May 11, 2021 - News

Iowa struggles with worker shortage despite uptick in unemployment

Illustration of a shrugging emoji wearing a hard hat.

Illustration: Brendan Lynch/Axios

There's no doubt you've stumbled across a "Now Hiring" sign at the drive-thru or grocery store.

  • Like the rest of the U.S., Iowa employers say there's a shortage of available employees in industries like construction and hospitality as the economy picks back up.

Why it matters: The inability to fill open jobs has an immediate impact on our everyday lives, like long waits at our favorite restaurants.

  • Long-term though, it slows our economic recovery and stifles business expansions.

Driving the news: The U.S. economy added a mere 266,000 jobs last month. Forecasters had floated gains close to 1 million, making this the biggest miss, relative to expectations, in decades.

  • But the reasons why we're dealing with a worker shortage are still up in the air, despite the state's higher unemployment rate.
  • Iowa's unemployment rate was 3.7% in March — up from 2.9% a year ago, according to Iowa Workforce Development.

One argument is that the extra $300 in weekly unemployment benefits introduced during the pandemic dampens motivations to go out and work.

  • "Who wants to work when you can make about the same being at home? I think we'd all take that deal," said Matt Everson, state director of NFIB.

The other side: Unemployment benefits may delay job searches, but they don't end them altogether, said Dave Swenson, an ISU economist. For one, many people want the health care benefits that come with a steady job.

  • Plus, you have to prove you're job searching to keep qualifying for benefits — a strike against the idea that people are simply sitting at home raking in cash.
  • "There isn't a simple narrative," Swenson said.

Other Iowa-specific factors that may play a role:

  • Iowa already didn't have enough workers to fill open jobs, pre-COVID. Our latest census numbers show stagnant population growth, continuing the problem, Everson said.
  • The state saw an abnormally high number of people exit the workforce altogether in 2020, including moms and older Iowans taking early retirement, Swenson said.

Be smart: Some economists say the surge in job creation could also just be outpacing hirings and search efforts, according to the New York Times.


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