The state’s manufacturing, health care and professional service sectors will likely return to normal, albeit slowly, as the economy begins to recover from the COVID-19 pandemic, while lower-pay, lower-skill jobs will be the slowest to recover, business experts said during a Des Moines Business Record panel discussion on the state of the labor market and the coronavirus pandemic.

Participants in the “Coping w/COVID: Labor Market Outlook” discussion, held Wednesday, were Iowa State University economist Dave Swenson; Beth Townsend, director of Iowa Workforce Development; David Leto, president of Palmer Group; Lori McCarty, chief strategy officer of Holmes Murphy and Associates; and Kathy Joblinske, market principal and executive vice president of ManpowerGroup.

As part of the hourlong discussion, the panelists were asked a variety of questions, touching on subjects ranging from how COVID-19 is affecting the state’s unemployment rate to what companies have done in response to the pandemic.

Eric Burmeister of the Polk County Housing Trust Fund presented a question to the panelists, asking what the wage level or skill levels are of the jobs that may not come back as the economy recovers.

“Are we looking at losing a wage level of job in Iowa and continue to see a lot of our folks working in lower-wage, service level jobs?” Burmeister said.

The panelists had somewhat mixed views in response to Burmeister’s questions.

Swenson said he sees the reverse happening.

“I think we have a lot of resilience in our metropolitan areas, and that resilience is going to be reflected broadly across the board in business services, health care, professional services, law, legal, all those things that require higher educations and higher skills, those industries are mostly going to come back to business as usual,” Swenson said. 

He said the state’s manufacturing sector recovered well in the past decade since the Great Recession, although there was a shift from durable goods to nondurable goods.

“We did a good job of recovering those,” he said. “What’s happening now is we’ve had a disproportionate number of job losses in lower-pay and lower-skill jobs. I anticipate in many regards the first lost are going to be the last to recover.”

He said he doesn’t anticipate the state suffering “occupationally … or at the wage level.”

“Some of the core elements of the state economy have more resilience than some of these other areas, leisure, hospitality, maybe some categories of retail, all of which pay lower. All of those are probably going to recover slower, or we’re going to engage with them in a different manner than we did going into this,” Swenson said.

Leto said that he doesn’t see people standing next to each other in lower-wage manufacturing positions as being “OK,” moving forward, and that automation and innovation will have to happen to keep employees safe.

“So I think that will impact some of those lower-wage positions because out of necessity, and safety for people,” Leto said.

Swenson said the level of industrial engineering described by Leto will take time and capital investment. Until that happens, worker safety will be at the forefront, he said.

“For those industries to change will require a lot of time, a lot of planning and a lot of capital investment that right now they’ve already demonstrated they’re not willing to make, but events might make it so they have to do that,” he said.

Townsend took issue with the notion that all service-level jobs are low-paying. She said in the meatpacking industry, for example, the starting wage is $16.50 an hour, or just over $34,000 a year. 

“So I don’t think it’s accurate to say these are all low-paying jobs,” she said. “We have to be careful. We want Iowa to be a diverse and vibrant economy, and that by definition is going to require that retail and hospitality jobs come back.”

Townsend said the state needs the manufacturing and health care industries to return strong, but time and resources are needed to help small business owners, especially those in retail and in hospitality, which has been more adversely affected than other industries by the pandemic.

Townsend said 95% of the state’s employers have 50 or fewer employers.

“So we really need to support our small businesses and hope they come back,” she said.

Register to rewatch the virtual event.