Where do jobs come from?

Food for thought for Iowa economic recovery policy choices: The vast majority of new businesses in Iowa are independent firms born here. The bulk of job creation comes from independent or standalone businesses.

See the report here

The Governor’s Economic Recovery Board is scheduled next week (Oct. 6) to discuss and recommendations from working groups and present them to Governor Kim Reynolds. This comes as Iowans have filed nearly a half million initial unemployment claims during the current COVID-19 recession, creating serious gaps in the economy.

This is a good time to remind policy makers how most businesses and jobs are created, and where to focus policy responses. The Board should not look e toward the big fish that get all the publicity when the state lands a new manufacturing plant, or a national corporation announces the opening of a new facility. Instead, they should pay attention to entrepreneurial activity and new businesses.

Year in and year out new businesses are being formed, and innovative small firms grow by leaps and bounds. At the same time, branch plants are shuttered, small businesses fail, high-tech stars are bought up and moved out of state. Taking all these changes into account, what accounts for the bulk of employment growth in Iowa? And what does this tell us about economic development policy?

Common Good Iowa research examines business dynamics in Iowa over 22 years. This work relies on a database of all business establishments that existed in the state during the period 1992 through 2014.[1] This allows us to identify all business establishments born in Iowa over this period and those moving into or out of the state, or dying. And it allows us to measure the employment in those establishments year by year.

Noteworthy points:

    • The vast majority — 85 percent — of new businesses in Iowa are independent firms born here. Only one in eight are new branches of existing firms, and just 1.4 percent are businesses or branches moving here from elsewhere.
    • Over the 10-year period 2004 to 2014, the net growth in Iowa jobs came almost entirely from independent firms, and mostly from the birth of new firms. As the chart below shows, job growth from new independent businesses outnumbered the jobs lost in businesses that died by 71,623. Independent firms that were already in Iowa in 2004 contributed another 40,000 jobs. Branch plants, on the other hand, showed a net loss of jobs over that period.

Independent Businesses: Major Source of Iowa Job GrowthBut here’s the key: While the average branch plant and independent businesses had the same history of job creation over time, there are far more independent businesses starting up in the state. The result is that the bulk of job creation comes from those independent or standalone businesses. In fact, nearly a third of all the jobs that existed in Iowa in 2014 were in new businesses born in the past 10 years, and most of those were independent firms. Only 1 percent of the jobs were in businesses that moved into Iowa from elsewhere.

The implications for state and local economic development policy are clear. No matter how you look at it, the birth of new independent businesses is the major source of net job growth. This reality calls for a shift in policy away from incentives to attract branch plants and out-of-state businesses, towards investments in education, research, work supports, entrepreneurial education, and the quality of life factors that have been shown to contribute to entrepreneurial activity.

 

[1] The five states are Iowa, California, Texas, Massachusetts and North Carolina. For a complete discussion of data sources, research method, and results for the other four states in the study, see Peter Fisher, Business Survival and the Fiscal Effects of State Incentive Policies. Report prepared for the Ewing Marion Kauffman Foundation. The Iowa Policy Project, November 2018.

Peter S. Fisher is Research Director of Common Good Iowa, recently formed by the merger of two Iowa-based, nonprofit, nonpartisan public policy organizations, the Iowa Policy Project and the Child and Family Policy Center. Fisher holds a Ph.D. in Economics from the University of Wisconsin-Madison, and he is professor emeritus of Urban and Regional Planning at the University of Iowa. He is the author of a number of reports for the Iowa Policy Project from 2001 through 2020 dealing with state economic development and fiscal policy, including tax incentives and tax increment financing.

IPP, CFPC form Common Good Iowa

A new chapter for great work by longtime partners in Iowa policy analysis — now as one organization, Common Good Iowa.

Today we have exciting news. The Iowa Policy Project has joined with our longtime partners at the Child and Family Policy Center to formally create a new organization, Common Good Iowa.

