In Iowa, Jobs Are Plentiful but Workers Are Not

Jerilyn Hergenreder, left, and Rachel Tonda performed lab work at Kemin Industries in Des Moines. The company has dozens of positions to fill. Credit Ryan Donnell for The New York Times

AMES, Iowa — Unlike the indoor basketball court, foosball tables or fireside lounge at Workiva’s sprawling campus here, the oversize green prize wheel centered among a hive of work stations is not meant for break times.

Only employees who refer new hires get a chance to spin it and win up to $2,500.

“Thirty percent of our recruiting comes from that wheel,” said Matthew M. Rizai, chief executive of Workiva, a cloud-based software firm. The hunt for workers is unrelenting, he said. “We always have openings.”

Workiva is not the only one. “We’ve run out of people for jobs,” said Christopher E. Nelson, chief executive of Kemin Industries, a global agricultural and biotechnology company. At the Des Moines headquarters, where a processing plant can scent the winter air with rosemary or spearmint, there are dozens of positions to fill. “Everything from Ph.D.-level scientists down to factory workers,” Mr. Nelson said.

The lament is heard again and again from employers across the state, as the presidential caucuses on Monday are shining an intense national spotlight on Iowa. Once the parade moves on, though, the focus will return to the pressing workaday demands of hiring employees, satisfying customers and getting goods out the door.

Salih Salih, who came to the United States as a refugee from Eritrea 10 years ago, said he believed his accent had been a handicap in finding a permanent job, despite a college degree and stellar evaluations. Credit Ryan Donnell for The New York Times

At 3.4 percent, Iowa’s unemployment rate is among the lowest in the country. With major metropolitan areas — crowded with hard-hat construction sites — painting an alluring picture of steady economic progress, business leaders here retain a sunny optimism that is rarely heard from the presidential candidates.

But now that Iowa has achieved a tightening labor market that is the envy of most other states, many companies are confronted with a different set of challenges pushing them to rethink everything from recruiting to economic development.

These include the fraught questions surrounding immigration. Iowa is home to United States Representative Steve King, the Republican anti-immigrant firebrand, and the kind of anxieties that he champions pop up in political advertisements in a state where roughly nine of every 10 residents are white.

Some immigrants, particularly those without sought-after credentials in technology or science, say they have had trouble finding a job. Salih Salih, 34, who came to the United States as a refugee from Eritrea 10 years ago, said he believed his accent had been a handicap for him and many other people. “They’re measuring their ability by how they speak English,” said Mr. Salih, who has experience in maintenance and as an electrician.

Mr. Salih has found temporary work through People360, an employment agency in Des Moines, but has struggled to find a permanent position despite a college degree and stellar evaluations.

Immigrants can encounter difficulties, said Mr. Nelson, the Kemin chief executive, but he added that the acute labor shortage was nudging some skeptics in the business community to be more welcoming. “The only thing that’s going to relieve us is getting immigrants into the state,” he said. “Having babies is still a 20-year process.”

With a growing number of retirees and stiff competition for young workers from surrounding Midwestern cities, getting people to resettle in Iowa is necessary for growth, said David A. Swenson, an economist at Iowa State. The state’s important meatpacking, animal feed and dairy industries “have been able to maintain profitability because of immigrant labor.”

But even a relatively modest change in Iowa’s demographics has helped foster a political backlash.

Indeed, the state has a hard time attracting outsiders. For some employers, the recruitment strategy includes luring home people with an Iowa connection.

A new headquarters for Kemin Industries taking shape in Des Moines, with the Iowa State Capitol building visible on the horizon. Credit Ryan Donnell for The New York Times

“As a local business, we want people who are tied into the area,” said David Kenworthy, chief executive of Storey Kenworthy, an office supply and furniture company. “We like to have people returning to Iowa, raise their family and put in roots.”

Workiva, at Iowa State University Research Park in Ames, brings in as many as 50 student interns a year, with many of them later joining the staff. Just down the road, the manufacturer Vermeer is building a small research hub at the park. The company, whose headquarters are more than an hour away in Pella, picked the location to attract technology graduates who might want to live closer to a bigger city.

Mark Core, an executive vice president at Vermeer, said that his customers say “the No. 1 thing holding back growth is labor — every time.”

The shortage has a ripple effect. “It hurts a lot thinking we could add even more people if our end users could find more people to operate our machinery,” Mr. Core said.

Part of Debi Durham’s job as director of the Iowa Economic Development Authority is to attract out-of-town employers to Iowa. But occasionally, she said, a company chief here will complain: “I’m having trouble finding employees, so why are we still recruiting?”

The answer, she said, is that new business is essential to Iowa’s long-term prosperity, which is why Ms. Durham, Gov. Terry E. Branstad and other state officials met with Dow Chemical and DuPont executives two weeks ago in hopes of persuading them to locate the $19 billion agricultural spinoff of their two companies, which are on track to merge this year, in Iowa.

Potential newcomers are given a detailed assessment of a particular area’s labor market: how many people are unemployed or willing to switch jobs; how far they would commute; and a sampling of wages.

When a company’s representatives (Ms. Durham would prefer not to name names) recently came looking to pay below the $10 median wage that many Iowans now consider the minimum acceptable, Ms. Durham told them, “You’re not going to find people at that wage.”

Still, low-skilled workers remain at a disadvantage here. Fight for 15, the national movement to raise the minimum wage, organized a protest by fast-food workers in Iowa on Thursday.

 Many employers say they have raised wages to attract workers, particularly skilled ones, but the insistent complaints about labor shortages have put less pressure on wages in Iowa than expected, economists say.

“Wage and salary earnings are very much less than the overall national average,” said Mr. Swenson, of Iowa State, citing sectors that include finance, insurance and professional services. “If the labor supply is tight and you’re not bidding up prices, you’re just making noise.”

Some employers have an eye on the rearview mirror, where the last recession still looms large. Though Storey Kenworthy had a record year in 2015, Mr. Kenworthy, its chief, remembers seeing revenue drop more than a third in 2008 and being forced to cut staff. Since then, “we tried to look at things a little differently,” he said, citing fixed costs like labor.

A result is a trend around the country: more emphasis on nonwage benefits and bonuses that can be trimmed back if business dips. Since 2011, wages at the firm have risen to 2.5 from 2 percent annually, Mr. Kenworthy said, with employees now bringing home $48,000 on average. Yearly bonuses and profit sharing add 10 percent more.

David Leto, executive vice president of the Palmer Group, an employment agency in Des Moines, said wages had steadily increased but “employees know not to ask for the moon here.”

Employers are also conscious of keeping parity among existing workers and new hires, he said.

As important as a paycheck is, it is just part of what attracts people to a company, said Mr. Rizai, of Workiva. He pointed out that he must compete with Facebook and Google for talent, which is why he spends so much time catering to the desires of his employees. This week, Fortune magazine named his company one of the top 10 large technology workplaces in the country.

He echoed a theme voiced by many Iowa employers: Here, someone can “live big” — find good schools for children and live in a comfortable house at a fraction of the cost on the coasts.

“Not everyone,” Mr. Rizai said, “wants to go to Silicon Valley.”

In Iowa, Jobs Are Plentiful but Workers Are Not