West DSM News

Gov. Kim Reynolds opted out of receiving additional federal unemployment dollars, drawing praise from Iowans for Tax Relief. 

Iowa was among 25 states to cancel participation in the federal program as it ended the additional $300 benefit June 12.

“Federal pandemic-related unemployment benefit programs initially provided displaced Iowans with crucial assistance when the pandemic began,” Reynolds said in a statement. “But now that our businesses and schools have reopened, these payments are discouraging people from returning to work.”

Chris Hagenow of Iowans for Tax Relief. | Iowans for Tax Relief

The state unemployment is slated to slightly increase this year from $605 to $651. This is a result of the average annual income in Iowa increasing by nearly $4,000 from 2019 to 2020, the Des Moines Register reports.

Iowans for Tax Relief Vice President Chris Hagenow, a former Iowa Republican lawmaker, said ending the extra federal unemployment benefits was the right choice for the state’s economy.

“Gov. Reynolds’ decision to end Iowa’s participation in the federal unemployment program was absolutely the right thing to do for Iowa’s economy,” Hagenow told West DSM News. “The federal payments were a disincentive for a return to work at a time when Iowa businesses need employees.”

According to a New York Times report, the typical worker in Iowa would actually have made more by collecting unemployment with the additional federal assistance than they would by having a normal job. In fact, Iowa was the State with the fourth highest additional income provided by federal unemployment benefits.

Hagenow said it’s time for people to return to work. There are ample opportunities available, Hagenow noted, with unemployment at only 3.9% in May, just a tick up from the 3.8% rate in April.

“Even before the COVID-19 pandemic, Iowa has had a significant shortage of labor,” he said, adding, “Iowa’s unemployment rate has returned to pre-pandemic levels. As the governor herself succinctly put it, Iowa simply has ‘more jobs available than unemployed people.’”

Iowa has increased its own unemployment benefits, tying it to an increase in the average annual wage, a decision questioned by Hagenow. 

“There are plenty of jobs available at present and increasing unemployment benefits merely serves to discourage people from filling those jobs,” he said.

Iowa’s labor force participation rate has fallen significantly since two years ago, prior to the COVID-19 pandemic, Hagenow noted. Iowa’s labor force participation rate was 70.1% in May 2019. In May 2021, the most recent available numbers, Iowa’s labor force participation rate was 66.4%.

“While this may not seem like a large change, if the number of Iowans who chose to leave the labor force represented a city in Iowa, it would be the third-largest city, with a population just shy of that of Cedar Rapids,” he said. “Higher wages are being used to try to entice these people back into the workforce. Higher wages are a good thing for those workers who see more money in their wallet. However, we must also be vigilant that these gains are not consumed by rapidly rising inflation, which stems in large part from our skyrocketing federal debt and the significant payments being handed out by the federal government.”

Hagenow, an attorney and partner at Hagenow & Gustoff LLP in Des Moines, served six terms in the Iowa House of Representatives representing parts of Dallas and Polk counties. The sixth-generation Iowan served as chairman of the House Government Oversight Committee, House majority whip and House majority leader.

Hagenow said the state is in good hands with Reynolds, who is also a Republican. 

“Gov. Reynolds’ leadership has helped Iowa’s economy survive the COVID-19 pandemic, and she continues to prioritize our state’s economic growth,” he said.

It’s a mutual admiration society, as Reynolds is a fan of Iowans for Tax Relief, which has advocated for tax fairness and government fiscal prudence since the 1970s.

“ITR has been fighting for Iowa taxpayers for over 40 years. I can’t tell you how important that is,” she said in a quote on the group's website. “When ITR is at the capitol, they are not working for just one business or industry. They represent all Iowa taxpayers.”