Look to Common Good Iowa for the solid research, rigorous policy analysis and focused advocacy that Iowans have come to expect from both organizations. Expect the same attention to critical issues that you have seen from IPP over two decades — and a new, invigorated approach to advancing a bold policy agenda. By joining to together we will have more capacity to coordinate our expertise on issues and communications, and wage successful campaigns to improve the lives of every person who calls Iowa home.

The creation of one organization out of two is the result of many months of discussions among board and staff members at both IPP and CFPC. We have always recognized that as each group has focused on some issues that the other has not, we share a common focus in other areas, including budget priorities and tax policy needed to fairly and adequately support those priorities. But we also have recognized that we need to connect the dots better between these many issues if we want our friends in the advocacy community to do so as well.

Common Good Iowa will, with one voice, draw attention to policy that connects these issues for the benefit of our entire community in Iowa — as we say, “the common good.”

Since the early discussions in 2000 that led to our founding in 2001, IPP has followed the vision of a “three-legged stool” for our work: economic opportunity (to include wages, jobs, education, wage theft, collective bargaining, economic development, pensions, and work supports including child care and Food Stamps); tax and budget issues, particularly tax fairness and revenue adequacy; and energy and the environment, including policy opportunities toward clean, sustainable energy choices and better water quality.

As you may know, IPP’s work on tax fairness and tax credits, as well as some of our research and advocacy on work support and safety-net programs, has been in cooperation and coordination with CFPC as the “Iowa Fiscal Partnership.” That brand on our work will go away as we are now formally one organization.

Common Good Iowa will carry on CFPC’s example as a leading advocate in Iowa on early childhood; children’s health, development and well-being; and family economic opportunity. As CFPC has done for many years, our new organization will continue to share data, link research to policy and promote best practices for improving child well-being as part of the nationwide Kids Count initiative.

Every staff member for both IPP and CFPC has a place in the new organization. Anne Discher, who has served as executive director of CFPC, will be the executive director of Common Good Iowa, headquartered in Des Moines. We will retain an Iowa City office, with IPP executive director Mike Owen becoming deputy director of Common Good Iowa. I invite you to reach out to Anne or Mike if you have questions about this new arrangement.

The name “Common Good Iowa” was chosen after great deliberation among staff and board of both organizations. It reflects our vision of public policy in Iowa. Philosophers, economists and political scientists have long debated and defined the common good, and there’s a powerful theme that links those conversations: public systems and structures for the benefit of all people, achieved through collective action in policymaking and public service. It feels utterly right for our new endeavor.

This is a great opportunity to reimagine our work. We’re at a moment when the devastating impact of racism, intolerance in our civic discussions, and years of neglect of our public systems have been laid bare for all to see. No Iowa community can thrive when some community members are systemically deprived of opportunity by our health, educational, human service and justice systems. We must do better.

As a largely white organization, we pledge to listen to and learn from our partners of color around our state, and to be not be just not racist, but, to borrow from scholar Dr. Ibram X. Kendi, to be anti-racist: to actively advance concrete policies and practices to dismantle the persistent inequities experienced by Black, Latinx, Asian, Native and other marginalized communities. We also commit to the internal work to become an organization that itself is attractive to a diverse, talented staff.

The merger is official now, although we will be putting finishing touches on our new brand over the next months. You’ll be hearing more about how you can celebrate virtually with us when we unveil our new logo, website, social channels and policy roadmap later in the year.

Until then you can reach Common Good Iowa staff at their existing CFPC and IPP email addresses, websites and social media accounts.

Sincerely,

Janet Carl

Vice President, Common Good Iowa Board of Directors
Former President, Iowa Policy Project Board of Directors

Six months: 1 in 4 Iowa workers file jobless claims

While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week.

The week ending July 25th marked the 26th week of the COVID-19 Recession. In that half year, 420,702 working Iowans (including another 7,441 last week) have filed for unemployment insurance. This is a staggering number. It represents almost one-quarter of the February 2020 labor force. And it is nearly four times the number of claims (107,344) filed by Iowans over the first six months of the Great Recession.

