CDPS Blog

Why inclusion could be key to Des Moines' economic future

October 7, 2019

In places where labor markets are tight, many policymakers and economic development practitioners are increasingly focused on growing the workforce and improving access to opportunities for populations that have long faced barriers to economic inclusion. In this post, we take a closer look at one place with very little slack in the labor market, Des Moines, Iowa. The data suggest linkages between economic growth and an expanding and increasingly diverse labor force. At the same time, measures of economic prosperity, educational attainment, homeownership, and criminal justice outcomes suggest persistent barriers facing the diverse populations that are key to a sustainable labor force expansion. Employing policies and practices that break down barriers for communities of color may yield important benefits for the Des Moines economy overall. 

The Des Moines economy has grown quickly in recent years. Total employment over time, one measure of growth, indicates that the Des Moines metropolitan area1 workforce has outpaced the state of Iowa, Plains region2, and nation. From 2001 to 2017, Des Moines’ total employment grew by about 100,000 workers, an increase of 28 percent. In contrast, US total employment grew by 18 percent over this period, while Iowa and the Plains region grew by 9 percent and 11 percent, respectively (see figure A).

Des Moines area workforce has grown rapidly since 2001 (Figure A) 

Des Moines employers’ demand for more workers is also evident from unemployment data. A remarkably small share of the labor force in Des Moines, and across the state of Iowa, is unemployed – falling below 3 percent since the beginning of 2019, down from a high of 6.7 percent during the Great Recession, according to Bureau of Labor Statistics data. In comparison, the national unemployment rate was 3.6 percent as of April 2019, and reached a high of nearly 10 percent during the recession.

Such a low rate of unemployment reflects a very tight labor market where the supply of workers is limited, which can act as a constraint on economic growth. With that in mind, it is useful to examine how the composition of the Des Moines labor force has changed over time, and in particular, to measure the extent to which the increase in total employment is comprised of non-white workers. For the Des Moines area, the state of Iowa, and the nation, we computed the share of the labor force that was non-white in 2005-2009 and in 2013-2017 (figure B). We found gains in the share of non-white workers in all three places, but the percent increase was largest in Des Moines and the state of Iowa as a whole. Across the Des Moines area, the share of non-white workers grew from 11 percent to 15 percent. This change reflects a net increase of about 20,000 non-white workers, which accounts for 52 percent of net new labor force participants in Des Moines between 2005-2009 and 2013-2017.3 In other words, most of the growth of the labor force over this time period was attributable to net gains in non-white workers. The non-white share of the labor force grew in every county in the Des Moines area, but Polk and Dallas counties saw the largest gains, rising to 19 percent and 13 percent non-white, respectively.

Des Moines area labor force is becoming more diverse (Figure B) 

 

Measuring racial disparities in Des Moines

Given the increasing importance of non-white workers to the Des Moines economy, we examine measures of racial disparities in income, education, homeownership, and incarceration rates in order to better understand some of the challenges that minority households in Des Moines may be experiencing that affect their ability to benefit from a robust economic environment. Across all four indicators, we found large gaps between white and black residents, and between white and Hispanic residents. For example, median family income in Des Moines in 2017 for white family households was about $87,000, compared to about $37,000 for black family households, a difference of 133 percent (see figure C). Hispanic family households had a median income of about $48,000, a difference of 84 percent. Compared to the national figures, shown in dashed lines, the disparities between racial groups in Des Moines are more pronounced. White households in Des Moines have a higher income than white households nationwide ($87,000 vs. $80,000 in 2017), while black and Hispanic households have lower incomes than their counterparts across the country ($37,000 vs. $47,000 for black households, and $48,000 vs. $49,000 for Hispanic households in 2017).

Real median family income has declines for White and Black households, and large gaps remain (Figure C) 

One possible contributing factor to the large income disparity is that white adults in Des Moines are much more likely to have a bachelor’s degree or higher than black or Hispanic adults. About 38 percent of white adults in Des Moines have a bachelor’s degree as of 2017, compared to 19 percent of black adults and 13 percent of Hispanic adults (see figure D). For all three groups, the percentage of adults with a bachelor’s degree has grown since 2005-2009, but the gaps remain. As with median family income, the racial disparities in educational attainment in Des Moines are larger than those at the national level. White adults in Des Moines have a higher share with a bachelor’s degree or higher than white adults nationwide (38 percent vs. 35 percent), whereas black adults in Des Moines are less likely than their counterparts nationwide to have a bachelor’s degree or higher (19 percent vs. 21 percent).

Educational attainment for Black and Hispanic adults is far below that of White adults in the Des Moines area (Figure D)

 

We also examine racial gaps in homeownership (see figure E). The homeownership rate among white households is higher than that of black households across the country, and the gap in Des Moines is particularly large. About 73 percent of white households own their home, compared to just 49 percent of Hispanic households and 32 percent of black households. While buying a home entails taking some financial risk, it is also an important mechanism for many households to accrue wealth over time. Lower homeownership rates among minority households reflect differences in credit scores, the ability to afford a down payment with savings or with support from family, and in other social and demographic factors.

Des Moines area exhibits large homeownership gaps, especially between White and Black households (Figure E) 

Finally, and perhaps most disturbingly, the incarceration rate for black individuals in Des Moines is far higher than the incarceration rates for white and Hispanic individuals (see figure F). For every 10,000 black residents in Polk County, about 96 are currently incarcerated, in comparison to 18 out of 10,000 white residents and 35 out of 10,000 Hispanic residents. 

Large disparities in incarceration by race in Polk County (Figure F) 

Des Moines’ experience with mass incarceration reflects that of the state as a whole. Iowa’s prison population has more than tripled since 1980, and the state ranks third in the nation in terms of the disparity in incarceration rates by race. Black men in Iowa are 11 times more likely than white men to be incarcerated. Furthermore, though black men comprise only 4 percent of the state’s population, they make up 24 percent of its prison population.

The negative consequences of a high incarceration rate include lower earnings, instability for families when parent or wage earner is incarcerated, and difficulty with re-entry into society and the labor force.4 Higher incarceration rates for communities of color in Des Moines further contribute to economic disparities, and impact economic growth overall.

Addressing racial disparities in income, education, homeownership, and incarceration are important goals for policymakers and community development practitioners. These disparities reflect barriers facing communities of color that increase economic inequality and create constraints on economic growth broadly in places like Des Moines, and communities across the nation. In an exceedingly tight labor market that increasingly relies on black and Hispanic workers, removing barriers facing these communities is a crucial step to continuing on a path of sustainable economic growth.

 


1 In this analysis, the Des Moines metropolitan area includes Dallas, Guthrie, Jasper, Madison, Polk, and Warren counties.

2 According to the Bureau of Economic Analysis, the Plains region includes Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

3 We examine the total employment of the Des Moines area in figure A using Bureau of Economic Analysis data, which allows us to study a longer time period. In figure B, we examine the race and ethnicity of the labor force in the Des Moines area using American Community Survey data, which covers a shorter time period. Thus, the total increase in workers from the data in figure B is smaller than the total increase in figure A.

4  See https://www.brookings.edu/wp-content/uploads/2018/03/es_20180314_looneyincarceration_final.pdf.

 

The views expressed in this post are our own and do not reflect those of the Federal Reserve Bank of Chicago or the Federal Reserve System.

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