As the national economy moves in fits and starts, Iowa continues to enjoy an economic recovery that has outpaced that of the much of the country.
On June 20, an Iowa Workforce Development report pegged statewide unemployment at 4.6 percent, down from 5.3 percent a year ago. The national unemployment rate, according to the Bureau of Labor and Statistics is 3 points higher, at 7.6 percent.
Alternative measurements of unemployment that factor in workers who have stopped searching for jobs and underemployed part-time workers are also well below the national average in Iowa.
Another report from the Annie E. Casey Foundation ranked Iowa fifth in the nation in terms of economic well-being. The report, which focused on the well-being of children nationwide, took into account many economic factors, including unemployment rates, poverty rates, and the relative cost of living.
On top of all the positive trends in the economic data, Iowa has also recently announced a number of major economic-development projects, including a $1.9 billion MidAmerican Energy project to increase the state’s wind-energy capacity. Last week, the Iowa Economic Development Authority announced that Microsoft will invest nearly $700 million in its West Des Moines data center.
These economic developments are certainly something to be happy about. But what is perhaps most notable about Iowa’s economy is what it lacks.
In a country in which income inequality has expanded rapidly for more than three decades, Iowa has relatively little inequality.
According to a November 2012 analysis from the Center on Budget and Policy Priorities, Iowa has the lowest ratio between low-income earners and high-income earners of any state in the country. On average, the top fifth of Iowa earners make about 5.6 times more than the bottom fifth. In Illinois, the top 20 percent make about 8.3 times more than the bottom 20.
Iowa’s economic success should dispel the too-popular notion that rapidly growing income inequality is a natural, even necessary outgrowth of a healthy capitalist system. In fact, given the research into the corrosive effects of income inequality, Iowa may be evidence that relatively low inequality can help preserve the health of a local economy.
But all this is not to say that Iowa’s economy is raising all boats. Iowa’s poverty rates have remained stagnant during the recent recovery.
While the state’s poverty rate — 12.8 percent in 2011, the most recent year for which data are available — is still below the national average, it hasn’t been falling along with unemployment. Since 2007, Iowa’s poverty rate has climbed from 11 percent to 12.8 percent.
This seems to indicate that though our state is recovering more robustly and more equally than most others, we are not all benefitting from our state’s economic good fortune.
Just as Iowa quiets the notion that income inequality is a necessary consequence of growth, so, too, must we dispose of the idea that poverty is an inexorable side effect of our economic system. In reality, poverty is an economic drain, and it should be treated as such.
In the next act of our state’s recovery, we should set our sights on fighting poverty. By working to lift more Iowans above the poverty line, we can continue to succeed economically while making sure that our recovery raises the prospects of all Iowans.
