Business leader: Iowa’s population growth ‘not a good spot to be in’
Des Moines businesses are short on skilled workers. (Photo by Perry Beeman/Iowa Capital Dispatch).
The director of one of Iowa’s major business groups on Wednesday said Iowa’s slow population growth means the fight for workers will be a key issue coming out of the pandemic.
“Iowa ranks first in the nation for labor force participation. However, as you all know, when that’s paired with our consistently low unemployment rate, we have a persistent shortage of available workers for businesses to grow and thrive in this state,” said Joe Murphy, executive director of the Iowa Business Council, which represents 22 of Iowa’s largest employers.
“That issue has been exacerbated throughout the pandemic and now that we are coming out of the pandemic, it’s something that we’re still very concerned about,” Murphy added. He spoke at an Iowa Business Council webinar on economic development.
Iowa’s population grew 4.7% from 2010 to 2020, the U.S. Census Bureau reported. The latest Iowa population estimate, released this week, was 3.19 million.
Iowa grew more than the neighboring states of Missouri and Wisconsin from 2010 to 2020, the bureau reported. Illinois lost population in that time. But Minnesota, North Dakota and South Dakota had higher population growth than Iowa.
Among the states with the largest gains in that decade were Utah at 18.4%, Idaho at 17.3%, Texas at 15.9%, North Dakota at 15.8%, Nevada at 15% and Florida at 14.6%.
Iowa’s growth over the past five years, under 1.5%, “is not a good spot to be in,” Murphy said. “That is very concerning to us as we think about the future of the state and the future economic opportunities that the state will afford.” The state ranks 45th in ethnic diversity., he added.
Murphy said Iowa’s gross state product rose nearly $5 billion in the past year, to $194.7 billion.
Iowan ranks in the top 10 states in manufacturing value, Murphy said. But the state dropped 14 spots in the rankings of “best run states” mainly because of slower-than-average growth in gross domestic product and a weaker five-year growth rate in jobs created, Murphy said. “That largely speaks to the fact that our population has become stagnant. So it’s impossible for companies to create jobs if there aren’t people to actually take those jobs.”
That means trying to lure workers from other states, Murphy said. “It’s important for all of us to meet the challenge from a population perspective and really try to move forward and have Iowa as the most welcoming and inclusive place possible,” he added.
Iowa’s corporate tax structure ranks 46th in the country, “and not competitive at all,” Murphy said. The income tax system ranks 40th. Some of that has to do with the complexity of the code and the use of tax credits. The council is pushing for a simpler code that would make it easier to lure new businesses and residents, he added.
The council’s most recent Economic Outlook Survey scored 62.5, the third straight quarter of more rosy outlooks after a drop during the beginning of the pandemic. Anything above 50 is considered a sign of growth.
“We know we aren’t out of the woods on the pandemic or the economic consequences associated with it, but we’re in a good spot,” Murphy said of the economy overall.
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