Iowa’s economic recovery lost momentum in March, with job losses for the first time in five months.
Nonfarm payrolls in the state fell by about 1,500 from February to March, according to survey data released Friday by the US Bureau of Labor Statistics. Job cuts in the hotel and catering industry put a particular strain on the economy.
Despite the slight decline in the number of workers with jobs, a separate federal survey showed that Iowa’s unemployment rate was actually improving, from 3.5% in February to 3.3% in March.
The rate in Iowa is the 20th lowest in the country. The state rate was 2.6% two years ago, before the COVID-19 pandemic forced mass business shutdowns.
Iowa’s pace of recovery continues to lag that of the country as a whole. Last year, the US added jobs more than twice as fast as Iowa.
Despite the sluggish growth, Beth Townsend, Iowa director of human resources development, said in a statement that the latest jobs report shows positive signs. Unemployment continued to decline, and the labor force – those who had work or were looking for work – increased.
“We’re starting to see real progress,” Townsend said.
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A few sectors in Iowa did well last month. According to the BLS, the retailers hired about 900 employees. And wholesale companies, such as companies that sell commodities, added about 700 workers.
But other industries suffered. The number of Iowans employed in health and social services fell by about 800, as did those in the arts, entertainment and recreation sectors.
However, the restaurants suffered the most. According to the BLS, the number of people employed in the accommodation and catering industry fell by 2,000 from February to March. While not yet where they were before the pandemic, companies in the industry had been steadily adding jobs for the six months through August.
Iowa Restaurant Association President Jessica Dunker said business owners across the state continue to struggle to find workers. The economy appears to have shifted as a result of the pandemic, she said.
A surge in online sales — linked to the opening of four Amazon.com warehouses in the Metro — has created new delivery and sorting jobs. And, Dunker said, restaurants no longer attract the state’s oldest and youngest workers.
“They just go into other industries,” she said. “(Restaurants are) so easy to choose from.”
She said workers used to take service jobs when they hit their upper 50s and early 60s and used the tips to make ends meet after retirement. But she said those workers have not returned.
At the younger end, other desperate businesses are poised to hire teenagers, a group that used to turn to restaurants for their first jobs, she said. Dunker’s own teenage sons have taken jobs as certified nursing assistants and as childcare workers.
At the Little Brother diner in Windsor Heights, owner Joe Tripp said he cooked from 6 a.m. to 9 p.m. every day for months.
Tripp, a veteran restaurateur who also owns the high-end Harbinger establishment on Ingersoll Avenue, said he hasn’t cooked in years. He prided himself on maintaining a full, steady staff.
“But there weren’t the vacancies to fill the vacancies,” he said.
After opening the diner last summer, he said he couldn’t nearly scrape together the number of employees he needed.
Tripp said he offers some of the best benefits in the industry. The company covers 100% of health insurance costs for Harbinger employees who stay for at least three years. He paid for his property manager’s Japan vacation in 2020 and is taking Harbinger’s kitchen team to Vietnam.
Despite this good reputation, applications would be slow to come in. He’s hired enough staff to reduce his own hours in the kitchen. But he would like to hire three more chefs, two more waiters and a bartender.
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At Lola’s Fine Kitchen in Ankeny, owner Heather Elliott closed business on some Mondays and Wednesdays last month. Without enough workers, she worked six days a week from 8 a.m. to 7 p.m. for two consecutive months, she said.
Her husband, a recruiter at an insurance company, worked at the checkout during lunch breaks. Her 12-year-old son worked at the cash register during his spring break.
Eventually, Elliott said she needed to reduce the days. Some of her employees needed time off, and she couldn’t fill the gaps.
“Some people need to go home and see their families,” she said. “You must have days off. You have events. Your life doesn’t revolve around that particular place.”
She said the restaurant recovered this month. She now guarantees that employees make at least $15 an hour regardless of tips, a move she believes helped attract new hires.
“It really gives them something that motivates them to like that,” she said, “to enjoy what they’re doing and want to put in the hours and want to be here.”
How does Iowa’s economic recovery compare to the rest of the country?
Since May 2020, when companies began hiring workers again, Iowa has regained 85% of the jobs lost in the first shock of the pandemic.
Although the state has recovered faster than it did during the Great Recession that began in 2007, Iowa still lags behind the rest of the country. Overall, the US has regained 93% of lost jobs.
Iowa’s problem isn’t that businesses here employ many workers in slow-growing jobs, said Peter Orazem, an Iowa State University economist. Instead, certain sectors in Iowa are simply creating jobs more slowly than their counterparts in other regions of the country.
In Iowa, the professional, scientific and technical services sector has shed about 500 jobs since the pandemic began. This sector, which includes everything from lawyers to accountants and engineers, has created 607,000 jobs nationwide over the same period.
The information sector, which includes broadcasters and publishers, has shed about 1,200 jobs in Iowa since February 2020. Nationwide, the sector has added about 26,000 new workers.
Iowa’s transportation sector, meanwhile, has been stronger than many industries in the state, hiring 2,600 workers since the pandemic began. In the US as a whole, however, the sector is creating jobs more than twice as fast as in Iowa, with the transportation workforce increasing by 608,000.
Orazem said he’s particularly concerned about a decline in the number of Iowa workers — workers who are either employed or looking for work.
From 2019 to 2021, the participation rate of Iowans between the ages of 45 and 54 fell from 92% to 84%. Nationwide, the rate for this age group has remained constant at around 81%.
Orazem said the drop was worrying and that it was difficult to understand what happened. It’s not an age group that typically needs childcare, he said, because most of their children would be in high school.
At the same time, most people between the ages of 45 and 54 are not taking early retirement because of the pandemic, he said.
“To be honest, I don’t know what people do between the ages of 45 and 54,” Orazem said. “These are the highest earning years of a person’s life.”
Which Iowa businesses haven’t recovered from the pandemic yet?
The healthcare sector remains the biggest drag on Iowa’s economy, with about 10,900 fewer employees than in February 2020.
Other sectors still struggling: accommodation and catering services; manufacture of durable goods; local government; and Arts, Entertainment and Recreation.
On the other hand, retail companies have hired 4,900 new employees since the pandemic began. Other sectors that create jobs: manufacturing of consumer goods, transportation and management of companies.
Tyler Jett covers jobs and the economy for the Des Moines Register. You can reach him at [email protected], 515-284-8215 or on Twitter at @LetsJett.
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