Slashing Unemployment Hasn’t Helped Other States, But Iowa Tries It Anyway

There are more jobs open in Iowa—tens of thousands more—than there are people to fill them.

Just 46,800 Iowans were unemployed out of 1.7 million working Iowans, an incredibly low unemployment rate of 2.75%, according to a recent announcement from Iowa Workforce Development.

According to Gov. Kim Reynolds, who signed a new law limiting unemployment benefits to just 16 weeks, down from 26, the problem of Iowa’s labor shortage is unemployed Iowans just twiddling their thumbs at home.

“We cannot stand idle and allow employable Iowans to sit on the sidelines,” Reynolds, a Republican, said after signing it earlier this month.

But the state also currently has 89,032 open jobs posted to the state’s website. So even if all of those Iowans were magically connected with available jobs tomorrow, that would still leave 42,232 jobs to be filled.

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Not just an Iowa problem

It’s a problem happening across the US right now, with 17 states seeing record-low unemployment. In fact, it’s a problem in other countries around the world, too.

Iowa pretty much matches the country average on open jobs to workers, with 1.83 jobs for every unemployed worker. Some states, such as Nebraska, have three or more open jobs per workers. But even the state with the closest parity, Pennsylvania, still has 1.17 jobs for every unemployed worker.

The reasons are varied. Two big ones: Older workers began exiting the workforce earlier than planned following the COVID-19 pandemic. Caregivers—primarily women caring for young children—also haven’t returned to the workforce in large part because of a lack of child care, a problem that acutely affects Iowa.

Other reasons people have cited include a skills mismatch and extra government stimulus money—though a study of the US and UK economies showed the skills mismatch was a marginal reason, and stimulus money did not factor in at all.

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Republicans’ newest solution? Squeeze unemployed

The solutions to the problem of extremely low unemployment and too many jobs are not easy—and, if it persists, will likely tilt the country into a recession.

One solution may be immigration reform, allowing those who already are willing to resettle in places like Iowa the opportunity to do so, something previous Iowa governors have done.

Republican governors such as Reynolds seem to be blaming the small number of unemployed people instead.

Iowa’s new law, which goes into effect July 1, now joins states with the lowest number of unemployment weeks in the US. Only Florida and North Carolina at 12 weeks, and Alabama and Georgia at 14 weeks provide a shorter amount of time.

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But the data shows a shorter benefits period doesn’t solve the problem: All four states lower than Iowa have even more open positions than workers, with Georgia at a whopping 2.73 jobs per unemployed worker, according to the Bureau of Labor Statistics.

It’s also likely to have a negative effect on the state’s construction workers and others who rely on unemployment benefits to get them through winter and other times when there’s no work to be had in their field, according to several in the construction industry.

The new law will “only further hurt workers who have been laid off, keep wages low, and make Iowa a more unwelcoming state,” Progress Iowa director Matt Sinovic wrote in a release.

By Amie Rivers
6/30/22

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