Slow recovery leaves many without work

Iowa’s economy is recovering, but unequally.

That was the conclusion of a report released Friday by the Iowa Policy Project. The Iowa City-based think tank publishes a report around Labor Day each year assessing Iowa’s job market. This year’s report shows that number of jobs created during the recovery now exceeds those lost in the most recent recession. The five-and-a-half year recovery was similar in length to the one following the 1981 recession; however, not all jobs are created equal.

Report author Colin Gordon wrote that many middle-income jobs were replaced with low-wage ones. Employees also saw a loss in benefits like health insurance. Those without a job for more than six months – categorized as the long-term unemployed – has doubled in the past six years in Iowa.

Gordon also noted that Marshalltown, like most towns more dependent on manufacturing, has struggled more than others to bounce back.

While the number of jobs is higher now than it was in late 2007 when the recession began, Gordon said that only tells part of the story. Each month, more people are added to the labor force, meaning more jobs need to be created just to keep the unemployment rate constant. Gordon calculates that Iowa is about 52,000 jobs behind pace; estimates show that deficit will be erased in another two years.

Many Iowans have been out of work so long they have given up looking for work, Gordon said. Fourteen percent of Iowans had been unemployed for six months or longer before the start of the recession. That number soared to 34 percent in 2010 and has fallen back to 28 percent now. For those in that situation, the prospects are bleak Gordon said.

“The older a worker is in the long-term unemployed the harder it is for them to re-enter the workforce,” he said. “You’re starting to lose skills and contacts in the workforce.”

Manufacturing took the biggest hit of any sector during the recession with a net loss of 15,000 jobs, many of which are gone for good.

“If we judge by the pattern of previous business cycles, I’d say two-thirds of them are not coming back,” Gordon said.

Health care (15,000 net jobs added) and business and professional services (11,000) saw the biggest gains in the past six years. Finance, hospitality, retail and government jobs were all relatively unchanged.

Other observations in the report:

The number of Iowans working part-time, not by choice but by necessity, has doubled in the past six years, the report states.

Education may no longer be the gateway to better pay with 43 percent of low-wage workers having at least some college education. “A large chunk of our low-wage workers have been to college and they’re earning 10 dollars an hour,” Gordon said. “A college education still pays off, it just doesn’t pay off for everybody. It’s more of a gamble, particularly given the costs of a four-year degree.”

Iowa’s average hourly wage is $15.62 an hour, seventh highest out of 12 Midwestern states. Minnesota topped the list ($18.13) while South Dakota was last ($14.78).