stateofworkingiowa

Jobs

EDITOR’S NOTE: This Jobs summary is from the State of Working Iowa 2013. The historical background here provides useful context in 2014, but for the most up-to-date Iowa jobs numbers, see the Iowa Policy Project’s monthly Iowa JobWatch report.

The State of Working Iowa is shaped by long-term trends in productivity, job creation, wages and incomes, as well as the more immediate state of the economy — or where we are in the cycle of bust and boom, recession and recovery. The sad irony, of course, is that our latest business cycle is starting to feel more like a long-term trend. It is now almost six years since the housing bubble burst in late 2007, and over four years since the start of the recovery (the national economy bottomed out in June 2009), and we are far from where we should be in terms of job growth, wages, and economic security.

The Jobs Picture: Recession and Recovery

The depth and duration of the Great Recession is captured by the graphic below, which compares our current downturn to all other postwar recessions — for Iowa and for the country as a whole. For the nation, the Great Recession was (and is) deeper and longer than any other postwar downturn. Almost seven years since the onset of the recession in December 2007, the national economy is still far short of pre-recession employment levels. For Iowa, the picture is a little better. In June, we finally returned to the employment levels of the pre-recession peak.

Figure 1. INTERACTIVE Coming Up For Air: Job Loss in Postwar Recessions, U.S. and Iowa

Figure 1Source: Colin Gordon analysis

But this is only part of the story. As the recession and weak recovery have dragged on, the state has continued to add to its labor force through immigration, domestic in-migration, and high school or college graduations. So to calculate our real jobs deficit it is not sufficient to look at the number of jobs in Iowa at the pre-recession peak over five years ago, but rather at the number of jobs, given our current labor force, needed to return to pre-recession rates of employment and labor-force participation. That deficit, captured in the graph below, is about 52,000 jobs. In order to clear that deficit in the next three years (during which time the labor force will continue to grow), we would need to add about 1,500 a month over that span. Over the past year, our rate of job creation has been a bit better than that (about 2,100 jobs/month), putting us on pace to clear the jobs deficit by August 2015.

Figure 2. The Remaining Climb Ahead: Iowa’s Jobs Deficit

Figure 2. The Remaining Climb Ahead: Iowa’s Jobs Deficit

Source: Economic Policy Institute

Not Just Unemployment . . .

In turn, the simple calculus of jobs lost and jobs gained underestimates the broader impact of a long recession and a slow recovery. While national unemployment rose from 4.5 to 10 percent as the recession took hold, long-term unemployment (the share of the unemployed who were without work for more than 27 weeks) shot from 16 percent to 45 percent (Figure 3). While the national unemployment rate has slipped back to 7.6 percent, the long-term unemployment share — at 37 percent — is still more than double its pre-recession rate. In Iowa, the long-term unemployment share rose from 13.6 percent in 2007 to 33.5 percent in 2010 (over a third of Iowa’s unemployed, in other words, were jobless for more than six months), and had fallen only slightly (to 27.5 percent) by the end of 2012.[1]

Our interactive graph provides various looks at the elements of underemployment.

Figure 3. INTERACTIVE More than Just Unemployment: Long-Term Unemployed and the Underemployment Rate

Basic RGB

In the weakening labor market, the share of part-time work also rose, from about 16 percent to about 20 percent of all national employment. And in the weak recovery, this share has stuck — and has been hovering around 20 percent ever since. More importantly, the share of “involuntary” part-time workers (those who want full-time work but can’t get it) doubled during the recession — from 16 percent to over 33 percent — and is still around 30 percent. In Iowa, the part-time share is a little higher (around 25 percent) and did not change much during the recession and recovery. But the share of those that were “involuntary” part-timers nearly doubled to over 18 percent, and has stayed near that level.

Some of this is captured in the underemployment rate, (also in Figure 3) an alternative measure that counts involuntary part-timers and marginally attached workers (those who are not currently working or looking for work but would if economic conditions were better) along with the unemployed. The national underemployment rate peaked at over 17 percent in late 2009 and early 2010 and — at 14 percent — is now near double the conventional unemployment rate. In Iowa, the underemployment rate was about 10 percent at the end of 2012, about double the state’s conventional unemployment rate.

