Iowa labor force has made some gains in wake of pandemic

(The Center Square) – March 8 marks the one-year anniversary of the first reported COVID-19 cases in Iowa, which led to the state’s economic plunge in April 2020.

Certain challenges persist despite substantial recovery, however.

“There were a lot of dire forecasts in April and May of last year, but in a lot of ways, the Iowa economy has recovered faster than a lot of people, including myself, had anticipated,” Iowa Department of Revenue Chief Economist and Division Administrator of Research and Policy Robin Anderson told The Center Square in a phone interview.

The state has gained back about 121,000 of the 186,000 jobs that were lost last April, she said. Receiving “a tremendous amount” of federal stimulus money has supported spending and personal income, she said.

Executive Director Joe Murphy of the Iowa Business Council, which includes 22 members from among Iowa’s largest employers, said the last two quarters of 2020 were “very positive” for the organization compared with the first half of 2020, indicating “a strong turnaround.” Increasing COVID-19 vaccine availability in the state also lends to the optimism, he said.

“When you look at where we were a year ago to where we are now, we’re exceptionally optimistic on what the next six months to a year hold,” Murphy told The Center Square in a phone interview March 3.

Anderson said that depending on the speed at which people receive COVID-19 vaccines, there could be “a bit of a boom” in the economy, both in Iowa and nationally, as many have saved the stimulus money they received.

“There’s a lot of cash on the sidelines ready to be spent once people feel like it’s safe enough to venture out again,” she said.

Still, as of December 12, 2020, Iowa’s employment rates were lower compared with January 2020 figures (not seasonally adjusted), especially among low wage (less than $27k, a 13.9% decrease) and middle-wage earners (between $27k and $60k, a 14.9% decrease), according to the Opportunity Insights Economic Tracker. High-wage earners’ employment rates had dropped 6.9%.

“I think that’s the thing obviously, that everybody is concerned about,” Murphy said. “We want to really make sure that we’re growing the economy and we’re growing opportunities in Iowa for all Iowans. And that’s really what we’re focused on particularly in the legislative session right now.”

He said that bills currently in Congress that address issues such as affordable housing, broadband connectivity and childcare are meant to grow the entire Iowa economy.

Payrolls are still down about 4% from their pre-COVID peak and the labor force participation rate has also dropped considerably, Anderson said. She said in an email that the rate dropped 120,600 from February 2020 to December 2020.

“It’s these broad measures – the labor market utilization, the employment to population ratio, that are still moving in the wrong direction. … Iowa traditionally has a very high labor force participation rate, and it is worrisome that this decline is happening,” she said.

Anderson said more support for small businesses and more stimulus money, especially for lower income and low wage workers such as restaurant and retail workers, will assist the state’s economic rebound. She also noted providing parents with more resources for childcare, especially with the school closures, will be beneficial.

“I don’t know how much our labor force participation rate decline went down because of childcare issues,” Anderson said. “There could be other things going on as well.”

Initial unemployment claims in Iowa filed between Feb. 21 and Feb. 27 were 4,452, down 740 from the previous week, while the number of continuing weekly unemployment claims was 49,140, an increase of 382 from the previous week, according to a news release from Iowa Workforce Development. About 62% of claimants said their claims were not COVID-19 related, down from 64.5% the previous week. Unemployment insurance benefit payments totaled about $17.2 million, and the most claims were from manufacturing, self-employed/independent contractors, and construction.

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