Turning good economic news into bad news

Economist Dave Swenson explains why “a tight labor market is good for workers and good for families,” contrary to what you may have read in the newspaper. -promoted by desmoinesdem

Iowa’s enviously low unemployment rate of 3.1 percent is distressing many in the business community and, by proxy, business news. In recent months more and more people are declaring that Iowa is at full employment, and that, they say, is a problem.

It’s not. Iowa’s economy bumping up against full employment, if in fact that is happening, is a good thing. It is the stated goal of every politician’s overweening job creation rhetoric. It is what we hope for as our economy moves through the wrenching disruptions to firms and households caused by recessions. It is precisely what we want to happen: as many people are working as our economy can support.

Unless it creates discomfort in the business community. Then low unemployment is a problem. Let me explain.

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Higher Education Economic Impact Studies Are Usually Hooey

ISU economist Dave Swenson returns to the important topic of exaggerated claims about job creation and other economic impacts. -promoted by desmoinesdem

The Iowa Department of Education released a study recently claiming Iowa’s community colleges support $5.4 billion in income and 107,170 jobs in Iowa.

The claim is ludicrous, and I’ll get to the details in a bit, but it is on par with a range of private and public economic impact studies of higher education that contort econometric methods in ways never intended in order to provide ever-desperate college and university administrators with economy-benefiting claims that wow legislators and garner public support.

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Skills Gaps, Worker Preparedness, and Gauging Iowa’s Future Educational Needs

Another helpful reality check by Iowa State University economist Dave Swenson. Find his previous writing for this site here. -promoted by desmoinesdem

It is vexing to hear assertions of a skills gap in Iowa, or nationwide for that matter, when people are really complaining they can’t find workers to do what they want them to do for the wages they are willing to pay. That is not a skills gap.

Neither the inability of a grain elevator in rural Iowa to find grain handling help nor a manufacturer in Clinton to find computer-controlled machine tool operators or programmers are skills gaps. They may be regionally-specific skilled labor shortages, as is the case in much of rural Iowa because of persistent outmigration, they may be workforce indifference to those job opportunities, but they are not skills gaps.

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Data Centers Do Not Make Iowa a High Tech State

Dave Swenson

The news out of West Des Moines last week was that Microsoft will add a third data center. At first glance, a data center cluster looks to be popping-up in Iowa. We have the three Microsoft projects in West Des Moines, Facebook’s two complexes on the other side of the metro in Altoona, Google’s two projects in Council Bluffs, and a smattering of smaller centers scattered about the state.

“Microsoft could build these centers anywhere in the world,” said West Des Moines Mayor Steve Gaer, as quoted in the Des Moines Register, but they’re building them right here in Iowa. A map of data centers across the U.S. tells us, though, that data centers of all sorts and sizes are just about everywhere there are people. In short, Iowa isn’t that special. Don’t tell West Des Moines.

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Decomposing Farm Financial Stress – It Ain’t the ‘80s, But There’s Cause for Concern

Dave Swenson

Anyone paying attention in Iowa knows that farmers benefited greatly from robust commodity prices during the earlier part of this decade, but that in recent years prices have slumped, as have the fortunes of farmers. Iowa’s farmers were credited (sometimes over-credited) with helping carry the state through the Great Recession because their boom years allowed them to buy new machinery and other agricultural durable inputs, which in turn multiplied through the Iowa economy. During down times, however, those magical multipliers stop working.

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Nice Bunch of Jobs You Have There, Iowa. Be a Shame if Something Happened to Them

Dave Swenson

Is it extortion when one party pays up even though it was never threatened?

Recently, the state of Iowa awarded $17 million in state assistance to Dow-DuPont for pledging to keep its Pioneer-related research and development activities in Johnston. In a Des Moines Register interview of Tina Hoffman, a spokesperson for the Iowa Economic Development Authority (IEDA), we were told they were sure “Pioneer wasn’t going to up and close down shop. That was clear from the beginning ….” Still, the state is spinning this to be all about job retention.

Except it wasn’t.

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