COVID-19 Economic, Health Crisis Exposes Iowa Weaknesses
September 2, 2020
DES MOINES, Iowa — Iowans are still enduring an economic and public health crisis that leaves the state staring down a Labor Day weekend as dark as any since the Great Recession 12 years ago.
“The economy fell off a cliff in March 2020, and we are still picking through the wreckage and tallying the damage,” Colin Gordon writes in the “State of Working Iowa” update for Common Good Iowa.
“The depth and suddenness of the economic collapse, alongside the unprecedented public health crisis that precipitated and accompanied that collapse, exposed glaring gaps and weaknesses in our public policies, and underscored systematic inequalities in economic and policy outcomes.”
Unlike previous “State of Working Iowa” reports, which have noted Iowa’s low-wage legacy and called for increases in wages and work support programs such as the Earned Income Tax Credit, this report focuses on immediate challenges of the COVID-19 recession and civic turmoil.
“These are challenging times,” the report concludes. “Our plan for recovery demands more than just a rush back to normal, featuring tax breaks and regulatory relief for business and the thin promise of trickle-down benefits for the rest of us. Our political attention and resources should be targeted where the need is greatest — at those held back by a long history of systemic racism, at those struggling to make ends meet even before the current crisis, and at those hit hardest by the COVID recession.”
The latest edition in the State of Working Iowa series begun by the Iowa Policy Project (IPP) in 2001 is the first for Common Good Iowa, a nonpartisan, nonprofit public policy research and advocacy organization created by the recent merger of IPP with longtime partner Child and Family Policy Center in Des Moines.
In the report, Gordon — a University of Iowa history professor and senior research consultant for Common Good Iowa — noted Iowa was one of five states without a general “shelter in place” order limiting business activity and social gatherings to stem the spread of COVID-19.
Illustrating how the economy “ground to a standstill,” he noted:
- Total new claims for unemployment insurance in Iowa from early February and late-August 2020 were 444,390 — over one quarter of the February 2020 labor force.
- The average number of new weekly claims in the first 30 weeks COVID-19 recession (14,813) was greater than the highest weekly total recorded during the Great Recession.
- Leisure and hospitality jobs dropped by over a quarter between February and July, and construction jobs fell by over 11 percent — twice the rate in that sector nationwide.
- As many nondurable manufacturing jobs (especially in food processing) were deemed “essential,” Iowa’s job losses in manufacturing were lower than in the nation as a whole.
“Iowa’s labor market inequalities widened as the pace and scale of job losses — in Iowa and elsewhere — fell heavily on low-wage workers,” Gordon said. “This is especially so in leisure and hospitality, and retail. The risk of staying on the job — in front-line occupations and in those sectors deemed “essential” — fell disproportionately on women and on workers of color.
“Those forced to leave the labor market to meet family obligations with public schools closing in mid-March in many cases had limited and inequitable access to paid leave. To add insult to injury, about half of those Iowans losing their jobs during a public health crisis also lost their job-based health coverage at the same time.”
Public policy responses have been mixed and their stability uncertain as the crisis has remained.
For example, despite a relatively generous expansion of unemployment insurance, and a $600 a week supplemental benefit that covered losses for those who had been earning under $30/hour, the boost may be fleeting.
State unemployment systems had trouble managing the avalanche of claims — and Iowa Workforce Development actively discouraged access, with warnings about improper claims.
“In turn, Iowa’s determination to ‘stay open’ and its expansive definition of ‘essential businesses’ undercut the public health objectives of the CARES Act,” Gordon noted, as rolling outbreaks became common in packing plants and packing communities, and few enforceable standards implemented to protect workers. “Indeed the single, brutal concession to workplace risk was new legislation immunizing employers against COVID-related lawsuits.”
As struggling families await action in Congress to extend COVID-relief programs, Iowa Governor Kim Reynolds has pushed aggressively to “reopen” the state, including schools where locally elected officials are reluctant to rush back.
“The peril facing Iowa’s working families, and the Iowa economy, is acute,” he wrote, noting the Economic Policy Institute has estimated that expiration of the CARES Act is likely to cost Iowa another 42,586 jobs over the next year. And, while the unemployment rate has dropped to 6.6 percent in July from 11 percent in April, the rate masks a big drop in the share of the population working or looking for work (from 70.9 percent to 65.6 percent).
“What this means, in a nutshell, is that Iowa’s job market has scarcely rebounded at all from its abrupt collapse in March,” Gordon said.
“The first order of business is an extension and expansion of the CARES Act — reinstating the PUC bump in unemployment benefits, expanding access to paid leave, and building in substantial assistance for state and local governments,” Gordon wrote.
“Once that is in place, we can begin to address the policy gaps and weaknesses exposed by the pandemic itself. Our system of occupational health and safety is fundamentally flawed, a fact underscored by the rolling viral outbreaks at Iowa’s packing plants.”
The report also argues for modernization of unemployment insurance to reach more of the workforce and respond in a crisis, and learn from the COVID-19 experience by adding paid family and medical leave, to benefit not only employees but employers as well.
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