No recession in Des Moines

American Demographics, August, 1991 by Cynthia Dunn Rawn

MOST BIG CITIES ARE GRAPPLING with sluggish real estate markets and rising unemployment. But Des Moines has a different kind of problem: finding enough qualified workers to support a growing service-oriented economy. Unemployment in the city stands about two percentage points below the national average. With low office vacancies, steady growth in retail sales, and a stable housing market, Des Moines is weathering the recession in style.

Iowa leads the country in hog production, but the economic base in Des Moines is tied more to life insurance premiums and credit-card portfolios. Des Moines is one of the largest insurance centers in the world; 14 percent of its nonfarm workers are employed in insurance, finance, and real estate. Government jobs account for another 14 percent, and health care claims 8 percent.

This economic diversity helps get the city through hard times. Even during the darkest days of the 1980s farm recession, Des Moines fared better than most of Iowa. While the state lost 5 percent of its population between 1980 and 1990, Des Moines grew almost 7 percent, to 392,900 people.

Steady, measured growth also helps Des Moines avoid downturns in real estate. The city has a downtown office vacancy rate of only 10 percent, compared with 17 percent nationally in early 1991. "Des Moines has done a good job of not overbuilding. We've been pacing ourselves," says Scott Stricker, administrator of the Department of Economic Development for the city.

Some of Des Moines' advantages are unique to the area. Downtown workers don't face hour-long commutes to the office. Wages and rents are lower than in Chicago or coastal cities. Perhaps best of all is the quality of the city's work force. Iowa has unusually high literacy rates, and its high school students' scores on the SAT and other college entrance exams are among the nation's best. Corporations benefit from a strong homespun work ethic that adds to higher profits.

"The productivity of the Des Moines office is higher than in other areas. I would credit it to the quality labor force and the work ethic," says Dale Pells, who heads the Sears credit-card center in West Des Moines. "It boils down to the productivity of people and the ability of a person to learn a job." Pells' office had 75 employees in 1989. Now it has 550, and Sears executives plan to add more.

Because of the expansion of offices like the Sears credit center, Des Moines faced severe shortages of entry-level office workers in the late 1980s. As a result, human-resource managers of local businesses are taking turns traveling to rural Iowa schools. Kris Winter of the Greater Des Moines Chamber of Commerce is holding job fairs in rural Iowa communities that have high unemployment. She tells graduating students to consider job possibilities in Des Moines instead of leaving the state.

--Cynthia Dunn Rawn