In a very slack labor market, many workers leave the labor market entirely — some to early retirement, some to return to school, some to reliance on other family members. Indeed we have seen fairly dramatic swings in labor force participation over the last six years. The national labor force participation rate (the share of the working age (16-64) population working or seeking work) climbed to over 66 percent in the late 1980s and stayed there until early 2008 — falling below 65 percent by the end of 2009 and then continuing to tumble through the recovery — bottoming out at 63.3 percent earlier this year.

Labor force participation is historically higher in Iowa, where the pre-recession rate of almost 73 percent fell to 68.8 percent in 2012. Since people leave the labor force for a variety of reasons, including education and retirement, we can highlight this problem by focusing on the share of prime-age workers (those aged 25-54) with a job. The employment-to-population ratio of this group was just below 80 percent in the early 1980s, and climbed to near 90 percent by the end of the 1990s. But the last two recessions have taken their toll. The share of prime-age workers employed slipped back to about 80 percent during the recession of 2001, recovered only slightly, and then fell below 77 percent after 2007 — a trend that has continued through the recession.

Figure 4. Iowa’s Employment-to-Population Ratio for Prime-Age Workers, 1979-2012

130830-SWI2013-Fig4Source: Current Population Survey microdata, 1979-2012

All of this promises to do lasting damage. Long stretches of joblessness bring with them not only economic insecurity but (as Dean Baker and the Pew Fiscal Analysis Initiative underscore) stark personal and social costs. These costs include real barriers to re-entering the workforce, physical and psychological costs to workers and their families, and general productivity losses. The burden of unemployment and underemployment, as John Schmitt and Janelle Jones have shown, falls disproportionately on those already disadvantaged in the labor market.

Behind the general numbers in Figure 5, our interactive graph shows the demographics of unemployment and underemployment for Iowa, in which African Americans, Latinos, less-educated workers, and young workers all suffer higher rates of unemployment and underemployment.

Figure 5. INTERACTIVE Employment and Underemployment in Iowa

130830-SWI2013-Fig5

What Kind of Jobs?

As important as it has been to add jobs over the recovery, it is also important that we pay attention to the quality of those jobs. The pattern is pretty stark: During the recession, as the National Employment Law Project has documented, jobs were lost across the economy. Yet in the recovery to date, job gains have been concentrated in lower-wage occupations. We see this pattern in Figure 6 online, which charts gains and losses in major sectors across the recession and recovery in Iowa and the U.S. Recessionary losses are dramatic, and near universal. The recovery is meager by contrast, and concentrated nationally in low-wage sectors like retail and hospitality (the spike in professional business services is misleading, as most of the job growth in this sector is in temp services — a subsector with average hourly earnings of only about $15). And losses have persisted, through the recovery, in sectors like construction, information, and state and local government.

As shown in Figure 6, losses in Iowa were not as deep, but the distribution was similar. We saw steep recessionary losses in manufacturing, construction and information.

Figure 6. INTERACTIVE The Impact of Recession: Job Growth and Loss by Sector, 2007-13

130812-SWI13-Fig6b

Some of these losses were eased by the recovery, but — as of July 2013 — we still show a net decline of jobs in construction and manufacturing. Health care added jobs through the recession and the recovery. The public sector added jobs slowly during the recession but, as austerity took hold, began shedding jobs during the recovery — especially at the local level.

This continued decline in job quality reflects a number of overlapping trends, some short term, some longer term. In the nation and in Iowa, we see a long trend toward lower-wage service employment. This is sometimes described as a polarization or “hollowing out” of the labor market, in which job growth is concentrated at the top and the bottom. But this characterization is misleading as job growth, over the last decade, is actually weak at the top as well. Sustained losses in key middle-income sectors — such as manufacturing and public service — have not been accompanied by real opportunities elsewhere in the economy.

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[1] On this and other labor force measures, the national figures are reported monthly, but those for a small state like Iowa can only be reported annually — so the latest we have are for 2012.

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