Iowa’s Unemployment Down To 2.6%, But Here’s Why There’s Still Concerns

Iowa’s governor announced unemployment numbers are now officially back to pre-pandemic levels, but there are tens of thousands more open jobs than available workers—and critics say she’s still hurting those workers with draconian policies.

Gov. Kim Reynolds celebrated the news that the state was at 2.6% unemployment, down from 2.7% in May. The June jobs report was released today by Iowa Workforce Development.

“We’re getting more Iowans back to work! Great new unemployment rate for our state!” Reynolds tweeted.

🚨📢BREAKING NEWS! We're getting more Iowans back to work! Great new unemployment rate for our state! 📢🚨 pic.twitter.com/TvdWeIXJ9A

— Gov. Kim Reynolds (@IAGovernor) July 21, 2022

IWD noted there were 43,900 Iowans looking for work in June, compared to 46,800 in May. The state added 5,100 jobs, mostly in accommodations, food service and seasonal government work, which normally rise in the summer months.

But with more than 89,000 open positions that continue to go unfilled in the state, ultra-low unemployment and stagnant growth isn’t good news for Iowa employers looking to hire.

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Isn’t lower unemployment a good thing?

It seems like common sense that you’d want to see low unemployment. After all, everyone having a job is a good thing, right?

But economists say there is actually such a thing as too-low unemployment.

Also known as the output gap, or labor market slack, not enough people looking for work can lead to inefficiencies (can’t run a business at full steam), lowered productivity (hiring unqualified people to fill roles) and wage inflation (paying more to attract workers).

Over time, that can drive employers out of a state, and potentially lead to a recession.

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‘The whole story’

But lowered unemployment also reflects more people—particularly older people—opting out of the workforce entirely.

Women older than 55 exited the workforce at a rate of 9.1% in Iowa since 2019, according to an analysis by Iowa State economist Peter Orazem. Both men and women between the ages of 45 and 54—well before retirement age—also left the workforce at rates of 8.3% and 7.6%, respectively.

Younger people aren’t making up the difference, either. Women 25-44 added just 0.4% to Iowa’s labor rolls, while men in that age range added an even paltrier 0.2%.

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Critics of the governor’s policies, like Matt Sinovic of Progress Iowa, say that’s because Reynolds isn’t addressing workers’ issues—and actively harming them.

“The numbers released today by Iowa Workforce Development don’t tell the whole story,” he said. “Too many Iowans are in jobs that don’t reward work and respect workers.”

He cited as examples Reynolds’ “handouts to wealthy corporations and tax cuts for the rich,” as well as a new law this month that lowered the number of weeks an out-of-work Iowan could collect unemployment benefits from their employer from 26 weeks to just 16 (which could have the effect of driving outdoor construction workers out of state this winter).

“As long as her anti-worker policies are in place, Iowa will continue to have a population and worker shortage,” Sinovic said. “To grow our economy, we must grow our state. That means investing in public schools, safety and providing resources for our communities.”

By Amie Rivers
7/21/22

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