Sept. 04–Far too many Iowans and Americans will have little to celebrate this Labor Day. More than 100,000 Iowans and 14 million Americans are unemployed and even more are underemployed, working part-time or discouraged from looking. And a growing percentage have been looking for work for more than six months. |By Christinia Crippes, The Hawk Eye, Burlington, Iowa
Sept. 04–Far too many Iowans and Americans will have little to celebrate this Labor Day.
More than 100,000 Iowans and 14 million Americans are unemployed and even more are underemployed, working part-time or discouraged from looking. And a growing percentage have been looking for work for more than six months.
More than a third of out-of-work Iowans have been looking for a job for the greater part of a year.
“Considering the population growth of the state, and the projected population growth for the next few years, that is over 70,000 jobs that the state still needs (to get to pre-recession levels),” said Noga O’Connor, an author of the Iowa Public Policy’s “The State of Working Iowans” annual report released last week. “For the next three years, 3,000 new jobs every month (need) to be added for us to just catch up with where we were before the recession hit.”
Welcome to the recovery
The national recession officially ended in June 2009 — the state lagged behind by six months — but that was before the peak unemployment rate of 10.1 percent in October 2009. Iowa’s peak unemployment rate of 6.2 percent hit nearly a year later.
A jobs report released Friday by the U.S. Bureau of Labor Statistics shows the national unemployment rate remained at 9.1 percent in August. The state rate is better, at 6.0 percent for July, the latest available statistics, but the four-county unemployment average is between the two at 7.5 percent.
The numbers are only slightly better than a year ago, when the regional unemployment rate was 7.6 percent and the state rate was 6.2 percent.
Given the unemployment rate and that most Americans’ economic outlook has not improved, it’s no surprise a CNN poll released Friday showed 8 in 10 people believe the country remains in a recession.
Plus, the unemployment rate is only part of the bleak economic picture emerging. Underemployment offers a more comprehensive look at the struggles of working people.
The Iowa Policy Project based at the University of Iowa considers someone underemployed if they are unemployed and looking for work, when they are discouraged and have given up looking for a job or if they are involuntarily working part-time jobs.
Again, Iowa’s figures are not as bad as the national underemployment statistics but they’re higher than before the recession began. The national underemployment rate peaked at 16.7 percent in 2010, and in Iowa it spiked at 11.6 percent. According to IPP, Iowa ranked sixth lowest nationally in underemployment.
Southeast Iowa’s rate is estimated at 6.0 percent, according to an Iowa Workforce Development Laborshed study.
Statistics, however, offer little comfort to those like Brad Miller, who has been underemployed since 2004 but saw his part-time work dry up even more just as the recession hit.
Miller, 37, has worked in everything from maintenance to restaurant service industry to entertainment, but the Burlington man was painting when he lost his last full-time job. Since then, he’s been making a living, with help from his family’s trust fund, by doing small painting and landscaping jobs for neighbors and other clients.
“I’m trying to look for work, as well. I don’t want to be a painter all my life,” Miller said. “It’s been kind of difficult emotionally, because of everybody that I’ve lost. I’m trying to keep busy, so I’m not feeling that way.”
During Miller’s struggles, he lost both his parents. Like those who are most likely to find themselves underemployed or unemployed, Miller does not have a high school degree.
But he’s working to change that by studying on his own time to pass the General Educational Development, or GED. Among his top job choices would be to get back into being a chef.
One of the reasons for underemployment is simply that there are more people looking for jobs than jobs available. Nationally, there were more than four people looking for jobs in June for every job opening then. IPP researchers estimated the figure in Iowa is closer to two or three people looking for job per job opening.
As of this summer, too, the nation and the Midwest, were losing more jobs than were being added. There were nearly 1 million separations — people voluntarily or involuntarily leaving their jobs — and nearly 720,000 job openings, meaning there was a net loss of jobs of 223,000.
“It has been estimated the economy would have to add roughly 400,000 jobs per month for the next four years to return the economy to the pre-2008 state to remedy the 11.1 million total losses,” said Deborah Hedger, an economics instructor at Southeastern Community College who has been studying the labor market in southeast Iowa. “The only way to really create this amount of jobs at this point is with a well-targeted fiscal policy and with our current national budget issues, I don’t think that is an option that is being entertained.”
The good news?
Though there are certainly challenges in the labor market both in southeast Iowa, Hedger said it’s not all bad news.
After all, the state’s and region’s unemployment rate are below the national average, as is the state’s underemployment rate. Iowa did not experience the housing bubble that caused problems in Nevada and Florida, for instance, and it is less tied to the automotive industry than Michigan.
In fact, the state’s unemployment rate is the fifth lowest in the nation, according to IPP.
Hedger said when it comes to wages, where Iowa fares worse than many states, the average weekly rate for employees in southeast Iowa of $640 is actually better than many other Iowa counties, especially in the southern part of the state.