The largest differences between the last recession and this one have come from the eighth week on. The last 19 weeks represent 403,697 of the total increase in this recession, all of those weeks substantially higher than the comparable period in the Great Recession.

While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week. The HEROES Act, passed by the House in May, would extend the $600/week PUC program through January 31, 2021. The HEALS Act pushed by Senate Republicans would slash that benefit to $200 through the end of September, and then cap the total UI benefit at 70 percent of lost wages. If this passes, weekly benefits for Iowa’s unemployed would drop from an average of $927 per week to $527 per week — a cut of 43 percent. To add insult to injury, the Senate plan also neglects to extend the federal moratorium on evictions.

This is a perilous moment. With new unemployment claims holding steady at more than double the weekly claims of the Great Recession, and economic recovery faltering in the face of surging COVID cases, we need to protect Iowa’s working families from both income insecurity and housing insecurity.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.

Data clear: New stimulus needed

Basic protections needed in unemployment insurance, SNAP, energy and other assistance as the COVID-19 virus surges in Iowa and other states in a weak economy.

As the long-awaited next round of federal aid and stimulus remains mired in political infighting, the hardship in Iowa — and around the country — is acute. As a new report from the Center for Budget and Policy Priorities (CBPP) makes clear, households are struggling to pay for the basics now, and that need will only grow if the $600 per week federal “PUC” boost to unemployment insurance benefits expires as scheduled next week.

The receipt of SNAP (food stamps) is up 14 percent in Iowa since February of this year, but the share of Iowans reporting food insecurity continues to grow. According to the CBPP’s analysis of the Census Bureau’s Household Pulse Survey, 1-in-8 (12 percent) Iowa families with children reported (for the last week of June and first week of July) that their household sometimes or often didn’t have enough to eat in the last seven days.

Housing insecurity is also a growing problem. Iowa set up a small fund with CARES Act funds to provide short-term assistance for those unable to make rent or mortgage payments — but disqualified those receiving PUC benefits from even applying. There is about $20 million left in the fund (out of $22 million) but when the PUC expires next week, the demands on this program will skyrocket. According to CBPP, 1 in 6 Iowa tenants are already behind on their rent.

These hardships will be especially stark for Iowa’s Black and Latino workers and their families. Unemployment rates are persistently higher for workers of color. These workers are disproportionately represented among the front-line and manufacturing (especially meat processing) jobs that have posed a higher risk of exposure to the virus. In the absence of meaningful and enforceable workplace protections, the temporary boost to UI benefits provided something of a refuge. As an administrative judge concluded in approving unemployment compensation for a worker who quit because of safety concerns concluded in one recent UI case, “the working conditions at Tyson were unsafe, intolerable and detrimental, and rose to the level where a reasonable person would feel compelled to quit.” But that option evaporates next week.

All of this hardship would be even worse in the absence of the CARES Act provisions for enhanced unemployment insurance, and increased federal support for SNAP, LIHEAP (Low-Income Home Energy Assistance Program), and other social supports. Iowans are suffering with those programs in place, and they will suffer more if social supports are allowed to return to levels previous to COVID-induced shutdowns.

The latest data on initial unemployment claims, released today, show the persistence of Iowa’s economic woes during the pandemic, with nearly 400,000 filing claims in the last 18 weeks.

It is crucial that, with the virus surging in Iowa and other states and the economy projected to remain weak, that our federal representatives move quickly to enact a stimulus package that continues and expands upon these basic protections. We need an extension of expanded unemployment benefits, more opportunities for paid leave, more federal support for child care, SNAP, and LIHEAP, and robust fiscal relief for states and localities. And it is just as crucial that Governor Reynolds and the Iowa Legislature pass along any discretionary state assistance to those in the most need.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project and a history professor at the University of Iowa.

