Dealing with Iowa’s Unemployment

“We
must build things in America again.  SECTORS will improve training and
employment opportunities for Iowa's workforce and help businesses and
manufacturers thrive and expand in today's global economy.”

What role can the federal government play in reducing Iowa’s unemployment rate? According to 2nd District Congressman Dave Loebsack, Congress could pass H.R. 1855, the Strengthening Employment Clusters to Organize Regional Success (SECTORS) Act. This bill would “promote long term competitiveness for American industries and employment opportunities for America's workers by supporting “sector” or “industry partnerships,” which allow businesses, unions, educators, and the public workforce system to develop and implement plans that help workers train for and advance in high-demand and emerging industries.”

According to Loebsack, “the SECTORS Act is endorsed nationwide by over 150 businesses, workforce and vocational organizations, manufacturing associations, colleges and universities, chambers of commerce, and training and human services organizations….passage of this legislation marks the beginning of our focus in the House on a ‘Make It In America Agenda.’
 
We must provide the tools necessary to reinvigorate our highly capable manufacturing sector.  We must build things in America again.  SECTORS will improve training and employment opportunities for Iowa's workforce and help businesses and manufacturers thrive and expand in today's global economy.”

The SECTORS Act found bipartisan support in the U. S. House of Representatives and passed the house in a voice vote on July 19. It has been read in the U.S. Senate and referred to the Committee on Health, Education, Labor and Pensions where it awaits action.

According to Iowa Workforce Development, unemployment in the state stood at 6.8% in June 2010 with 113,600 unemployed workers. In order to get to a more reasonable unemployment rate, tens of thousands of Iowans need to find work. One hopes the SECTORS Act will provide a mechanism to contribute to this effort to reduce unemployment and sustain viable industry sectors. Whether the bill will get out of committee in the Senate is unclear. If the SECTORS Act is signed into law, the impact on unemployment is uncertain, even if the bill addresses the specific need of employers being unable to locate enough qualified workers in specific manufacturing sectors. Despite these challenges, this was an effort worth making and Congressman Loebsack should be commended for leading this effort.

At the same time Iowans deal with unemployment, the impact of workforce globalization is being felt. What Iowans consider to be a living wage is much better than that in other parts of the world. From a cost of labor standpoint, it does not always make sense for businesses to manufacture their products in Iowa or in the United States.

Business enterprises often determine that to support global distribution of products, locating manufacturing in Iowa or in North America may not produce the best cost structure. If their largest markets are in other countries, manufacturing is more efficiently located closer to those markets. This is increasingly true as countries like India and China improve the standard of living for a large segment of their population and increase demand for manufactured goods. If the raw materials and workforce are abundant closer to market, that is where manufacturing capacity will be located despite what Iowans do to attract manufacturing jobs.

To some extent, the SECTORS Act would protect the manufacturing jobs we have by making sure the workforce can meet employers’ needs. However, large scale enterprises consider manufacturing from a global perspective. Manufacturing capacity currently located in Iowa could be re-located if the market changes or if there is a compelling cost benefit to locate manufacturing elsewhere. The federal government can play a role in job retention and creation and should pass legislation like Loebsack’s SECTORS Act. The federal government should also refrain from creation of tax incentives for companies to move manufacturing capacity outside the United States.

A 6.8% unemployment rate is high enough to indicate that no single solution will get Iowans back to work. It is also evidence that holding a job that pays a living wage is becoming an increasingly tenuous situation in the post-Reagan era of globalization.

~Paul
Deaton is a native Iowan living in rural Johnson County and weekend
editor of Blog for Iowa. E-mail Paul
Deaton