Washington County economy grows, but problems remain

By several measures, business has been booming across the Washington County community for the last year. A plethora of small businesses have opened their doors for the first time, while an array of larger companies have made substantial expansions.

While that’s something to be excited about, experts say several issues are holding development back. Workforce and transportation from the pandemic remain pervasive, with ongoing housing issues and resurgent COVID-19 concerns tipping the scales further.

Labor shortages are especially salient.

“Workforce is the No. 1 thing that I hear from everybody,” Washington Chamber of Commerce Director Michelle Redlinger said. “We’ve had up to 200 jobs available on our job posting site for opportunities here in the community, and it’s a big problem. We have more open positions than we have people who are able to fill them.”

Redlinger said the issue was preventing business growth.

“Our businesses and employers are poised for growth and ready to expand,” she said. “They just aren’t able to do so without the manpower.”

Washington Economic Development Group Executive Director Mary Audia said that even for business that could afford to expand, that growth was capped by the limited workforce.

“They’re expanding, but even though they’re expanding, they might have been expanding even more,” she said. “What I’m hearing is that even though they’re able to expand, they’re not able to expand as much as they would like to because they just don’t have the labor.”

The cause for that labor shortage is a mystery. Employers and experts alike have previously said child care and housing shortages played into the problem, but beyond that, consensus is hard to come by. Educated guesses range from an aging population, an uptick in retirements, rethought careers during the pandemic, and growing calls for higher wages.

Iowa Chief State Economist Robin Anderson said economic recovery after the pandemic was uncharted water. In a departure from typical patterns, unemployment rates and available positions, which usually trade off with one another, are both high right now, a pattern that holds true across Iowa and the United States.

“It’s kind of a conundrum. You’ve got an elevated employment rate, but you’ve got employers screaming about job shortages,” Anderson said. “People feel confident enough to quit their jobs to feel like they can get another job really quickly. That’s something we just haven’t seen at this stage of the recovery in other business cycles.”

While data isn’t conclusive, Anderson said statewide trends and anecdotal accounts suggest that the pandemic worsened Iowa’s preexisting economic issues, especially in areas like Washington County.

“Even prior to the pandemic … finding the right people for the job was one of the top concerns for Iowa companies,” she said. “Rural areas are confronted with declining or slowing population growth more so than, say, the Des Moines metro. It is more of an acute problem in rural areas.”

Once they find enough labor to do the work, companies then have to worry about getting the materials to work with.

“2021 looked a little different,” said Premier 1 CEO Ben Rothe. “I still had peak seasonality, but the global supply chain, even the domestic supply chain, the freight situation has really changed. While I have orders outstanding, my labor needs have been reduced because I don’t have the product because I can’t get it.”

The cause of that material shortage is similarly complicated and devoid of consensus. Common concerns mentioned by Audia, Redlinger, and business executives included domestic shipping issues from the labor shortage, international shipping issues from the pandemic, and trouble caused by sliding economic relations with China.

Lastly, lingering concerns about COVID-19, fueled by a spreading delta variant of the virus, haven’t helped matters.

“I just had a prospect that’s looking at bringing a lot of money to Washington County decide to cancel his trip up here this week because hospitals are full in Florida, where he comes from,” WEDG Executive Director Mary Audia said. “That kind of slows down our progress as well. Not to the extent that is was before, but I’m seeing cancellations, I’m seeing people wear masks again.”

Despite the long list of pervasive economic issues, a puzzling but positive trend has come to light. Across Washington County and the state, new businesses are opening and established businesses are expanding at astounding rates.

Washington Chamber of Commerce estimates put the number of new businesses in the county around 25, plus nearly 20 more with recent or nearly completed expansions, relocations, and renovations. Statewide data showed a similar surge.

“We saw a significant uptick in business filings in 2021,” Chief Economist Robin Anderson said. “It’s really easy to get capital right now. You’ve got really low interest rates, and that’s helping support borrowing to start businesses.”

Anderson said the data defied predictions, giving cause for economic optimism.

“It was very unexpected,” she said. “There’s easy access to capital, there’s people transitioning out of work to become entrepreneurs. If you look, consumer confidence is pretty elevated right now in the national data … People are feeling pretty confident, and they’re willing to take a risk right now.”