Iowa jobless claims numbers daunting

Initial jobless claims keep climbing in Iowa. Yet, as the crisis persists, the safety net for Iowa’s unemployed is about to unravel.

In the last week, another 11,125 Iowans applied for unemployment insurance. That brings the total, in the 24 weeks since the COVID-19 recession began in February, to over 400,000 — or almost a quarter of the entire Iowa labor force. Of that, nearly 388,000 (387,847) are the change over the last 17 weeks, in which these numbers first spiked.

Let’s put that in perspective: 400,000 unemployment claims is over four times the number filed over the first 24 weeks of the Great Recession. Over that span, from December 2007 to May 2008, weekly claims peaked at 13,542 in late December 2007 — the only week in the Great Recession when Iowa unemployment claims topped the 10,000 mark. In the last 24 weeks, weekly claims have exceeded 10,000 eleven times. Indeed, the average since early February is almost 17,000 new weekly claims — 3,000 higher than the worst week of the Great Recession.

As the crisis persists, the safety net for Iowa’s unemployed is about to unravel. On July 25, the federal Pandemic Unemployment Compensation (PUC) program — the $600 weekly boost to regular state benefits — comes to an end. For the nearly 150,000 Iowans currently receiving unemployment benefits, the checks will be a lot smaller: For an unemployed worker who had been working full-time at minimum wage, the weekly check will shrink from over $800 to barely $200. Once the applications of the 11,125 Iowans who filed for unemployment last week are processed, the PUC will be a distant memory — and their benefits will replace barely half of their lost wages.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project.

Warning: Edge of a cliff

With COVID cases surging, extending federal support for unemployment insurance is crucial to fighting this recession — and the virus that caused it.

In less than two weeks, the Pandemic Unemployment Compensation (PUC) program — the $600 federal supplement to unemployment insurance benefits — will come to a close. The impact, for Iowa’s working families and for the Iowa economy, is likely to be devastating.

Our regular unemployment insurance system reaches only about half of the workforce and replaces barely half of an unemployed worker’s wages. In order to support those workers thrown out of work by the pandemic and, more broadly, to support the public health goal of sheltering in place, the CARES Act extended eligibility to most of those not covered (Pandemic Unemployment Assistance or PUA) and added $600 a week to the benefit paid under regular UI and the PUA.

This means a full-time minimum wage worker who lost their job qualifies for a regular weekly benefit of about $152.00 (Iowa unemployment insurance replaces about 52 percent of wages), and an additional $600 under the PUC — for a weekly benefit of $752.00. An unemployed worker had had been earning the median hourly wage in Iowa ($18.40) qualifies for a weekly benefit of $387.00 and an additional $600 under the PUC — for a weekly benefit of $987.00.

The $600 supplement under the PUC and the entire benefit paid to non-traditional workers under the PUA are all paid for the federal dollars. That has had a huge stimulus effect in Iowa, sustaining not just individual consumption but state and local tax revenues as well. Currently there are 145,875 Iowans either receiving regular UI+PUC or waiting for their claim to be processed, and another 18,456 receiving PUA+PUC. That represents an inflow of over $102 million into the state every week. Come July 25th, when only the federal contribution to the regular PUA benefit is left, and that will slow to a trickle, barely $3 million a week.

The result? Many of the unemployed will see a substantial benefit cut, tumbling from near full replacement of wages for workers earning less than $65,000 to barely half that. At half-wages, few will be able to meet basic expenses. That blow will reverberate throughout the economy. According to new estimates by the Economic Policy Institute, failure to extend the PUC beyond July will cost Iowa another 42,586 jobs over the next year.

Meager benefits and persistently high unemployment, in turn, will put new demands on other forms of social support, including SNAP and rental and utility assistance. And they will press the unemployed — unable to pay their bills — back into the labor force at the expense of their health and the public health. With COVID cases surging in Iowa and many other states, the extension of federal support for unemployment insurance is crucial to fighting this recession — and the virus that caused it.

