Jobs in Iowa: Partly Sunny with Scattered Showers

The labor force grew by 2,900 workers last month. This could be a sign of increased confidence in the market, as more Iowans decide looking for work is a worthwhile endeavor.

Christine Ralston

I cannot wait for the day when The Iowa Policy Project’s monthly JobWatch headline reads unequivocally, “Nonfarm Jobs Increase for 12th Consecutive Month and Unemployment Remains Steady at 3 Percent.”

Alas, the forecast is still a bit mixed: Iowa is certainly making headway in nonfarm jobs numbers, but we continue to see high unemployment rates.

The good news is pretty good. The number of nonfarm jobs in Iowa increased by 7,300 to 1,474,200 in March. This increase is heartening, though we do have a ways to go. Iowa is still down 16,200 jobs compared to last March.

Then there is that other number: the unemployment rate. The unemployment rate edged upward to 6.8 percent, from 6.7 percent in February and well above the 5.5 percent we saw this time last year.  The last time the unemployment rate reached 6.8 percent was July 1986, when the state was recovering from the chronically high unemployment of the early 1980s.

As is usually the case, Iowans are fortunate to be better off in terms of unemployment than the rest of the nation. The national unemployment rate remained steady in March at 9.7 percent.

But there are other clues in these numbers. The labor force grew by 2,900 workers last month and is up by 12,700 over March 2009. This could be a sign of increased confidence in the market, as more Iowans decide looking for work is a worthwhile endeavor.

March marks the third consecutive one-month improvement in nonfarm jobs, and the sixth in the last eight months. Iowa has posted an average gain of 5,100 jobs per month for the last 3 months. We are currently down 54,000 jobs from last decade’s high point (1,528,2000 in November 2007). Continuing this trend would be great… and would start to push us closer to that headline I can’t wait to type.

Posted by Christine Ralston

Tax Day spin: Find refuge in the facts

It is quite possible there is no more heavily spun day on the calendar.

Mike Owen
Mike Owen

Today is, as we all know, “Tax Day,” the deadline for filing our federal individual income tax returns. It is quite possible there is no more heavily spun day on the calendar. You can’t even find refuge on the comics pages.

While the Tea Party folks and others have their spotlight today, take a few minutes to read this masterful year-old blog post from our friends at the Oklahoma Policy Institute: http://okpolicy.org/blog/taxes/classic-reruns-no-tax-day/

Beyond that perspective on the value of taxes in funding essential public services, other useful information also is worth considering today about who pays taxes. Citizens for Tax Justice, in a report this week about tax changes resulting from the recovery, or “stimulus,” legislation signed by President Obama last year, notes the following:

  • 99 percent of working families and individuals in Iowa benefited from at least one of the tax cuts signed into law by President Obama.
  • Working people in Iowa received $1,115, on average, from these breaks.
  • These tax breaks benefited working people at all income levels.

For the full report (3-page PDF) click here and for the Iowa-specific summary (4-page PDF) click here.

David Leonhardt of the New York Times and Ezra Klein of the Washington Post (whose blog links to Jon Stewart’s take of the situation on “The Daily Show”) illustrate that lower-income Americans pay taxes, even if others might not want to acknowledge it.

As Stewart suggests, actually getting the facts about who pays taxes — which also include federal payroll taxes and state and local taxes — might not fit the outrage being pushed at a given moment: “Knowing that doesn’t make you as mad, does it?”

Iowa Fiscal Partnership reports have shown state and local tax impacts are far greater as a proportion of income for low-income Iowans than for higher-income Iowans, while corporate-income-tax loopholes and other tax breaks are draining the state treasury with little accountability, and critical services are being cut.

All food for thought on this day.

Posted by Mike Owen, Assistant Director

Why Should Iowans Pay for Stockholders’ Interests?

If a nuclear feasibility study is needed for Iowa, it should be independently done.

Teresa Galluzzo
Teresa Galluzzo

MidAmerican Energy asked the Iowa Legislature for $15 million of ratepayer money, mine and yours, to explore whether it should build a nuclear plant in Iowa. While I firmly agree that Iowa ought to aggressively pursue options to reduce greenhouse gas pollution, I find it very unsettling that state lawmakers overwhelmingly approved this request.

MidAmerican Energy must put its shareholders’ interests first and thus the company’s feasibility study would necessarily prioritize how a nuclear plant would perform for stockholders before the impacts on rate-paying Iowans.

Even as a leader in wind-powered generation — 17 percent to 20 percent of our electricity production — and energy efficiency, both thanks, in part, to substantial efforts by MidAmerican Energy, Iowa must continue to evaluate its energy future, because we need to do more to address climate change. If it is necessary to study further whether new nuclear plants are a viable part of our generation mix, such research should be done by an independent group and include analysis of how nuclear would impact Iowans’ rates and safety.

