Peter Orazem, an economics professor at Iowa State University, found that states that ended the unemployment benefits have recovered their labor force more quickly. In those states, the July 2021 labor force was, on average, 1 percent larger than the labor force was in July 2019, not adjusted for population growth. States that kept the additional $300 a month benefit had labor forces 0.6 percent smaller on average than their labor forces in July 2019.
The increase cannot be entirely attributed to ending unemployment, however. The states that opted out of the benefits were also places that already had “policies that favored employment,” Orazem said.
“If you look at Iowa relative to the other states (that ended the $300 payments), it’s the poorest-performing in terms of labor force participation,” Orazem said.
Iowa did see a significant bump between June and July of this year. In June, there were 4.7 percent fewer people in the labor force than there were in 2019.
“That’s a net increase of 1.3 percentage points in one month, which is huge,” he said.
This story also covered by
Iowa Capital Dispatch, Aug. 20