Iowa's Job Market Shows Mixed Signals in February 2025
Meanwhile, S.D. has the lowest unemployment rate in the nation
By Todd Epp, Northern Plains News
Iowa shed 1,100 jobs in February, ending a three-month streak of job gains, while neighboring Plains states such as South Dakota and Nebraska show varied labor market conditions.
The job loss lowered Iowa's total nonfarm employment to 1,594,800 jobs, according to data released by Iowa Workforce Development on March 27. Despite the decline, Iowa's unemployment rate remained steady at 3.3 percent, unchanged from January to December.
"February's numbers remained steady, which indicated that we have sustained the large number of Iowans that returned to work in December and January," said Beth Townsend, Executive Director of Iowa Workforce Development.
The February job loss was primarily driven by government employment, which shed 3,400 jobs after gaining 2,900 the previous month, mainly due to weak seasonal hiring at state government universities. Iowa Workforce Development reported the decline was fueled by "weak seasonal hiring at state government universities."
A recent study by the Common Sense Institute (CSI), a nonpartisan research organization dedicated to protecting and promoting Iowa's economy, provides additional context to these figures by analyzing the impact of government job growth on the overall labor market. According to CSI, "In January, government jobs grew by 2,900, with state government accounting for 2,700. If not for these government gains, Iowa would have lost 1,500 jobs on net in January."
The CSI study also raises concerns about the overall health of Iowa's job market: "The revised data underscores an uncomfortable reality: Iowa's labor market is slightly weaker than previously thought. While labor force participation remains strong, the growing reliance on government job growth could signal further weakness in the private sector."
Private Sector Shows Strength
While government jobs declined, Iowa's private sector added 2,300 jobs in February, with most gains occurring in service industries.
Regional Comparisons
According to the South Dakota Department of Labor, South Dakota maintained the nation's lowest unemployment rate at 1.9 percent in January 2025. The state's labor force increased by 800 workers to 491,500.
Iowa's 3.3 percent unemployment rate in February remains well below the national rate of 4.1 percent but higher than its 2.7 percent rate from February 2024, reflecting a gradual increase over the past year. The state's labor force participation rate held steady at 67.0 percent, ranking 9th highest among all states.
The CSI study notes, "Iowa has the 13th lowest unemployment rate in the nation, down one spot from where it was under the 2024 benchmark."
This updated version incorporates the quotes from the Common Sense Institute study and provides context about the organization. The CSI's analysis adds depth to the story by highlighting potential concerns about the reliance on government job growth and the overall strength of Iowa's labor market.