Governor Culver should consider this before joining the General Assembly in a giveaway — from utility customers’ pockets — to MidAmerican Energy for a study that could perhaps be done by an independent group at less expense to Iowans.

Missing an opportunity for tax-credit reform?

Nothing is objectionable about proposed tax-credit reforms — but much more needs to be done.

Christine Ralston
Christine Ralston

Iowa is missing an opportunity to implement strong transparency measures and to recapture revenue that it has been allowing to slip away for years.

Legislation passed by the Senate and now before the House appears to make only small, cosmetic changes to a serious structural problem. Generous tax credits have been leaking revenue out of the state for many years. Considering the recent scandal in the film tax credit program and the fact that Iowa, like most other states, faces revenue shortfalls of historic proportions, the state very much needs meaningful reform.

The Governor’s Tax Credit Review Panel made promising recommendations, and the Governor supported those recommendations when he issued a call for action in his Condition of the State address. Yet, the legislative package falls far short of the panel’s recommendations. For example:

Table comparing tax-credit reform proposals

It is important to note that lowering a cap is not the same thing as “saving” money. When the sum of all business credit claims is not reaching that cap, then the state is only reducing its potential liability and not saving any actual dollars.

The proposal is also lacking in essential new transparency measures. No additional disclosures regarding tax credits and expenditures are proposed in the plan. Iowans should know who is getting their tax dollars.

And this bill is certainly not good news for the thousands of Iowans who are seeing important safety net programs and jobs disappear during this recession.

Does this bill do something? Yes. Does it do much? No. Nothing in this bill is objectionable when considering the principles of sound tax policy. That said, much more needs to be done to move Iowa forward and to solve Iowa’s budget problems using an approach that is truly balanced.

Posted by Christine Ralston, Research Associate

Despite Job Boost in January, Lower Numbers Than Thought

The new numbers present some reason for hope for job-seekers — but also show Iowa jobs are falling short of demand. An extension of unemployment benefits in this climate would be important, to help struggling families and the economy.

Christine Ralston
Christine Ralston

Iowa nonfarm jobs grew in January, but revised December numbers are far below previous estimates. Nonfarm, or payroll, jobs rose by 4,600 in January to 1,463,400. Though a clear gain, it shows the number of jobs for December was vastly overstated. The January number is 5,400 jobs below the level that had been previously estimated for December.

The unemployment rate showed a slight increase following annual government revisions of employment data, to 6.6 percent from 6.5 percent in December. That December number had previously been reported at 6.6 percent.

The new numbers are the best numbers available, and they do present some reason for hope in what has been a very difficult period for job-seekers.

Over the year, from January to January, we see pretty similar trends to what we’d seen earlier. Iowa lost nearly 40,000 jobs in one year (38,200), and over 40 percent of the loss (16,600) came in manufacturing. These are jobs that traditionally pay better than most and offer health benefits.

It’s always best not to get too swept up in the monthly numbers because they are subject to revision. It’s better to take a step back and view them over time.

What the numbers do illustrate, however, is that Iowa jobs are falling short of demand for work. This yet again emphasizes the need for an extension of unemployment insurance benefits by Congress — both to help families make ends meet when jobs aren’t available and to bolster the economy. Unemployment benefits are spent in local economies, and that helps to create jobs.

Posted by Christine Ralston, Research Associate

Lessons from Oregon

Like Oregon voters, Iowa voters favor a balanced approach to budget challenges.

Christine Ralston
Christine Ralston

Iowa could learn something from Oregon voters about taking a balanced approach to budget challenges.

In a victory for fiscal prudence, Oregon voters recently passed two initiatives — Measures 66 and 67 — that upheld their legislature’s decision to use a balanced approach to their budget shortfall.

In Oregon’s case, lawmakers last session made cuts to the budget and raised income tax for the top 3 percent of filers. They also raised the corporate minimum tax from $10 and increased the corporate income tax rate for businesses netting over $10 million a year, and temporarily for most other businesses. As the Legislature already voted last session to use a balanced approach that included trimming the budget and raising revenue, this vote saves Oregonians from further cuts in important services. This is notable for two reasons:

■     Oregon is known for its opposition to raising taxes, having last voted to raise taxes about 80 years ago when it added a state income tax.
•     It is one of five states that does not have a state sales tax.*
•     It also has a statewide cap on property tax.
•     It has a “kicker” law that automatically sends money back to residents when revenues exceed forecasts. Oregon has no rainy day fund.
■    Given the opportunity for a direct vote, Oregon voters chose to retain a balanced approach and raise taxes on themselves rather than make additional cuts that would decrease funding for education, health care and other essential services.

