Opinion | Iowa’s hiring headaches, explained

Patience with the economy is what is going to get us out of the slump.


Shahab Khan, Opinions Columnist

Iowa employers are having an increasingly hard time finding workers, and politicians are having a hard time explaining why.

Gov. Kim Reynolds is scapegoating the extra unemployment insurance boost for deterring workers from looking for jobs. Democrats, in contrast, are advocating for businesses to increase wages to attract workers. Republicans and some small business owners have begun to blame the unemployment insurance boost for causing a labor shortage. Both of these postulations miss the wider point.

There is not much of an actual labor shortage, just hiring headaches as it takes some time for firms to hire workers.

On an elementary level, the idea that the unemployment insurance boost disincentivizes workers from looking for jobs makes sense, as prospective workers will not need money from a job when they can collect it on unemployment.

Yet, when we hold this theory up to the evidence, it becomes clear this is not the case. First, to even receive unemployment insurance, you must be able to demonstrate you are actively looking for a job, contradicting the point that those on unemployment insurance are just leeching off the government.

Democrats, meanwhile, are clamoring for increasing wages to fix the worker problem. While I do think it is a great idea to raise wages, the argument that wage hikes will fill up jobs seems to be insufficient for solving the current labor question.

For starters, even if workers do not think they are making as much money as they should, they are still incentivized to find jobs because of critical perks such as health insurance – something a lot of people cannot get while unemployed.

A survey of businesses conducted by the Federal Reserve shows that even when employers incentivize workers with high wages or signing bonuses, they still are having trouble with hiring.

Both Democrats and Republicans are seemingly lacking in providing a sufficient hypothesis for Iowa’s “labor shortage”. The hiring problem that Iowa firms are facing is transitory as it takes time to retool a labor force after a once in a generation pandemic.

To understand the labor problem at home, it is also important to look at the labor prognosis of other countries and see how they are facing similar problems.

In the United Kingdom, British policymakers concocted a scheme in which people were furloughed and compensated for by the British government. This was done to make sure that when the pandemic subsided, Britons would be ready to jump back into the workforce as if nothing happened.

However, things didn’t go exactly as planned for our friends across the Atlantic, as British business owners are still facing the same problems as their American counterparts – workers are not filling up jobs.

What most people do not realize about an economy suffering with shocks on the supply side is that there is no magic switch that will give firms jobs. Rather, it takes time for these shocks to stabilize.

In simpler terms, in a couple of months, people will finally get their jobs back and we will forget that this labor crisis ever happened.


Columns reflect the opinions of the authors and are not necessarily those of the Editorial Board, The Daily Iowan, or other organizations in which the author may be involved.