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By Tyler Jett, Des Moines Register

Iowa’s economic recovery lost momentum in March, shedding jobs for the first time in five months.

Nonfarm payrolls in the state decreased by about 1,500 from February to March, according to survey data released by the U.S. Bureau of Labor Statistics on Friday. Job losses in the accommodation and food services sector were a particular drag on the economy.

Despite the small drop in the number of workers with jobs, a separate federal survey showed that Iowa’s unemployment rate actually improved, from 3.5% in February to 3.3% in March.

Iowa’s rate is the 20th lowest in the country. The state’s rate stood at 2.6% two years ago, before the COVID-19 pandemic forced mass business closures.

Iowa’s pace of recovery continues to lag that of the country overall. In the last year, the U.S. has added jobs more than twice as fast as Iowa has.

Despite the sluggish growth, Iowa Workforce Development Director Beth Townsend said in a statement that the latest jobs report showed positive signs. The number of unemployed workers continued to drop, and the number of people in the labor force — those with jobs or looking for jobs — increased.

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“We’re starting to see real progress,” Townsend said.

Some sectors in Iowa performed well last month. Retailers added about 900 workers, according to the BLS. And wholesale trade businesses, such as companies that sell raw materials, added about 700 workers.

But other industries suffered. The number of Iowans employed in health care and social assistance dropped by about 800, as did those in the art, entertainment and recreation sector.

Restaurants suffered the most, though. The number of workers in the accommodation and food services sector declined by 2,000 from February to March, according to the BLS. Though still short of where they stood before the pandemic, businesses in the sector had been steadily adding jobs for six months, dating to August.

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Iowa Restaurant Association President Jessica Dunker said business owners around the state continue to struggle to find workers. The economy seems to have shifted as a result of the pandemic, she said.

A surge of online sales — related to the opening of four Amazon.com warehouses in the metro — has created new delivery and sortation jobs. And, Dunker said, restaurants aren’t pulling in the state’s oldest and youngest workers anymore.

“They’re just going to other industries,” she said. “(Restaurants are) such easy picking.”

She said workers often used to take serving jobs when they reached their upper 50s and early 60s, using the tips to help make ends meet after they retire. But she said those workers haven’t returned.

On the younger end, other desperate businesses are willing to hire teenagers, a group that used to turn to restaurants for their first jobs, she said. Dunker’s own teenage sons have taken jobs as a certified nursing assistant and as a child care worker.

At the Windsor Heights diner Little Brother, owner Joe Tripp said he cooked from 6 a.m. to 9 p.m. every day for months.

A veteran restaurateur who also owns the high-end Ingersoll Avenue establishment Harbinger, Tripp said he hadn’t cooked for years. He prided himself on keeping a full, consistent staff.

“But there weren’t the bodies to fill up the positions,” he said.

After opening the diner last summer, he said he couldn’t scrape together nearly the number of employees he needed.

Tripp said he offers some of the best benefits in the industry. The company covers 100% of health insurance costs for Harbinger employees who stay for at least three years. He paid for his house manager’s vacation to Japan in 2020, and he’s taking Harbinger’s kitchen crew to Vietnam.

Despite that good reputation, he said, applications are coming in slowly. He has added enough employees to cut back his own hours in the kitchen. But he would like to hire three more cooks, two more waiters and a bartender.

At Lola’s Fine Kitchen in Ankeny, owner Heather Elliott closed the business on a couple of Mondays and Wednesdays last month. Without enough workers, she worked from 8 a.m. to 7 p.m. six days a week for two months in a row, she said.

Her husband, a recruiter for an insurance company, worked the cash register during his lunch breaks. Her 12-year-old son worked the register during his spring break.

Finally, Elliott said she needed to cut back on days. Some of her employees needed some time off, and she couldn’t fill the gaps.

“Some people have to go home and see their families,” she said. “They have to have days off. They have events. Their life doesn’t revolve around this particular place.”

She said the restaurant has bounced back this month. She now guarantees that employees make at least $15 an hour, regardless of tips, a move she thinks has helped bring in new workers.

“It’s really giving them something to motivate them to like this,” she said, “to enjoy what they do and to want to pick up hours and to want to be here.”

How does Iowa’s economic recovery compare to the rest of the country?

Since May 2020, when companies began hiring workers again, Iowa has recovered 85% of jobs lost in the initial shock of the pandemic.

While the state’s recovery has been faster than it was during the Great Recession that began in 2007, Iowa still falls behind the rest of the country. The U.S. overall has recovered 93% of jobs lost.

Iowa’s problem is not that businesses here employ a lot of workers in slow-growing jobs, said Peter Orazem, an Iowa State University economist. Instead, certain sectors in Iowa are simply adding jobs at a slower rate than their counterparts in other areas of the country.

In Iowa, the professional, scientific and technical services sector has shed about 500 jobs since the pandemic began. This sector, which includes everything from attorneys to accountants and engineers, has added 607,000 jobs nationally during the same period.

The information sector, which includes broadcasters and publishers, has shed about 1,200 jobs in Iowa since February 2020. Nationally, the sector has added about 26,000 workers.

Iowa’s transportation sector, meanwhile, has been stronger than many industries in the state, adding 2,600 employees since the beginning of the pandemic. However, in the U.S. overall, the sector is adding jobs more than twice as fast as in Iowa, with transportation payrolls increasing by 608,000.

Orazem said he’s particularly troubled by a drop in the size of Iowa’s labor force — the workers who are either employed or are looking for jobs.

From 2019 to 2021, the labor force participation rate among Iowans between 45 and 54 years old decreased to 84% from 92%. Nationally, the rate for this age group remained steady around 81%.

Orazem said the drop is troubling, and it’s difficult to understand what happened. It is not an age group that would typically require child care, he said, because most of their children would be in high school.

At the same time, most people between 45 and 54 are not retiring early because of the pandemic, he said.

“To be honest, I don’t know what people between the ages of 45 and 54 are doing,” Orazem said. “Those are the peak earning years in somebody’s lifetime.”

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What businesses in Iowa still haven’t recovered from the pandemic?

The health services sector continues to be the biggest drag on Iowa’s economy, with about 10,900 fewer employees than in February 2020.

Other sectors that are still struggling: accommodation and food services; durable goods manufacturing; local government; and arts, entertainment and recreation.

On the other side, retail trade businesses have added 4,900 workers since the pandemic began. Other sectors adding jobs: nondurable goods manufacturing, transportation and management of companies.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at [email protected], 515-284-8215, or on Twitter at @LetsJett.

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