Illustration: Sarah Grillo/Axios

The U.S. unemployment rate is so low that some cities and states have turned into "worker deserts" — places where companies can't find people to hire.

Why it matters: The "good news" story of the strong labor market has a big downside that is playing out in places like Iowa, New Hampshire and Florida, where companies say they can't keep up with business demand — hampering growth — unless they find more workers.

By the numbers: Across the country, there are more than 1 million more jobs available than there are people to fill them.

In Iowa, for instance, the unemployment rate was 2.5% in July, just 1 percentage point above the lowest level on record.

  • According to the most recent government data, there are 70,000 fewer unemployed Iowans now than there were at the onset of the current economic expansion.
  • That's great for Iowans, but there's a catch: Population growth in the working-age demographic has been shrinking since 2015, according to the U.S. Census Bureau, while more Iowans are aging out of the labor force.

A dramatic example of how far companies are willing to go to find new workers is Iowa-based Wells Enterprises, which makes Blue Bunny ice cream. It opened new facilities across the country for the sole purpose of finding employees — with mixed success.

  • Mike Wells, who took over the family business 12 years ago, tells Axios he opened an office in Minneapolis to handle marketing and sales, but still couldn't find workers.
  • A year later, Wells Enterprises closed that office and built another in Chicago, where he was finally able to hire the right people for those roles.
  • Wells tells Axios it's just as challenging finding workers for those types of jobs as it is for its factory production lines.

Faced with worker scarcities, other Iowa companies are stretching as much as they can.

  • Vermeer, an industrial equipment manufacturer, has asked employees to work Saturdays — on a voluntary basis — to keep up with customer demand. But that has its limits, Vermeer's board chair Mary Andringa tells Axios, since a weekend shift isn't "as agreeable to team members as it was 30 to 40 years ago."
  • The company has struggled to find workers for its assembly line. "We disappoint customers if we can't get a product to them," Andringa says. "We've got some things now that if people order, they can't get it for 6 months. We don't like that."

A similar dynamic is playing out in states like New Hampshire, where unemployment is close to a 30-year low.

  • "There are 20,000 jobs waiting to be filled, with no one to fill them," David Juvet of New Hampshire's Business and Industry Association tells Axios.
  • The state's population growth is "at a near standstill" compared with earlier decades, making it "unlikely" that the pipeline of people entering the workforce will be large enough to replace those leaving, economists said in a 2018 analysis.

In Florida, where the unemployment rate remains "persistently low," companies are "bringing back retirees on a contract basis, increasing the use of interns and apprenticeships and enhancing productivity through better workforce training," Mark Vitner, an economist at Wells Fargo, wrote in a recent report.

  • He also noted how heavily the state relies on immigration to refuel its working-age population.

Between the lines: Manufacturing and construction are being hit particularly hard.

  • "500,000 [manufacturing] jobs are still open in the United States and we can't fill them," Nicholas Pinchuk, CEO of toolmaker Snap-On, told CNBC this week. "Our factories have never had more hours."
  • "The severity of the labor shortage in the construction industry is the strongest headwind that we face," Jon Jaffe, an executive at homebuilder Lennar, told analysts in June.
  • Despite a slowdown in activity, manufacturing saw a record number of job openings in June.

Small businesses are suffering too: In a poll, the number that said finding qualified workers was their single most important problem hit a 46-year high last month, according to the National Federation of Independent Business, which tracks Main Street sentiment.

  • "The shortage of potential employees relative to the demand for them is slowing economic growth," economists at the NFIB wrote.

Be smart: Worker deserts are creeping up in a handful of states critical for the 2020 presidential election, and business leaders there are pushing for policies that would create bigger labor pools — namely, immigration.

  • Mini-scoop: On Sept. 4, the Iowa Business Council — a coalition of Iowa's biggest companies — plans to release a set of pro-immigration recommendations, taking a position on this issue for the first time.

Go deeper:

Go deeper

Iowa governor signs order restoring voting rights to some felons

Photo: Scott Olson/Getty Images

Iowa Gov. Kim Reynolds (R) signed Wednesday an executive order restoring voting rights to some Iowans with felony records, the Des Moines Register reports.

Why it matters: It had been the last state in the country to bar all felons from voting, unless they applied for a special exception from the governor's office.

Exclusive: How the high-tech economy is expanding

Data: Information Technology Industry Council; Map: Andrew Witherspoon/Axios

The technology sector increasingly underpins the U.S. economy, with signs of its growth becoming more woven into local economies far outside iconic innovation hubs like Silicon Valley and New York.

Why it matters: A new district-by-district report out today from the Information Technology Industry Council makes the case that an economy infused with high-tech workers, startups and exports is a more resilient one, with higher wages and productivity.

What's new: Drilling into the data by congressional district yields some surprising findings:

  • The average congressional district now has about 400 high-tech startups employing around 3,400 workers.
  • Texas and Florida are home to four times the number of high-tech startups as the average U.S. state.
  • In Alabama, startups make up 16% of high-tech employment — the highest share in the country.
  • In Vermont, high-tech manufacturing exports make up 5.5% of the state economy — the largest share in the country.

"There is demand for skilled STEM workers, there is demand for public R&D funding, and even for high-tech startups in states across the country — not just in states we hear so much about," said ITI President and CEO Jason Oxman. "Companies are looking for opportunities to find good people in new geographies."

Yes, but: Despite shoots of green sprouting up across the country, many districts are still struggling to find a solid foothold. And there's concern that the COVID-19 pandemic will stunt some areas' tech-related growth even more.

  • For example, the Heartland region lags far behind coastal markets when it comes to attracting entrepreneurs and startups, according to a May report from Heartland Forward.
  • This is where skilled workers are key: "Knowledge-intensive young firms have a higher probability of achieving middle-market status where they can generate rapid job gains for their communities," per Heartland Forward.

The ITI data shows a strong correlation at the district level between employment in computer and math occupations and employment in science and engineering occupations — indicating that a density of high-skilled labor makes a region more attractive for skilled workers in other sectors.

  • This can impact wages.
  • In the median congressional district, average annual wages for high-tech workers in the median state were nearly $79,000. That's more than double the median U.S. personal income, which is around $31,000 annually.

There's a clear correlation at the congressional district level between the prevalence of high-tech and STEM workers and federal R&D funding, ITI's data analysis found.

The catch: The decades-long slide in public R&D funding has accelerated since 2009, according to the Information Technology & Innovation Foundation, which analyzed the numbers last year.

  • As of last summer, the federal government invests about $125 billion per year in R&D on everything from agriculture to manufacturing to energy. But that investment as a share of overall U.S. GDP has continued to decline. Meanwhile, countries including China have increased this spending.

By the numbers: In the last two fiscal years, 250 out of 435 congressional districts got at least $50 million in federal R&D funding.

  • 14 states did not get any public R&D funding.

The bottom line: The tech economy isn't a one-size-fits-all proposition, and regions should build on their strengths.

  • Smaller markets have managed to capture pieces of the innovation infrastructure needed to drive high-tech ecosystems, but many have a long way to go.
  • "It is really important for states and congressional districts to focus on what they're good at and not try to be the next San Francisco," Oxman said.

The coronavirus could set back a generation of women

Illustration: Annelise Capossela/Axios

The coronavirus' disproportionate impact on women workers is eroding years of progress.

Why it matters: In the long run, the pandemic could chip away at women's representation in the workforce and widen the gender pay gap, experts say.