The State of Working Iowa
The Long, Slow Recovery: Confronting the Legacy of Recession

FOR IMMEDIATE RELEASE FRIDAY, August 30, 2013

View full report as 18-page PDF


IOWA CITY, Iowa (August 30, 2013) — Recovery has offered Iowans little respite from the challenges of diminished job security and widening inequality, the annual State of Working Iowa report finds.

In the 2013 issue of the report from the nonpartisan Iowa Policy Project (IPP), author Colin Gordon notes the brunt of the recession fell outside Iowa, on states vulnerable to the housing crash or subsequent collapse in consumer demand.

“But Iowans have experienced many of the same economic pressures — including a slow jobs recovery and stagnant wages. We also have experienced many of the same political pressures, including attacks on the public sector, shortsighted austerity budgeting, and a race-to-the-bottom scramble to cut business costs,” Gordon wrote.Colin Gordon

”In Iowa and the nation, the recession exaggerated a drift toward diminished employment security and widening inequality. And, in Iowa and the nation, the recovery has offered little respite.”

The report recommends a variety of policy moves to refocus state attention on policies that can be effective — such as raising and enforcing the minimum wage, investing in education and recognizing the value of collective bargaining to working families.

“Labor Day is a good time to remember that shared prosperity rests on policies and institutions that sustain the bargaining power of workers,” said Gordon, a senior research consultant for IPP and a history professor at the University of Iowa.

The report is available at www.iowapolicyproject.org, and in an online format that includes interactive graphics at www.stateofworkingiowa.org.

Among Gordon’s key findings:

• Almost seven years since the onset of the Great Recession in December 2007, the national economy is far short of pre-recession job levels. For Iowa, the picture is a little better, with the state finally reaching the pre-recession level in June.
• When accounting for population growth, Iowa remains about 52,000 behind the pre-recession mark and at its recent pace could clear the jobs deficit two years from now.
• Long-term unemployment has been stubborn — 33.5 percent in 2010 (over a third of Iowa’s unemployed were jobless for more than six months). That figure had fallen only slightly, to 27.5 percent, by the end of 2012.
• Recovery has eased some of the steep job losses from recession in Iowa, but Iowa still shows a net decline in two traditionally high-quality job sectors, construction and manufacturing.
• Wages not only have stagnated while workers have become more productive.
• The education premium — a return on the investment of higher education — has been uneven and uncertain. While a smaller share of the Iowa labor force would be deemed “low-wage” workers than 30 years earlier, a larger share has at least some college education yet falls within that “low-wage” category.

“In the nation and in Iowa, we see a long trend toward lower-wage service employment,” Gordon said. “Sustained losses in key middle-income sectors — such as manufacturing and public service — have not been accompanied by real opportunities elsewhere in the economy.”

The report notes that wages at the 90th percentile since 1979 have grown by about 16 percent, while the median wage has grown only about 3 percent — and wages at the bottom rung, the 10th percentile, have fallen by 3 percent.

“Iowa workers have not been the beneficiaries of growth in the economy. While the Iowa economy has grown by 67 percent since 1979 in terms of income, wage earners have seen little of that.

“The long-term pattern is pretty clear,” Gordon added. “Working families have lost a lot of ground across the last 40 years — except for a short period in the late 1990s. These years saw slow growth for all but the highest earners, despite steady gains in aggregate income and productivity, and steady gains in the educational attainment of workers. The last business cycle did not hit Iowa as hard as it hit the rest of the country, but our wages were already low.”

The State of Working Iowa 2013 is the latest in an annual series produced regularly by IPP since 2001. The Iowa Policy Project is a nonpartisan, nonprofit public policy research organization based in Iowa City. Reports are available to the public at www.iowapolicyproject.org.