fully consider the impact of their decisions before acting hastily. Changes to any law affecting all units of local government and hundreds of thousands of Iowans should in any case only be considered after extensive study, public involvement, and public scrutiny. Instead, as of this writing there is no proposal for the public to evaluate, yet a bill could be introduced in one house and be rushed through both chambers for the Governor's signature in less than one week.
To date, proposals for major changes to Chapter 20 have not been linked to any clearly identified public policy goals, nor were such changes proposed for public consideration during 2016 state legislative elections. Unresolved questions about implementation of proposed changes are numerous. Meanwhile, predicted costs and negative consequences for thousands of Iowa households, rural communities, schools, public services, and the state’s economy as a whole, are substantial. The most predictable of these long-term consequences and their ripple effects — accelerating declines in job quality, downward pressure on Iowans’ wages, and increasing income inequality across the state — are of concern to all Iowans, and deserve the fullest consideration from state leaders.
 Collective bargaining changes enacted via Wisconsin’s Act 10 remain in effect, while Ohio’s collective bargaining changes were signed into law only to be repealed months later through a voter referendum. Research has suggested close similarities between aspects of these and similar bills to policy proposals and in some cases template legislation developed by national organizations such as the American Legislative Exchange Council (ALEC) and Americans for Prosperity (AFP). Center for Media and Democracy, “Koch-funded Mackinac Center Brings Wisconsin Act 10 Provisions to ALEC,” May 1, 2012, http://www.prwatch.org/news/2012/05/11490/koch-funded-mackinac-center-brings-wisconsin-act-10-provisions-alec; Center for Media and Democracy, “ALEC Exposed Wisconsin: The Hijacking of a State,” 2012 (p. 27).
 Data provided by Iowa Public Employment Relations Board, January 26, 2017. Numbers are based on the number of employees provided by employers when they submit collective bargaining agreements and the employee unions/associations when filing with PERB for impasse services.
 U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages.
 U.S. Bureau of Labor Statistics, Current Population Survey, 2016.
 Generation Iowa Commission, “Generation Iowa Recommendations: Road Map to Recruit and Retain Young People to Iowa,” 2008.
 Colin Gordon, “Wages,” The State of Working Iowa, https://stateofworkingiowa.org/wages-2/
 Estelle Sommeiller, Mark Price, and Ellis Wazeter. Income Inequality in the U.S. by State, Metropolitan Area, and County. The Economic Policy Institute, June 16, 2016. http://www.epi.org/publication/income-inequality-in-the-us/
 See Florence Jaumotte and Carolina Osorio Buitron, “Inequality and Labor Market Institutions,” IMF Staff Discussion Note, July 2015, https://www.imf.org/external/pubs/ft/sdn/2015/sdn1514.pdf
 Economic Policy Institute, “The Benefits of Collective Bargaining: An Antidote to Wage Decline and Inequality,” April 14, 2015, http://www.epi.org/publication/benefits-of-collective-bargaining/
 US Department of Agriculture, “Rural Economy & Population: Employment and Education,” https://www.ers.usda.gov/topics/rural-economy-population/employment-education/
 Tom Hertz et al., “Rural Employment Trends in Recession and Recovery,” US Department of Agriculture, August 2014, https://www.ers.usda.gov/webdocs/publications/err172/48731_err172.pdf, p. 5.
 U.S. Bureau of Labor Statistics, Occupational Employment and Wages, May 2015.
 Health Care Professional Shortages in Iowa, Iowa Department of Public Health Center for Rural Health and Primary Care, 2010 Annual Report.
 Des Moines Register, January 31, 2017, cited here: http://www.desmoinesregister.com/story/news/education/2017/01/11/iowa-readies-teacher-shortage/96257920/
 Milwaukee Journal Sentinel, “From teacher ’free agency’ to merit pay, the uproar over Act 10 turns into upheaval in Wisconsin schools,” Oct. 9. 2016, http://projects.jsonline.com/news/2016/10/9/from-teacher-free-agency-to-merit-pay-the-uproar-over-act-10.html
 Wisconsin Budget Project, “Budget Cuts and Teacher Shortages: With Fewer Resources, Schools Struggle to Find Educators,” http://www.wisconsinbudgetproject.org/wp-content/uploads/2017/01/Budget-cuts-and-teacher-shortages.pdf
 IPP analysis of data from the U.S. Census, American Community Survey, 2010-2014.
 U.S. Bureau of Labor Statistics, Current Population Survey.
 Andrew Cannon. Apples to Apples: Private-Sector and Public-Sector Compensation in Iowa. The Iowa Policy Project, February 2011. www.iowapolicyproject.org/110222-pubpvtpayxs.html
 2016 results of elections retrieved from website of the Wisconsin Employment Relations Board http://werc.wi.gov/site/representation-election-updates/
 Kansas City Star, March 24, 2015, cited here: http://utw-ks.org/2015/03/charities-snared-in-effort-to-limit-power-of-kansas-unions/
 “To Promote Harmonious and Cooperative Relationships”: A Brief History of Public Sector Collective Bargaining in Iowa, 1966 to 2016, University of Iowa Labor Center, 2016, p. 1.
 Ibid, p. 1.
 Ibid, p. 6.
 Ibid, p. 1.
 Ibid, Center for Media and Democracy.