The recent Iowa caucuses have brought attention on the low unemployment rate of the state as well as the demand for a larger labor force. At 3.4 percent, Iowa's unemployment rate is one of the lowest in the country. The tightening of the labor force has created some conflict in Iowa-based industries, such as the need to find a new recruitment strategy. Not helping the situation, is State Rep Steve King who is known for his anti-immigrant stance and policies. In order to create growth, Iowa must find a way to bring people into the state. New business is essential for long-term growth. Some economists have said that these labor shortages have put less pressure on wages than expected. Many workers are joining forces with local unions to protest low wages and benefits. Iowa has the potential for long term sustained growth, it just has to find more workers to create that growth.
NY Times, Patricia Cohen
It is very interesting to see that Iowa has such a low unemployment rate. I was surprised to find out that this is actually causing a problem for them. More so that they have to find ways of attracting people to the state, like finding people who have a some sort of connection to the state. Even when many employers have reported that they have raised wages to attract workers, especially skilled ones, it has not been as successful as they hoped.
ReplyDeleteThis is an interesting dilemma for Iowa because normally one would not think that low unemployment could not cause issues for a state. 3.4% is an incredibly low rate for a state when, nationally, the natural rate of unemployment is around 5%. With such a tight labor market, Iowa will have to raise the salaries for the jobs they wish to fill in order to attract more workers to the state. The state may want to look into new recruiting strategies besides just increasing the wages of workers. For example, they could possibly create retraining workshops so that the frictionally unemployed could learn new strategies and become competitive in the market again.
ReplyDeleteI think that immigrant is the most efficient way to solve this problem. Plenties jobs means that lowa has a large potential to develop, without enough labor force, the speed of developing would definitely decrease. Rising salaries for attracting labors would cut the profit and more industries would shut down which means less jobs. Obviously decreasing in jobs would eventually put the labor market in the equilibrium, but lowa would also loss a good chance to speed up developing.
ReplyDeleteits weird to think that low unemployment could be a problem for any state. attracting workers could be tough if the wages are low and economic growth is a t a stand still. raising wages could be an option to get people to come but it would raise the unemployment rate at the same time.
ReplyDelete