Colin Gordon is a professor of history at the University of Iowa and is senior research consultant at the nonpartisan Iowa Policy Project in Iowa City.

Iowa’s continuing jobs crisis

The last time the unemployment rate was this high, Charlie Chaplin was starring in Modern Times, and Jesse Owens was upstaging Adolf Hitler at the Berlin Olympics.

In the week ending June 13, another 9,516 Iowa workers filed for unemployment insurance. This brings the total new claims since the start of the COVID recession to over 350,000, or one-fifth of the labor force.

The seasonally adjusted unemployment rate for Iowa in April (the latest month for which data is available) was 10.2 percent, but that is a serious undercount for two reasons:

First, it misses those who, faced with such a dismal job market or family commitments, have dropped out of the labor force altogether. If you are not actively looking for work, you don’t get counted as unemployed. In April, Iowa’s labor force participation rate (the share of the working age population who are working or looking for work) dropped below 70 percent for the first time since the Great Recession.

Second: misclassification. In calculating the April unemployment rates, the Bureau of Labor Statistics misclassified those furloughed or unable to work because of family commitments as “employed but unable to work.”

If we take these factors into account, the real unemployment rate in Iowa is probably closer to 15 percent. The last time the unemployment rate was this high, Charlie Chaplin was starring in Modern Times, Jesse Owens was upstaging Adolf Hitler at the Berlin Olympics, and the cement in the Hoover Dam was not yet dry.

Colin Gordon is senior research consultant for the Iowa Policy Project (IPP), and a professor of history at the University of Iowa. He has provided job and work-life issue analysis for IPP since the organization started in 2001.

Worker safety: Who gets protected?

Public policies should be assessed on whom they put at risk and whom they reward. The blanket business immunity in SF2338 during COVID-19 comes with a failed record of protecting Iowa workers.

The COVID-19 crisis poses a dizzying combination of health and economic risks, and it has forced us to rethink the ways in which our public policies protect us against those risks. The underlying logic of the CARES Act, for example, was based on the assumption that sharing public spaces — especially workplaces — posed a grave threat to the public health. Its benefits — including a limited program of paid leave and a relatively generous expansion of unemployment insurance — were designed to make not working and sheltering in place possible.

That instinct was right but its execution was dismally flawed. State unemployment systems could not begin to manage the avalanche of claims. The virus flourished in settings — most starkly meatpacking plants — that ploughed ahead as “essential” businesses. And states impatient to open up again did everything they could to discourage workers from accessing the new federal benefits — a point Iowa Workforce Development Director Beth Townsend all but conceded in testimony before Congress last week.

From the first hint of the virus to the rush to reopen, Iowa has done perilously little to protect its workers, their families, and their communities. Safe workplaces are pretty clearly defined in the guidelines developed by both the CDC and the Occupational Health and Safety Administration (OSHA). But there is nothing in state or federal law that compels employers to follow them, and ample evidence that many are not. Even in the midst of local outbreaks, county health directors lacked the authority to shut down production. “They just don’t get it,” as the Tama County emergency management coordinator, complained in the midst of an outbreak at the National Beef plant there, “They will keep going until all of their employees have this virus. They would rather risk their employees’ health and keep their production going.” As Governor Reynolds coldly reminded us in late May: “Our recovery is contingent on our ability to protect both the lives and the livelihoods of Iowans. We can’t prioritize one over the other.”

Those priorities came into sharper focus this week. In a brief and largely aimless session, the Iowa Legislature offered scarcely a passing reference to the health and economic insecurity facing Iowa’s working families. They did, however, jump to address the insecurity of Iowa employers — offering up blanket immunity from COVID related claims coming from workers or consumers.

