daveswen

A pre-election economic update

Dave Swenson is an associate scientist in Iowa State University’s Department of Economics. -promoted by desmoinesdem

Elections inspire economic promises. Whether those promises are realistic or not usually doesn’t matter. It is the economic narrative that matters, and if you hit the right chord, as the Bill Clinton campaign found with “it’s the economy, stupid,” you can milk that for all it is worth to swing an election in your favor.

The GOP retook the Iowa governorship in 2011, and there was a range of economic promises and expectations. Chief among them was the time-worn assumption that Republicans knew how to generate economic prosperity. Jobs were going to be created, household incomes were going to rise, and the state’s economic prospects were going to be righted after four years of mismanagement.

For a time things looked promising. Robust farm profits were driving strong demand for machinery and other capital investments on the farm, which supported both Main Street and manufacturing recovery. Iowa’s already strong wind energy industry continued to expand. There were huge fertilizer plants under construction on both sides of the state. Iowa had become a popular place to site data centers. A dime was added to the gas tax to boost road construction. And a controversial pipeline bisecting the state diagonally requiring hundreds of workers was laid in the ground.

So Iowa’s economy is doing great, right? Wrong. Here are just a few key indicators:

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Iowa nonmetro changes, challenges, and shifting voter preferences

Iowa State University economist Dave Swenson examines “troubling” trends in seventeen mid-sized cities (“micropolitan” areas) with core urban populations of 10,000 or more. -promoted by desmoinesdem

Iowa’s metropolitan areas are growing, a few quite smartly, but a majority of Iowa’s nonmetropolitan areas are declining, several quite sharply. These changes have implications for the vitality of and outlook for much of rural Iowa. They also have implications for dominant rural political attitudes.

As rural economies and populations transform, so too do their collective public policy preferences. Recent statewide and federal election results show clearly that nonmetropolitan Iowa has become more conservative than its historically-conservative norm. And current indications give us no reason to expect that trend to abate.

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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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