Iowa’s labor participation rates struggle to return to pre-pandemic rates

CEDAR RAPIDS, Iowa (KCRG) – Tic Toc, a Cedar Rapids restaurant, is a prime example of the ongoing struggle to find workers even after the pandemic.

“I know we’ve held open interviews and people don’t show up. I’ve hired people and been like ‘Hey, this is your first day.’, they didn’t show up.” said General Manager Alyssa Gregory.

The frustration shows up in state labor data. After state unemployment rates rose to nearly 183,000 in April of 2020, many workers older than 40 never returned to the workforce because they now had the money to retire or quit.

”The older workers were the ones who atypically dropped out. Part of that was because of government increase payments for unemployment benefits, so they were both more generous and easier to get. But also, 401Ks were increasing at a very rapid rate. We had about a 30-40% run-up in the value of your pensions in 2020 and 2021.” said Iowa State Economics Professor Peter Orazem.

Fewer workers means those who remained could demand higher wages and better benefits. And the competition for top talent compounded the problem – making it even harder to find reliable employees while still making a profit.

“It’s kind of hard for us to find good quality candidates. Or, you know, when you do find somebody, they might get a better opportunity somewhere else, which, you know, it does happen.” said Gregory.”

Though Iowa’s labor force has had a slower recovery, Orazem believes its time to reckon with the facts and find new solutions.

”I just don’t think that Iowa is going to be able to get those older workers who decided to drop out. They’re just not coming back. So we’re either going to have to attract people from other states or we’re going to have to hope that there’s an increase in nationwide immigration and we get our share of those workers.” said Orazem, who noted that due to lockdowns, immigration rates hit a sharp decline during the pandemic, but considering immigration accounted for 38% of Iowa’s population growth since 2000, the sudden drop-off has had a large affect on the size of the labor force.

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