Still, tens of thousands of people on sidelines
DES MOINES --- While Iowa’s economy is emerging from the COVID-19 pandemic in some ways, at least one significant pocket of disruption remains: in the state’s workforce, where thousands of Iowans are continuing to choose to remain at home rather than going to work.
Economic experts say the reasons are not yet clear. But whatever the motivation, tens of thousands of Iowans have not returned to work since the state began hemorrhaging employees at the onset of the pandemic last year.
There were 1,518,400 workers in Iowa’s non-farm workforce in May, the most recent month for which state workforce department data is available. That’s a significant rebound from where the state bottomed out during the worst of the pandemic -- but it’s still 73,200 workers shy of the state workforce’s pre-pandemic level from February 2020.
“We have many people in Iowa who have chosen to sit on the sidelines, either because of COVID and illness, because of family responsibilities, they didn’t like the kind of work that was being offered in light of the pandemic … or we don’t know why,” said Dave Swenson, an economics professor at Iowa State University. “What we do know is that we don’t know exactly who these people were. We don’t know who they were and why they checked out.”
The issue is not unique to Iowa. There were just over 161 million people in the U.S. workforce in June, roughly 3 million fewer than the more than 164 million in February 2020, according to federal labor statistics.
But while that national figure is a workforce reduction of 1.8 percent from the pre-pandemic level, Iowa’s drop is much sharper -- 4.6 percent.
“I don’t know who they are but … it has been striking, even more striking than the national numbers,” Bill Boal, an economics professor at Drake University, said during a recent episode of “Iowa Press” on Iowa PBS. “There are still a lot of people out of the labor force who were in the labor force a year ago.”
Debi Durham, the state economic development director, said she has been encouraged by recent increases in the state’s workforce. Although the number of active workers still is shy of pre-pandemic levels, the figure has increased in 10 of the past 13 months.
Through her optimism, Durham conceded the state also faces long-term workforce challenges, as it also did before the pandemic struck.
“We still have to grow Iowa’s population, and we still need to upskill people for industry 4.0 initiatives,” Durham said. “But again, I’m encouraged by what I saw.”
Durham said she thinks there could be another uptick in labor force participation in September when schools resume and kids are in class. Many districts had a mix of in-person and virtual classes or operated entirely online for portions of the pandemic in the 2020-2021 academic year.
“I think some people are still sitting out because of daycare and child care activities in the summer,” Durham said.
And while the state’s unemployment level ticked up slightly to 3.9 percent in May, Durham said that could be a good sign in that it means more Iowans are looking for work and returning to the workforce. Individuals not actively seeking employment are not calculated in unemployment statistics.
A spokesperson said on July 1 that state workforce development Director Beth Townsend was not available for an interview and also did not return a message last week.
Swenson said while the number of Iowa non-farm jobs has been increasing as Durham noted, the pace has been “really, really slow” and lags behind federal growth.
“We’ve really had a lot of people check out of the labor force and we don’t know what it’s going to take to get them back in,” Swenson said.
Iowa is among the states that recently ended its participation in extra federal unemployment benefits -- the given rationale that ending the extra $300 would motivate more individuals to seek employment. Iowa Gov. Kim Reynolds ended Iowa’s participation effective in June; experts say it is too soon to tell from the data if the move was effective.
Durham, however, backed Reynolds’ decision to cut off the extra unemployment benefits. “We needed to do that,” Durham said. “Without the additional benefits, it behooves people to go back to work.”
Advertised job postings in the state have increased in the first month without the federal benefits, according to state workforce development data. The state had nearly 71,000 advertised job postings as of July 9, according to the data, which is a 3.9 percent increase from June 9.
Only three counties --- Des Moines, Pottawattamie and Delaware --- saw advertised job openings decrease by more than 50 over the one-month span. Meanwhile, the five counties with the most job postings in June --- Polk, Linn, Johnson, Scott and Black Hawk --- all saw the number of job openings increase.
Data from the national job search website Indeed.com shows a similar trend. When Reynolds on May 11 announced that the end of the extra benefits was coming soon, Iowa had 30.8 percent more postings on Indeed than on Feb. 1, 2020, before the pandemic hit. That increased to 35.9 percent on June 12 when the benefits ended. On June 25, the most recent date with data available, it had grown to 39 percent.
Swenson said research does not support the notion that limiting unemployment benefits increases workforce participation. He noted unemployment benefits are available to individuals only who are seeking employment. Those who are not seeking a job are not eligible.
“People aren’t getting fat and sassy off the benefits. People on the benefits are much more likely to be searching for work,” Swenson said. “We don’t have good, national research that says being mean to unemployed people whips them back into the labor force, whips them back into employment.”