Business council: Iowa’s worker shortage ‘bordering on a crisis’

Business leaders cheered legislation approved in 2021 addressing workforce issues such as housing, child care and broadband. Shown is downtown Dubuque. (Photo by Perry Beeman/Iowa Capital Dispatch)

Iowa’s lack of workers is “bordering on a crisis” after the state’s population dropped, a leader of the Iowa Business Council said Wednesday.

“This is the first time since we’ve been issuing (the annual Iowa Competitive Dashboard beginning in 2011) that IBC is reporting that our population literally declined,” Executive Director Joe Murphy said at a news conference Wednesday. “It’s bordering on a crisis with respect to the population,” he added.

“A healthy state is a growing state,” Murphy said. “As businesses look to expand in Iowa, they can only do so with respect to the available workforce here in the state.”

The nonpartisan, nonprofit organization represents Iowa’s top employers. The council’s annual report on Iowa’s competitiveness suggested Iowa take advantage of some workers’ willingness to move among the states as the pandemic leaves many looking for work.

“Long-term prosperity will be constrained by a lack of people to fill jobs. Growing Iowa’s overall population will be critical to building the workforce pipeline and expanding state revenues,” the council’s report states.

The council’s report states that Iowa’s population growth “continues to be outpaced by other states” and does not meet businesses’ workforce needs. “Iowa must capitalize on individual’s willingness to move to new locations and states as a result of the pandemic and the normalization of remote working opportunities,” the report states.

The latest Iowa Competitive Dashboard, released Wednesday, notes: “Iowa ranks first in the nation for labor force participation. However, when paired with the state’s consistently low unemployment rate, Iowa faces the persistent shortage of available workers for businesses to grow.”

The Iowa Business Council represents 22 of the state’s largest employers.

The council noted that Iowa’s most recent annual population estimate from the U.S. Census Bureau’s American Community Survey is 3,155,070, down from 3,156,145 the year before. Those figures are from the 2019 and 2018 data. A 2020 update is not available yet, Murphy said. 

Murphy said the council welcomes moves by Gov. Kim Reynolds and legislative leaders to expand broadband access and to improve affordable housing. 

Reynolds has proposed $450 million in state funding for broadband improvements over the next three years. She has noted that Iowa ranks 45th among the states in broadband access and has the second-slowest internet speed.

“I think the fact that the governor has recommended $150 million every year for three years is an incredible investment and a bold idea to get that funding initiated,” Murphy said. “It is a large sum of money, but we don’t want to be here three years from how, having the same conversations about low connectivity rates and inferior infrastructure in respect to broadband.”

Housing was another priority raised by Reynolds and her Economy Recovery Advisory Board. Reynolds addressed the issue in her “Condition of the State” address last month and in tax-credit proposals detailed this week.

Murphy said the state will need to focus on its strengths in marketing campaigns. “We have wonderful schools, we have safe communities, we have low to zero commute times,” he added.

The council examined Iowa’s competitiveness in five areas, as it has in the past. The state ranked as competitive in all five, but was barely above “underperforming” in demographics and diversity:

Economic growth

Notable here is that Iowa’s manufacturing value as a percentage of gross state product fell two slots to No. 6 in the country.

“Iowa’s economy has remained steady, growing its gross state product to $194.7 billion and increasing median household income by more than $1,700 last year,” according to the report.

Education and workforce

The report notes that Iowa remains in the top half of states in fourth-grade reading and math skills. But reading skills fell by 3 percentage points and math by 4 points.

Governance

Iowa’s boast about being one of the best-run state governments in the land took a hit when the state fell to No. 21 in 2020 from No. 7 in 2019. The council attributed the drop to slower-than-average growth in the gross domestic product.

Health and wellness

Iowans’ waistlines improved a bit, with 33.9% of Iowans considered obese in 2020. That figure was 35.3% the year before.

Demographics and diversity

The population loss was the big story here. “Iowa’s population growth has consistently
trailed the national average and its net migration decreased by more than 2,300 people in the past year,” the report noted.

Perry Beeman
Senior reporter Perry Beeman has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.