Report: Iowa’s economy competitive nationally, but improvements needed

Iowa remains competitive with other states in several economic measurements, but improvements are needed in areas such as tax policy, mental health and workforce recruitment, Iowa Business Council officials said as they unveiled the IBC’s annual Competitive Dashboard report Thursday, March 9. The report, released every year since 2011, measures the state’s national standings in five key areas: economic growth, workplace and education, governance, health and wellness, and demographics and diversity. “Ultimately, we want this report to be both a guide and a tool for policymakers, businesses and community leaders when pursuing efforts to make Iowa more competitive,” IBC president Joe Murphy said in a virtual news conference Thursday. “These recommendations serve as a roadmap to make our state more competitive and tackle the challenges that threaten Iowa's long-term economic growth.” Overall, the Economic Competitive dashboard shows that the state is competitive nationwide in economic growth, governance, health and wellness and demographics and diversity, and is outperforming the national standard in workplace and education. Phil Jasper, Iowa Business Council chairman and president of business systems at Collins Aerospace in Cedar Rapids, outlined the key findings of the Competitive Dashboard report. On the economic growth front, Mr. Jasper noted that the state’s economy has remained strong, with a gross state product of more than $216 billion, an 11% increase over last year. “This further indicates resiliency throughout our industry sectors, and that's vitally important as we look at potential economic headwinds ahead of us,” Mr. Jasper said. Iowa continues to rank in the top 10 nationally with a workforce participation rate of nearly 68%, but the total number of working Iowans has actually declined by 37,000 since 2020, hindering the overall potential for economic growth for the state, Mr. Jasper said. In terms of education, Mr. Jasper noted that the IBC has partnered with the Iowa Department of Education and school districts statewide to focus on work-based learning, pointing out that 360 high schools participated in at least one workplace learning program in 2022, up from just 121 participating schools in 2020. More than 30 IBC-related events were held across the state offering workplace learning opportunities, he added. In the political realm, Mr. Jasper said the state has made progress in tax policy with reforms signed into law last year. “Providing for a more simplified and competitive tax code has long been an IBC priority,” Mr. Jasper said. “We're currently engaged in efforts to further reform our property tax system, while also ensuring tax cuts enacted last year are extended to include all types of businesses. We believe that as the tax provisions in last year take effect and are combined with our overall quality of life, Iowa will become an even more attractive place for people to live, work and thrive.” However, responding to a question raised after the presentation, Mr. Murphy noted that while Iowa’s insurance industry ranks among the top three states nationally, with several insurers headquartered or maintaining significant operations in the state, the tax reforms approved last year failed to address the “premium tax” paid by insurance companies on gross insurance premiums. Moving to health and wellness, Mr. Jasper said Iowa’s metrics show some positive signs, as the state ranks sixth nationally with just 4.8% of residents lacking health insurance. Yet leaders need to address Iowans’ mental health needs, both in the workplace and at home. “The Business Council recognizes the impact mental health has on the economy and the workplace,” Mr. Jasper said. “Increasing the supply of mental health professionals in Iowa while also enhancing public mental health investment mechanisms will directly benefit the state's business climate, our communities and our schools, and therefore will positively affect Iowa’s economy.” Mr. Murphy noted after the presentation that the IBC is supporting legislation that would allow Iowa to become part of a nationwide mental health counseling compact. Under the measure, mental health counselors living in states that are part of the national consortium would be able to provide telehealth or other services to patients throughout the consortium. Another legislative measure would incentivize recent college graduates in mental health fields to remain in Iowa, addressing a shortage of mental health professionals in the state. FInally, the state’s population, including growth and diversity, will continue to be a primary focus of economic development efforts. Iowa has consistently trailed the nation in population growth with a 1.6% growth rate in 2022, ranking just 30th nationally. “Long-term prosperity will continue to be constrained by a lack of people to fill jobs,” the report indicates. “Growing Iowa’s overall population will be critical to building a talent pipeline and expanding state revenues. Iowa’s population growth continues to be outpaced by other states and still does not meet businesses’ growth needs.” That growth also must address ethnic diversification, as the state’s diversity rate of 17% ranks 45th in the U.S. “The growth and diversification of Iowa’s population must be accelerated in both urban and rural communities to ensure continued economic vitality for the state,” the report indicates. “Recruitment and retention efforts could be bolstered by changes in federal immigration policy, as well as highlighting the significant advantages Iowa provides its citizens over other states including safe communities, high quality K-12 educational systems, low cost of living, and affordable housing.” The IBC plans to present the report’s findings in “roadshow” forums across the state in upcoming months, Mr. Murphy said. The full Competitive Dashboard report is available for download on the IBC’s website.