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Editorial: Retrain Iowa workforce to boost wages

BY DI EDITORIAL BOARD | JULY 07, 2014 5:00 AM

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If you’ve been paying even the slightest sliver of infinitesimal attention to economic news over the past few years, the phrase “jobless recovery” probably sounds familiar. Even though the stock market is generally performing well, and Wall Street banks are back to making record profits, that hasn’t perfectly translated much into more jobs.

Typically when a jobs report from the Bureau of Labor Statistics comes out, the public is told that the unemployment rate fell, but only because some people have given up on looking for work and are not factored into the calculation.

But not this time. The June jobs report stated that the United States picked up 288,000 jobs last month (far above the expected 215,000) and the unemployment rate fell from 6.3 to 6.1 percent. Participation in the labor force continues to hold steady for the third-straight month at 62.8 percent.

More good news: The number of workers who gave up on looking for work fell substantially over the past year.

On a similar vein, Iowa Gov. Terry Branstad has continually touted his goal of adding 200,000 jobs to the state’s economy over the course of five years. Putting aside his administration’s apparent thought process of picking a big, good-loocking number to list, there’s probably a better metric to use, such as one that accounts for jobs lost during the recession and the increased demand for jobs resulting from population growth.

According to just such a measure from the Iowa Policy Project, the number of Iowa jobs has recovered to pre-recession levels, but when you figure the added demand for jobs from population growth into the equation, you reach a shortfall of 47,800 jobs.

Even so, more jobs on their own don’t necessarily mean a whole lot if they don’t pay well.

Wages remain flat, growing a mere 2 percent over the past year nationwide. Meanwhile, inflation has grown by 2.1 percent. Since prices are growing faster than wages, purchasing power is at a net loss.

This, however, is nothing new. Effectively nonexistent wage growth (adjusted for inflation) has been the norm for decades except for among households in the higher end of the income distribution.

The same has been true for Iowa, though the state has at least seen a little more wage growth than the rest of the country, according to data analyzed by the Economic Policy Institute and the Iowa Policy Project. Iowa Workforce Development similarly reported that from 2005 to 2012, wages in terms of purchasing power remained stagnant.

Iowa Workforce Development issued a 2013 report on middle-skill jobs, showing a huge mismatch in skills among Iowa’s labor force. Although 56 percent of job openings have middle-level skill qualifications, only 33 percent of workers are employed in this area, while 12 percent of jobs are in low-skill sectors, along with 38 percent of workers. These middle-skill jobs pay an average of $35,000 to $60,000, according to the report.

There is an enormous opportunity to get Iowans currently in the low-skill sector bumped up into middle-skill jobs via training programs at community colleges. Unfortunately, according to a report from the Iowa Legislative Services Agency, these critical institutions have recently seen their support from local, state, and federal governments slashed. This forces tuition to rise, making it harder for low-wage workers to afford the training and making it harder for Iowa to fill its skill gap.

Iowa is definitely doing better than the rest of the country, but the state has very low-hanging fruit upon which it could easily capitalize. Investing more funds in community colleges would give these financially strained institutions the resources they need to retrain workers and increase wages, giving the state economy a huge boost.


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