Economists concerned about lack of labor force in Iowa

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SIOUX CITY, Iowa (KCAU) – Governor Kim Reynolds said she was cutting off the extra payments early because she believes they discouraged Iowans from going back to work.

Economists say it’s not the unemployed they are worried about, but the lack of labor force.

“One of the big differences in Iowa relative to the rest of the nation is actually that our unemployment is pretty low. But if you look at where a lot of the job losses, at least from a measurement perspective where the job losses are, it’s that a lot of people have decided to exit the labor force or in other words not only not working, but they’re also decided they’re not going to look for work or you know try to work at this time,” said John Winters, associate economics professor at Iowa State University.

Iowa’s unemployment rate is at 3.8%, according to data from Iowa work Force Development which is about 1% higher than the state’s pre-pandemic unemployment rate.

Iowa economists think that it will take a while for Iowa to recover due to the weakness of the labor force and trying to figure out how to entice the people on the sidelines back into working.

One economist says taking away unemployment benefits was a political action, rather than a strategic one.

“So this activity took away $300 a week from 56,000 or so, Iowans, and it eliminated unemployment assistance for about 31,000 Iowans. So this was really really harsh and how that’s going to play out over time we’re going to have to wait and see. The social science evidence suggests that being mean to unemployed workers doesn’t improve the hiring rate. And so we’ll have to wait and see how this works out,” said Dave Swenson, an economist at Iowa State University.

As the economy recovers, Swenson said he will be looking for the rest of the country’s well-being to see the demand for goods made in Iowa as well as the health of metro economies such as Des Moines, Cedar Rapids, and Sioux City which he says will lead the state in growth.

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