Labor Day 2021: Iowa job deficit endures in slow recovery

IOWA CITY, Iowa (Sept. 4, 2021) — At Labor Day 2021, Iowa's job market remains imbalanced since the COVID-19 pandemic hit the state in early 2020, without a clear policy response in place to correct it.

Iowa payroll, or nonfarm, jobs remain 65,000 off pace from the pre-COVID recession economy, with the largest net losses in selected service jobs and government jobs. Meanwhile, the state is not taking steps to make sure workplaces and entertainment venues are safe enough to attract workers and customers.

The biggest policy steps taken by Governor Kim Reynolds and the Legislature have been twofold: the governor's unilateral decision to reject a federal expansion of unemployment benefits in June, and a new law prohibiting local governments and businesses to require masks or coronavirus vaccinations in most instances.

“We can pretend that reducing unemployment benefits is a cure-all, but there is nothing to indicate that it works. The expanded benefits would have brought more federally supported spending to the economy. Second, the state could be doing more to make community and workplace spaces safer to get Iowans back to work,” said Mike Owen, deputy director of Common Good Iowa, a nonpartisan policy research and advocacy organization whose staff have tracked Iowa jobs for two decades.

National job numbers released Friday for the month of August show a continuing struggle as the nation and its economy attempt to recover from the spread of the pandemic. The latest state numbers available are for July.

The state's unemployment rate stood at 4.1 percent in July, continuing to inch up from 3.6 percent in January. The rate stood at 2.9 percent in early 2020, before the impact of COVID became apparent in monthly job reports.

“The job numbers only tell us where jobs are falling short, not the reasons those jobs are not being filled. But common sense tells us that pay, workplace safety and lack of child care could be behind it. In addition decisions by workers to seek new career paths could actually help the economy in the long run,” Owen said.

Despite the governor’s contention that reducing unemployment benefits in June would send Iowans back into the job market, the early indicators are inconclusive. The seasonally adjusted labor force — Iowans employed or looking for work — dropped from 1,727,900 in February 2020, just before the pandemic hit Iowa, to a low of 1,619,400 in December.

The average increase in the labor force since the December low point was 5,900. The July labor force increase after expanded benefits ended was slightly higher at 6,400, but less than increases for the previous two months.

Iowa faces a job deficit from the start of the COVID recession. From February 2020 to July 2021, the number of payroll jobs has fallen from 1,590,900 to 1,532,800 — a net loss of 58,100 jobs. Adding 6,900 jobs that would be needed to keep up with population growth since the recession started, the job deficit for Iowa is at 65,000.

Since the sharp drop in jobs in April 2020 — 171,800 — and significant boosts totaling 65,600 in June and July of that year, the monthly net job change has settled into an average of 3,800 net new jobs each month. The increases in the last two months were 6,600 and 7,400, but even holding at similar levels it will be a long climb to reach pre-recession job levels.

The lasting loss of jobs through the first 18 months of the COVID-19 recession in Iowa is largest in two service sectors: Education and Health Services, down 15,900 since February 2020, and Leisure and Hospitality, down 12,400.

Common Good Iowa is a nonpartisan, nonprofit organization built on a collective 50 years of experience of two respected Iowa organizations — the Child and Family Policy Center and Iowa Policy Project. Find Common Good Iowa research and perspectives at www.commongoodiowa.org.

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