Report: Full Job Recovery in Iowa Could Take 18 Months or More

By Dave DeWitte, Reporter

A jobs posting board. (AP Photo/Rick Bowmer)

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By Aaron Hepker

CEDAR RAPIDS, Iowa - Iowa's economy is still 18 months away from regaining all the jobs it lost in the Great Recession at the current pace of job creation, according to a new report.

The Iowa Policy Project's annual State of Working Iowa report said the current job recovery is taking place more slowly than any of the modern recessions in 1980, 1981, 1990 or 2007.

Iowa's economy has added an average of 1,000 jobs per month since the recovery began in the end of 2009, according to the report, issued Tuesday by the Iowa City-based policy group. The pace has accelerated this year to 1,500 to 2,500 jobs per month.

Report author Colin Gordon said the recovery has been a "long, tortuous process."

"We still have a substantial jobs deficit," Gordon said. "We're in some respects swimming against the current because we're adding people to the labor force at almost the same rate we're adding jobs."

The state is still 36,000 jobs short of the peak employment levels before the recession, Gordon said. To preserve the ratio of jobs to population that would have existed at peak employment would require another 89,000 jobs — a deficit that would take nearly three years to make up at a monthly job creation rate of 2,500.

The slow pace of job creation wasn't the biggest concern cited in the report. A bigger issue, Gordon said, is the shift in the economy from better-paying manufacturing jobs to service-sector jobs.

"Not only are we trading good wages for lousy wages, but benefits for no benefits," Gordon said.

About one-fourth of Iowans earn less than $10.73 per hour, the wage needed to life a full-time worker above the poverty level for a family of four, the report said. Iowa ranks in the middle of the pack on the percentage of workers at or below poverty level wages.

The percentage of Iowa workers at 100 to 200 percent of poverty level wages, 48.5 percent, was higher than any state except North Dakota, South Dakota and Nebraska.

Where Iowa didn't stack up at all was in the percentage of Iowans in the high-earner category making more than 300 percent of poverty-level wages.

Only three states — Arkansas, South Dakota and Alabama — have a smaller percentage of workers in that high-earner category.

Real median wages in the United States have risen only 4 percent from 1973 to 2011, the report said, while labor productivity rose 80.4 percent over that period. Iowa has tracked with the national trend, the report said.

The issues of wage stagnation have been complicated by rising costs for everything from health insurance to housing.

A full-time worker in Iowa making the median state wage needed to work for 10 weeks to pay a family health insurance premium in 1999, the report said. By 2011, the number of weeks' paychecks needed to cover a family health insurance premium had risen to nearly 25 weeks.

As in previous years, the report recommended the state consider such policies as expanding the Earned Income Tax Credit to help Iowans working at low wage jobs and to invest more resources in education and infrastructure rather than "chasing private investment with tax breaks and low labor or regulatory standards."

"There is actually some doubt as to what a state can do to create jobs," Gordon said.

What states can do, he said, is help bolster the wages and benefits of the jobs it does have. If those wages and benefits can be lifted, he said it tends to filter upward into the higher-wage jobs.

A spokesman for Iowa Gov. Terry Branstad did not immediately respond to a request for comment on the findings.

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