Orazem: Iowa's biggest challenge is rebuilding labor force

January 31, 2022

Peter OrazemPeter Orazem, university professor, was a featured speaker at the Dubuque Area Chamber of Commerce’s 2022 Forecast Luncheon in January.

Meanwhile, wages also rose during the pandemic, with Dubuque showing an average hourly wage increase from $27.52 to $28.07 from November 2020 to November 2021, he said.

“Across almost all parts of Iowa, except Cedar Rapids, wages rose,” Orazem added.

However, Orazem said Iowa’s biggest challenge in building back up the labor force is its older population. The number of people ages 25 to 54 — what Orazem called the most in-demand age group for employers — in the state dropped by 1% in the state’s available labor force over the course of the pandemic. The percentage drop was even greater for the age groups older than that.

“The age structure is causing a huge problem,” he said. “The response is moving much more slowly to labor force recovery in Iowa. ... And every other state wants the same workers.”

Read the Telegraph Herald story.

Orazem was also one of the five panelists at the Jan. 27 Business Record Economic Forecast at the Sheraton West Des Moines, which drew 375 attendees.

Bankruptcies and foreclosures could surge
Peter Orazem said he’s worried that the "chickens are going to come home to roost" in the next year or two as bankruptcies and foreclosures that were staved off by government-imposed forbearance and stimulus payments end, resulting in potentially massive surges. In 2020, per-capita income increased at some of the fastest levels recorded, while bankruptcy filings were down 30%. If a big rebound in foreclosures and bankruptcy filings occur, it would result in a lot of real estate assets coming up for sale, potentially depressing the real estate markets. "Possibly, it could be good news, if it could all be sustainable, but my sense is that a large departure from past bankruptcy rates is going to be sustained in the future," he said.

Manufacturing employment rebounds
Iowa’s December employment numbers released earlier this week showed that aggregate employment in manufacturing is back to pre-pandemic levels equivalent to December 2019, Orazem noted. "So we've made back all of those losses. But within that there's a lot of variation in terms of how the different sectors are doing. So we're up to 4.7% unemployment in non-durable-goods manufacturing, and that's largely food and food security. And those are relatively shorter supply chains relative to durable goods manufacturing, where we're still down about 3 to 4%, in terms of employment." However, Iowa’s labor force has been unable to respond as quickly as many other states due to its aging demographic, which is a concern going forward, he said.



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