Oregon’s voters truly understand the importance of a balance during difficult economic times.

So, what does this mean for Iowa? For one, the Oregon vote remarkably reflects the results of a survey of Iowa voters last fall.

That survey for the Iowa Fiscal Partnership found that Iowa voters favor a balanced approach to addressing further budget problems:

■     Six in 10 favor some increase in taxes and fees rather than making cuts alone.
■     By the same ratio, Iowa voters believe the wealthiest Iowans — those earning over $250,000 per year — and big corporations pay less than they should in taxes.

The situation is complicated, and Iowa voters recognize that using budget cuts or tax increases alone will not solve our balance problem.

Oregon’s unemployment rate is 11 percent, compared to Iowa’s 6.6 percent. Oregonians understand that a budget has two sides, and a balanced approach to spending and revenue assures a responsible way to protect critical services in difficult economic times.

Posted by Christine Ralston, Research Associate


* Federation of Tax Administrators website, http://www.taxadmin.org/fta/rate/sales.html (accessed on January 29, 2010). The other states are Alaska, Delaware, Montana and New Hampshire.

Crunching those year-end Iowa jobs numbers

We need all the numbers to best view Iowa’s job picture.

Christine Ralston
Christine Ralston

Iowa’s latest jobs picture is a bit mixed up. Iowa’s unemployment rate was at 6.6 percent in December, remaining relatively stable through the second half of 2009. But the job numbers themselves dropped dramatically, shedding 13,200 in December alone for the largest one-month drop in more than a decade.

Though this month’s job losses were staggering in their rate of change, the whole year gives a better picture.

Iowa began 2009 with a seasonally adjusted unemployment rate of 4.4 percent, and jumped quickly – to 4.8 percent in the first month, and to 6.2 percent by June and 6.5 percent in July. The rate has stayed at or above that level ever since.

It’s important to understand that the unemployment rate alone doesn’t tell the whole story of those without work.

The unemployment rate:

  • does not include those who are working less than full time but would prefer full-time employment.
  • does not include those workers who have given up and dropped out of the job search; and
  • does not necessarily reflect job trends. In other words, the unemployment rate can go up at the same time we’re adding jobs — or vice-versa.

So what gives? First it helps to know the monthly numbers reflect two surveys that measure different things.

A U.S. Census survey of households determines the unemployment rate. When a person is unemployed he or she must be 1) jobless, 2) looking for a job, and 3) available for work.[1] In other words, not every person without a job is considered unemployed.

People meeting that definition as “unemployed,” along with those who are employed, constitute the labor force. The unemployment rate is the percentage of the labor force that is unemployed.

It’s not perfect: Someone who has lost his/her job and has quit trying to find a job at a given point in time is no longer counted as unemployed, and therefore is not reflected in the unemployment rate. And someone who lost a job with health-care and retirement benefits may now be working independently — at lower pay and without benefits — but is counted as employed. That person is employed, but is really underemployed.

So the unemployment rate does not necessarily measure job quality or the ability of the economy to meet the demand for jobs.

The monthly nonfarm job numbers, on the other hand, come from a payroll survey of employers. It does not count workers; rather, it counts jobs, which is a more transparent way to know what jobs employers are making available.

The nonfarm job number, too, is not perfect. In fact, one person with two jobs is counted twice. And it doesn’t tell whether the jobs are full- or part-time jobs. But it’s a pretty good measure, because it shows changes in the number of jobs the economy is supporting, month to month and year to year.

Monthly nonfarm jobs 2009Rather than focusing too heavily on one-month changes, we can see that during all of 2009, nonfarm payrolls fell by 40,100 jobs, or an average of 3,300 per month. In 2001, the year of the last recession before the 2009 recession, the average job loss was 2,100 a month.

A few key points from the nonfarm jobs numbers, which show changes by sector for the year:

  • Nearly half of the net nonfarm job losses for the year were in manufacturing — 19,900.
  • We had losses of 7,900 jobs in trade, transportation and utilities; 7,700 in construction; and 4,500 in leisure and hospitality.
  • Only three sectors showed a net gain: education and health services, 2,600; professional and business services, 1,200; and financial activities, 900.

The economy leaves Iowa with a lot of room for improvement. Employment is often one of the last areas to show signs of recovery, so it is going to take some time to see big positive changes. It is also a reminder that we need all the numbers to best view the state’s employment picture.


[1] Bureau of Labor Statistics. http://www.bls.gov/cps/cps_htgm.htm#concepts.

Posted by Christine Ralston, Research Associate