An Iowa Policy Project report issued this Labor Day weekend is titled “Tough Times in the Heartland.” Researcher Colin Gordon, co-author of the 2009 “State of Working Iowa” report, says Iowa has escaped some of the hardest hits of the national recession.
Iowa home values weren’t as high and didn’t tumble as low. Plus, the state has a smaller stake in the automobile industry compared to states like Michigan and Ohio.
“Despite that sort of relative insulation, I think the news is pretty dismal,” he says. “We’ve lost almost all the job gains from our last recovery in 2005. We’ve lost 46,000 jobs since December, 2007 alone and given the fact that our labor force continues to grow, we now have a job gap that’s over 60,000.”
According to Gordon, two major drags on the Iowa economy are wage stagnation and a decline in the number of jobs which offer health and pension benefits
“Wage growth has pretty much ground to a halt. Now, historically this has been a problem in Iowa because particularly at the higher wage levels we’ve ranked very low in the country and very low in the region and this often comes up when we talk about teachers’ salaries or nurses’ salaries and that sort of thing, but we’re bleeding jobs at the high end and this raises serious issues for the security of working families,” Gordon says. “But it also raises serious issues for our ability to recover from this recession.”
Gordon’s report shows Iowa’s unemployment rate has doubled in 18 months.
“It is really unclear given job losses and stagnant wages, where the consumption — where the recovery is going to come from,” Gordon says.
Iowa’s unemployment rate was six-and-a-half percent in July.
The “State of Working Iowa” report found nearly 50,000 manufacturing jobs have been lost in Iowa this decade. “And what we see, you know, both in the last recession and recovery and the current one is that we lose good jobs with benefits and then what we see when we come out of the recession the growth is largely in areas without those benefits,” he says.
The consequences for families, according to Gordon, are “concrete” as many are just hoping to survive ’til pay day.
“What we see in this recession, underscored, is just how vulnerable Iowa working families are,” Gordon says. “It used to be the case, for example, that you could fall back on savings, you could fall back on home equity, you could fall back on a second wage earner in the case of unemployment, but that’s no longer the case. I mean, most working families now have two wage earners working full-time and they rely on that income.”
Iowa has more two-parents families with both parents working than any other state. Gordon’s report notes that it costs those parents more to pay for a year of child care than it would be send that son or daughter to one of the three state universities.
Gordon predicts at least 10,000 Iowans will file for bankruptcy this year. That’s a dramatic increase, as fewer than 5000 filed for bankruptcy in 2006. While many of the statistics and tables in the “State of Working Iowa” report seem to make rather grim statements on the state’s economy, Gordon suggests there is a “glimmer of hope” in the numbers.
“Things are pretty dismal, but they’re not as dismal here as they are elsewhere,” Gordon says. “At least relative to many of the other states, many of the other regions of the country, we start from a position of relative strength. We’re not yet facing a situation where we have 20, 25 percent without health insurance or 10, 15 percent unemployed.”
Gordon says state policymakers should consider expanding the basic tax credit for low income families. It’s called the Earned Income Tax Credit. He also advocates annual cost-of-living increases in the state’s minimum wage. Read the entire “State of Working Iowa 2009” report on the Iowa Policy Project’s website .