Still, the region’s per capita income of a little more than $33,000 per year lags the state’s per capita income of $37,647 by nearly $4,500. And Lee and Henry counties at about $31,000 per capita annual income lag even more.
“We’re definitely seeing overall in Iowa a decrease (in per capita income), but some counties are more effected,” Hedger said.
Iowa ranks 33rd nationally in its wages, with a median wage of $15.02 per hour, which is about $1 less than that national median, according to IPP. It was one of 10 states to see the real value of its median wage fall since 2000, and one of only three states to lose ground for even high-wage workers.
The picture of southeast Iowa’s unemployment rate and wage levels as both glass half-full and half-empty isn’t even the biggest contradiction facing the region.
Even though there is high unemployment and more people looking for work than there are jobs available, area businesses complain they cannot find qualified workers.
There were more than 50 advertisements seeking workers, some seeking more than one position, in The Hawk Eye last Sunday, filling nearly three pages. Help wanted ads have been steady at that level for some time.
Dennis Hinkle, president of the Greater Burlington Partnership, said throughout the recession he’s heard from area businesses concerned about finding qualified employees who show up to work daily.
“Were sitting at mid-7-percent-range unemployment and employers are desperately seeking workers,” Hinkle said. “There are production lines that are running 30 to 40 people short every day.”
Iowa Works Region 16 director Deb Dowell said part of the reason for the disparity is dislocated workers are hesitant to take jobs where they would make less than they had been earning, hoping to find something better.
“They need to get back in the hunt. There are jobs,” Dowell said, adding it’s easier to find a job when one is already working.
Dowell and Hinkle acknowledge some potential employees cannot pass a preemployment screenings, including drug tests.
According to an Iowa Workforce Devolpment survey earlier this year, 8.4 percent of employers either strongly agreed or agreed there are problems filling open positions because applicants are disqualified due to controlled substance use. About a quarter of employers surveyed were neutral. A slightly higher percent, 10.9 found a problem filling open positions because the applicants are disqualified for failure to pass a background check.
The largest problem employers found was a lack of the necessary skills for the job.
According to the Workforce Needs Assessment report, a little more than 50 percent of Iowa businesses offer in-house training to their employees, and 17.7 percent are interested in working with schools to offer more training programs.
In southeast Iowa, many training and retraining opportunities are available at the Iowa Works center in Burlington. Classes are offered on everything from keyboarding to resume preparation to interview techniques and there are opportunities to get various certifications.
Staff at the center say the leading barrier to employment for most people is basic computer literacy. Kelly Brousseau, a trainer with the Workforce Investment Act, estimated only 30 percent of the region has functional computer literacy skills, meaning they can do more than check their e-mail and get online. She said within the last six months, more of the application and hiring process has moved online, making those skills even more necessary.
Though some perceive their skills to be better than they are, some clients request to apply only for jobs that will allow them to file paperwork the old-fashioned way. And while older displaced workers would seem to be the obvious computer illiterate, staff said it is by no means limited to those who entered the workforce before computers were ubiquitous.
Iowa Works Region 16 has spent the last year implementing an integrated system so that the people who walk through the door are helped immediately and regularly during their visit, even if it’s just to hop on a computer.
Angela Wallace, who works in skills development for WIA, said already the center has seen huge progress, as people are finding jobs, but the long-term and continual high unemployment conceals the extent of their success.
Beyond the problems directly related to finding a job, southeast Iowa has other challenges that make it difficult to change the region’s unemployment rate.
The region’s strong manufacturing sector has declined in the past decade. Lee County, for example, had more than 30 percent of its total employment in the manufacturing industry in 2000. Just five years later, it dropped to about 25 percent and has remained there since that time.
While some advanced manufacturing businesses have come to the region, they haven’t replaced the volume of jobs that left before 2000.
Accompanying the loss of manufacturing jobs has been a rise in lower-paying jobs, in sectors like leisure and hospitality. Lower wage jobs often come with fewer benefits, although two-thirds of the state’s employers offer health insurance coverage.
That sort of change doesn’t help when the region already has a poverty rate higher than the state average. The state’s poverty rate for all ages is 11.8 percent; in the four-county region it ranges from 12.8 to 15.8 percent.
Higher poverty rates come with other hindrances to employment, like lack of transportation. The percent of households without a vehicle in the state is 6.4 percent. In southeast Iowa, that average is a percentage point higher in Lee and Des Moines counties. And recently shuttered Iowa Workforce Development offices in Keokuk and Mount Pleasant mean residents have to make the commute to Burlington to get necessary, and sometimes required, training.
The region also has a higher percentage of single-parent households than in the rest of the state. Des Moines County has the highest rate of single-parent households in the four-county region, with 10.4 percent — two percentage points higher than the state average of 8.4 percent.