The “COVID-19 Response and Back to Business Limited Liability Act” (Senate File 2338) requires that any claims of exposure to the virus meet a standard of “reckless disregard” or “actual malice.” Employers “shall not be held liable for civil damages for any injuries sustained from exposure or potential exposure to COVID-19 if the act or omission alleged to violate a duty of care was in substantial compliance or was consistent with any federal or state statute, regulation, order, or public health guidance related to COVID-19 that was applicable to the person or activity at issue at the time of the alleged exposure.” Since such regulations or guidelines are virtually non-existent, it is hard to imagine what such threshold might look like.

At a time of such peril and uncertainty, this is a remarkable and damning expression of our state’s priorities. It is a solution in search of a problem; there has been no stampede of frivolous damage claims — in Iowa or elsewhere. And it ignores the more obvious and equitable tack, which is to protect the workers in the first place, and allow them to refuse work (and draw unemployment benefits) if that protection is not sufficient. “Everybody wins when businesses follow clear, science-based guidelines to protect health and safety,” as The New York Times put it in a recent editorial. “Workers and customers are less likely to get exposed to the virus, and businesses are less likely to get exposed to litigation.”

Now, more than ever, our public policies should be assessed on whom they put at risk and whom they reward; on whom they protect, and whom they do not. The blanket immunity offered Iowa businesses by SF2338, alongside our abject and continuing failure to offer any meaningful protection for Iowa’s workers, fails that assessment on all counts.

Colin Gordon is senior research consultant for the Iowa Policy Project and a professor of history at the University of Iowa.

Encourage Iowans to seek both jobless, housing benefits

The new rental and mortgage assistance program offers relief in one breath to Iowans economically harmed by COVID-19, and then snatches it away in the next.

Amidst the worst employment crisis since the Great Depression, Governor Kim Reynolds and her colleagues seem fixated not on the magnitude of the crisis, but on the generosity of the CARES Act unemployment programs and the obstacle they apparently pose to getting Iowans back to work.

First, Iowa Workforce Development issued a chilling directive (from which they have now retreated) which very nearly suggested that only those actually laid out by the virus had any claim on unemployment insurance. Now the new “Iowa Eviction and Foreclosure Prevention Program,” (which offers rental and mortgage assistance to households “at risk of eviction or foreclosure due to a documented COVID-19 related loss of income”) actually disqualifies those receiving unemployment insurance from applying.

The logic here is difficult to fathom. Those thrown out of work by the pandemic are struggling to make ends meet, and to sustain rent or mortgage payments. Aren’t these exactly the Iowans who should be eligible for a program of rental or mortgage assistance? Instead, the new program offers assistance to “Iowans who have been economically impacted by COVID-19,” in one breath and then snatches it away in the next — penalizing and stigmatizing those most at need by treating receipt of the federal Pandemic Unemployment Compensation (PUC) benefit ($600 a week through July 25) like a failed drug test.

But even if we put the savage inequity of this aside, the Governor’s evident distaste for the federal supplements to unemployment insurance is just bad fiscal policy. Let’s do the math. As of this week, 178,619 Iowans are receiving regular unemployment benefits and another 17,545 are receiving Pandemic Unemployment Assistance (PUA).  The PUA base benefit is paid for with federal dollars, and recipients under both regular UI and the PUA also get the $600 PUC benefit through July. That’s an inflow of over $120 million a week, from the federal treasury into the pockets of working Iowans.

If we assume an effective state income tax rate of 2.3 percent and effective sales tax rate of 5.3 percent (both based on estimates by the Institute on Tax and Economic Policy for Iowans earning between $22,000 and $40,000/year), that’s a boost to state income tax receipts of $2.8 million dollars a week,[1] and a boost to state and local sales tax receipts of $6.4 million dollars a week. In the seven weeks before the PUC expires July 25, that’s a net revenue of gain of $64.5 million — or enough to pay for the mortgage and rental assistance program (which has been allotted $22 million of Iowa’s CARES Act funds) almost three times over.

