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Recouping Iowa’s worker losses will be difficult, state economist says

New or younger Iowans not replacing many retirees

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Recouping Iowa’s worker losses will be difficult, state economist says

JOHNSTON — Iowa’s economy is in recession and losses in its workforce will be exceptionally difficult to recoup because older Iowans who are retiring are not being replaced by younger or new residents, a state economist said Tuesday.

Peter Orazem, a professor of labor economics at Iowa State University, discussed the state’s economy and workforce issues Tuesday while recording this weekend’s episode of “Iowa Press” on Iowa PBS.

Iowa’s unemployment rate is at 2.9 percent, according to state data, which is the 13th lowest in the nation. However, the number of Iowans in the workforce remains below pre-pandemic levels, according to state workforce data.

While the size of Iowa’s workforce has continued to climb steadily throughout 2022, the most recent number of Iowans working — 1,584,600 in October — still lags behind October 2019 and behind the pre-pandemic level of 1,590,500 in February 2020.

“We’re lagging the rest of the U.S. in terms of recovery of employment, and that’s holding back the Iowa economy,” Orazem said.

Complicating matters further, Orazem said, is that much of the workforce Iowa lost was among older workers. Those older workers do not appear to have plans to rejoin the workforce, Orazem said, and Iowa historically struggles to attract new residents.

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Orazem said that among Iowans under the age of 45, workforce participation rates have actually increased. But workforce rates among Iowans older than 45 declined, he said.

“Iowans who stayed in Iowa who were not retired, they were atypically working. And so they atypically dropped out of the labor market relative to the rest of the U.S. And as a consequence, we don't think that they’re coming back,” Orazem said. “That’s going to be holding back the Iowa economy in terms of its ability to make up for its loss of labor.”

Iowa has the ninth-highest share of residents who were born in the state, Orazem said, meaning Iowa gets a proportionately small share of its population from other states or countries.

“If you look at the sources of replacement labor in Iowa, it’s really hard to come up with another one other than immigration, which has been the buffer for the Iowa labor force for many years,” Orazem said.

State and federal data shows that Iowa has had three quarters in a row where growth was negative when compared with the same quarter a year earlier.

“We’ve had three straight quarters of negative gross state product, which, you know, would meet the classic definition of a recession,” Orazem said.

Comments: (515) 355-1300, erin.murphy@thegazette.com

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