Iowa's economy is changing and so are its employment patterns.
An Iowa State University analysis of government efforts to encourage specific types of industries shows some success. The report was prepared by Liesl Eathington and David Swenson in ISU's economics department.
"State economic development programs face twin tensions," says Swenson. "They must maximize the well-being of the most people with the least public dollars, while maximizing the well-being of as many places as possible." Swenson says the state doesn't have the time or financial resources to court all industries. "Conventional wisdom suggests Iowa should direct its economic development efforts to a set of industries that will bring the greatest return to the state's economy," he says.
A 1992 study, commissioned by the Iowa Department of Economic Development, produced a list of targeted industries that mixed state economic strengths with emerging industrial potential. Since then, the state has targeted those specific industries for growth.
The new ISU study compares employment growth in some of Iowa's targeted industries between 1992 and 1997 to evaluate their performance as a group, as sets of industries and regionally. The report also evaluates how Iowa's targeted industries contribute to the state's overall economy in ways beyond employment growth.
Iowa's targeted industry list includes almost 80 different kinds of industries. For the ISU report, those industries were grouped into eight categories, including financial services, telecommunications, computing services, foods and related products, metals and fabricated metals, plastics, printing and publishing, and computing and measuring devices.
As a group in 1997, the targeted industries comprised about one-fifth of Iowa's non-farm jobs and contributed a little less than one-third of the state's total non-farm output. Of the eight target groups, financial services was the largest in terms of employment, while the foods and related products group contributed the largest share of total non-farm industry output.
Iowa's economy was slightly more dependent on these eight industry groups than the United States economy as a whole. The percentage of these industries' non-farm employment was 18% in Iowa and 15% in the United States.
The ISU report shows the average earnings per job in all target industry groups exceeded statewide average earnings per non-farm job in 1997. The targeted industry groups contributed about 25,000 new jobs to Iowa's economy in 1992-97.
Of the eight target groups, the metals manufacturing group brought the greatest number of new jobs to the state in the five-year period. Metals was followed by financial services, computing services, telecommunications, and printing and publishing.
Iowa's counties were grouped into four categories to conduct the analysis. This placed 10 counties in the metropolitan category, nine in the large urban category, 60 in the small urban category and 20 in the rural category. The metropolitan counties have a central city of at least 50,000.
Large urban counties have a central city of 20,000 or more. Rural counties are those without a city of 2,500 or more. The remaining are the small urban counties.
Swenson says that while some of the targeted industries are flourishing in Iowa, they are not necessarily flourishing in all parts of the state. "The targeted service industries demonstrated a clear preference for the metropolitan counties," he says. "Most of the targeted manufacturing industries showed a preference for the non-metropolitan county groups, and especially, the small urban counties."
The report highlights the difficulty of achieving a balance between geographic and industrial diversification, employment growth and income growth, Swenson says. "A county's likelihood of success in attracting a particular industry depends a great deal on its size, industrial structure, wealth and labor force composition," he says.
The full report, titled "Employment Growth in Iowa's Targeted Industries, 1992-97," is available on the Web at: http://www.econ.iastate.edu/research/webpapers/NDN0079.pdf. This is the second in a series of reports focusing on recent patterns of employment change in Iowa. The first report described broad changes in Iowa employment. Iowa's value-added agricultural industries will be the focus of the final report.