Many area schools also have a higher than average drop-out rate, and education often is key to earning higher wages. In Lee County, for example, Fort Madison had the third highest and Keokuk the 10th highest state drop-out rates for ninth- through 12th-graders.
“It’s a community problem, and how are we going to deal with it?” Dowell said, adding that there has not been a community-led effort to improve the region’s economic and employment outlook.
But that could change.
Both Iowa Works and the Greater Burlington Partnership have efforts under way to tackle some of the underlying problems.
“We have to look regionally,” Dowell said. “If we wait for the state, and we wait for the federal government, it’s not going to happen.”
Dowell said working regionally means in partnering with businesses on their training needs and pooling resources.
In the past two months, the Greater Burlington Partnership hired a part-time employee, Sheila Newman, to begin addressing workforce challenges by working with businesses, K-12 schools, community colleges and Iowa Works, among others.
“Everybody needs to be at the table,” Hinkle said. “If our existing businesses are having difficulty hiring enough people to fill positions, it’s going to be very difficult to attract additional counties to our area.”
He said the effort will combine both short- and long-term strategies.
“We don’t want concerns about workforce to be the thing that keeps us from attracting new businesses and new jobs to the area,” Hinkle said. “Like a lot of areas, we’re choosing to prioritize it, and take the issue on, identify problems and solutions, and make sure that we are a place that an ample and a trained workforce for our future needs.”
Hedger, the SCC instructor, for her part is working to collect and organize data to understand how the region’s wages have fared over the long-term. Once Hedger has the data compiled, she hopes to see whether the regional data mirrors the national data showing wages of the middle class and working poor are shrinking while those wages at the top are growing.
Even Lee County Economic Development Group is working on helping the unemployed start their own business. The group found a recent report compiled by Iowa Workforce Development that indicates half of the unemployed people in Lee County are interested in starting a business.
While there will be endless speculation, the public and media will have to wait until Thursday evening to hear what President Obama proposes to address the nation’s employment problem.
U.S. Rep. Dave Loebsack, D-2nd District, was unwilling to speculate about Obama’s planned joint address before Congress, but freely admits the president should be leading on this issue more than he has been.
“I think we clearly need a demonstration of leadership coming out of the speech, whatever the specifics may be,” Loebsack said.
What Loebsack would like to hear out the speech, however, is first an endorsement of the congressman’s bipartisan legislation to partner businesses with community colleges to offer necessary training in the region. His Strengthening Employment Clusters to Organize Regional Success, or SECTORS, Act passed the U.S. House unanimously last year, but it never left the U.S. Senate.
Beyond that, the congressman hopes to hear the president talk about closing tax loopholes to corporations that take jobs overseas and an extension of the research and development tax credit.
“We are in a very, very difficult — that’s understating it — situation in terms of jobs and economy right now,” Loebsack said during an interview at The Hawk Eye. “There’s no easy way, no short term way out of this thing.”
Loebsack also previously weighed in on the closure of 37 workforce development center offices throughout the state, including two that closed last month in southeast Iowa. Though state funded, the IWD offices also collaborate with federal partners funded through the Workforce Investment Act.
As a member of the House Education and the Workforce Committee, Loebsack has been working with a Republican committee member to see that the WIA is reauthorized.
The Iowa Public Policy report on the status of working Iowans included several recommendations the state should make to improve the economic outlook. Those who compiled the report, however, recognize those changes may not be feasible.
Aside from ensuring preschool education and raising the minimum wage and indexing it to inflation, the group also supports more aid through the Earned Income Tax Credit, which Republican Gov. Terry Branstad vetoed earlier this year. The IPP report also calls for infrastructure investment in the form of another stimulus, even if it means borrowing the dollars to do it.
“Obviously, collecting revenue would be a good idea, too, but I think the state the economy is in now, I think, although it runs somewhat against conventional wisdom, public debt is the least of our problems,” said Colin Gordon, one of the authors of the report.
He said the investment would create jobs and help spur demand, the lack of which is keeping the economy from growing.
“If you combine the sort of underemployment measure with the wage stagnation, you’re looking at an economy in which it’s going to be very difficult to galvanize the kind of across-the-economy demand that we need to see recovery,” Gordon said.
At a more local level, many would like to see the state keep open the 37 workforce offices that have closed or are set to be shuttered by the end of next month.
“I understand the plight of the state; they’re trying to cut their budget and be more efficient, but on the other hand, when unemployment is at the rate we have it ….,” said Janet Fife-LaFrenz, a Lee County supervisor and chairwoman of the regional workforce investment board.
Fife-LaFrenz pointed to Branstad’s campaign promise of creating 200,000 jobs in the state in five years and argued it will be more difficult to fulfill that goal without the offices.
“We’re not seeing a huge influx of population coming into the border. I think we have to make do with what we have, to train individuals and get them back to work,” Fife-LaFrenz said.|