Iowa employers optimistic, but federal uncertainty cause for concern, state business leaders say

JOHNSTON — Against the background of a dismal federal jobs report, two Iowa business group leaders on Friday said the state’s employers remain optimistic about the economy here, although they also warned against the impact of ongoing uncertainty in federal trade policy.

Nicole Crain, president of the Iowa Association of Business and Industry, and Joe Murphy, president of the Iowa Business Council, discussed the state of the Iowa economy and Iowa businesses Friday for this weekend’s episode of “Iowa Press” on Iowa PBS.

The U.S. Labor Department on Friday reported that U.S. employers added only 22,000 jobs in August — down from 79,000 in July and a fraction of the 80,000 that economists had projected, according to the Associated Press.

And the June federal report’s numbers were adjusted down by 27,000 jobs, from a 14,000-job gain to a 13,000-job loss.

Murphy, whose organization represents 21 of some of the largest companies in Iowa, said member employers are “relatively optimistic” about Iowa’s economy, but also described the economy as softening and plagued by uncertainty.

“I think there’s a lot of uncertainty still in Iowa’s economy,” Murphy said. “Our members are really focused on the future, trying to create innovations, trying to create business models that will sustain through any sort of unpredictability that we’ll see in the labor market, in Iowa’s overall economic picture. But there’s still certainly a great amount of concern with respect to the uncertainty that we’re seeing — whether that’s tariff related, workforce related issues — and we’re seeing perhaps, maybe just a softening of the labor market (in the national job numbers).”

Murphy said Iowa businesses represented by his group generally are “holding steady” when it comes to hiring.

“While some companies may be going through some layoffs, other companies are really just not hiring as quickly as they had previously and maybe not hiring as more robustly as they would like,” he said.

Crain, whose organization represents roughly 600 businesses of all sizes in all 99 Iowa counties, many of them in manufacturing, said manufacturers are effectively at full employment and that tax and spending package approved earlier this year by federal Republicans has helped those businesses by removing some of the uncertainty.

“That (federal tax law) has really helped provide some of that certainty back to those small and mid-sized manufacturers that maybe were holding off on capital expenditures, maybe holding off on some other investments, and now they feel a little bit better about that,” Crain said. “They know what the tax provisions are going to be. They know how to plan.”

‘We need to see some movement on these (trade) deals’

A primary cause of economic uncertainty remains federal trade policy, both Murphy and Crain said. The first eight months of President Donald Trump’s second administration have seen a roller coaster of tariff policy changes and threats, causing an unclear vision of the future for U.S. employers.

Crain said businesses represented by her organization, especially manufacturers, are supportive of the Trump administration’s effort to address U.S. trade policy. Crain warned, however, that a prolonged period of instability in federal trade policy will eventually create economic difficulty for businesses.

“We understand what the administration is doing. We completely support (its effort). We have a ton of manufacturers that are members. So we support wanting to have more products made in America, made in Iowa. Many of our members — 40 percent — have experienced unfair trade practices,” Crain said.

“But we need to get these (trade) deals done. And I know that the administration is working on that,” Crain added. “Iowa manufacturers are well positioned to ride this out. They’ve been riding it out. But the sooner we can get these deals done, the better. … We’re getting to the point where we need to see some movement on these deals.”

Murphy said he “wholeheartedly” agrees that the trade deals need to get done soon to avoid negative impacts to businesses.

“Even our member companies who are maybe indirectly affected by tariffs, whether it’s through a strategic relationship that they have with another company, they’re beginning to feel the effects of that,” Murphy said. “We know that we’re working on these deals, but we just have to get them done so we can get over this hump and move forward with sort of a regulated economy with respect to trade policy. It’s really hard to make deals when you don’t know what the rules are.”

“Iowa Press” can be viewed on Iowa PBS at 7:30 p.m. Friday and noon on Sunday, or anytime online at iowapbs.org.

State unemployment tax rates remain low

State unemployment insurance tax rates on businesses will remain at the lowest levels allowed by law for the fourth consecutive year, Iowa Gov. Kim Reynolds’ administration announced Friday.

A formula in state law sets the tax rate on businesses that feeds the state’s unemployment insurance fund, which pays out state unemployment benefits. The formula factors the current balance of the state unemployment trust fund and state wage growth.

The trust fund’s balance was just over $2 billion as of late August, according to the state.

Republican statehouse leaders earlier this year passed a new law that reduced unemployment insurance tax rates on Iowa businesses. The new law cut the taxable wage base in half and lowered unemployment taxes to a maximum rate of 5.4 percent on wages up to about $19,000 per employee.

The new law is projected to reduce the tax on Iowa businesses by nearly $1.2 billion over the next five years, and reduce the trust fund by $278 million over the same period, leaving it at a projected $1.8 billion.

“I am proud of the efforts we have made to reduce the unemployment tax burden on Iowa’s businesses while maintaining benefits for Iowans who need them,” Iowa Gov. Kim Reynolds said in a statement. “Reducing taxes should lead to employers having more resources to invest in growing and upskilling their workforce which will help grow our economy.”

Comments: (515) 355-1300, erin.murphy@thegazette.com

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