And these are conservative estimates. The unemployment totals do not include the over 150,000 UI (including those from the last two weeks) that have been filed but not yet processed. They do not include the retroactive benefits payable to those qualifying for UI. They are based on the minimum monthly benefit under the PUA. And they do not include the stimulus or tax revenue impact of state-funded UI benefits.

For the health and safety of working Iowans, we should be encouraging and enabling as many as possible to qualify for unemployment benefits. And, as long as federal government is picking up the tab, we should jump at the chance to backfill state and local budgets with the tax revenues that accompany such benefits.

[1] The state’s June 3 fiscal update echoes this estimate, attributing a $31.4 million increase in state income tax receipts over the 10-week period from March 19 to June 2 ($3.1 million a week) to withholding from UI benefits. This estimate is slightly higher because it includes the withholding from state-funded benefits as well.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.

Losing jobs and health access

As Iowa’s unemployment rate climbs towards numbers not seen since the Great Depression of the 1930s, we are shedding health coverage — in the midst of a sustained public health crisis — almost as fast as we are shedding jobs.

One of the cruelest ironies of the COVID-19 unemployment crisis is that, alongside the job losses, many workers and their families are also losing health coverage.

In Iowa, almost two-thirds (64 percent) of the nonelderly population rely on employment-based health insurance. As Iowa’s unemployment rate climbs towards numbers not seen since the Great Depression of the 1930s, we are shedding health coverage — in the midst of a sustained public health crisis — almost as fast as we are shedding jobs.

Even in good times, our crazy patchwork of health coverage — job-based care for most, Medicare for the elderly, Medicaid for low-income families, the ACA “marketplace” for others, and no coverage at all for the rest — is an engine of inequality. The better the job, as a rule, the better the health coverage. And in bad times, that coverage can easily disappear. Our reliance on job-based coverage, as one health policy expert famously put it, is like an umbrella that melts in the rain.

By one estimate (through May 14), about half of the 300,000 Iowans who lost their jobs in the COVID-19 recession also lost their health insurance. And this is a conservative estimate, as it does not count family members who might have relied on the same coverage and it is based only on those who lost their jobs and filed an unemployment claim.

These workers have some options — although the interruption of coverage alone is a frightening prospect in these troubled times. A lucky few might be able to pick up coverage through another family member who remains employed (and insured). Those losing job-based coverage have the “COBRA” option of continuing coverage by paying the full premiums themselves. But this is a costly option (the annual premium for job-based family coverage in Iowa is over $18,000) that few can afford.

Most displaced workers will turn to public programs. Iowa’s Medicaid program offers coverage to adults earning less than 138 percent of the federal poverty level ($16,791 for an individual, $28,888 for a family of three), and Medicaid and CHIP cover children in families with incomes up to 302 percent of the federal poverty level ($65,594 for a family of three). Unemployment benefits count towards this threshold, but the supplemental $600/week in Pandemic Unemployment Compensation (available through the end of July) does not.

Those whose family incomes fall above the Medicaid or CHIP thresholds have the last option of the Affordable Care Act “marketplace” insurance. Iowa’s health insurance exchange is a “federally facilitated” marketplace, which means it cannot allow open enrollment outside the conventional enrollment window in November.

But loss of a job (and job-based insurance) does qualify for off-cycle enrollment, and the premium assistance available for those purchasing at least a bronze plan on the exchange can substantially reduce costs for those with income under three to four times the poverty level. But here again there is a catch: Unemployment benefits count as income in determining both eligibility for ACA assistance and the amount of the assistance.

All this underscores the inequity and inefficiency of our job-based health care system. It is uneven and unreliable. And it fails at its most elemental goal: to protect working Iowans from risks that are beyond their control.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project (IPP) and a professor of history at the University of Iowa. He has led IPP’s State of Working Iowa analyses since 2001, and is author of Dead on Arrival: The Politics of Health Care in Twentieth Century America, and Citizen Brown: Race, Democracy, and Inequality in the St. Louis Suburbs.