Unemployment Rate Hits Highest Level Since 1983

Thanks in part to the university, as well as research-oriented and public sector employers like the National Animal Disease Center, the city and Iowa's Story County have an unemployment rate of 3.7 percent.

In the short term, things are looking up for the university, according to Moody's Economy.com. It could see a boost in applications as students crunched by the recession choose Iowa State University over expensive private schools.

A decline in manufacturing jobs, however, has hurt Ames' employment picture and, according to Moody's Economy.com, combined with limited growth in Ames' research and government sectors, paints a bleak economic future for the city.

Lundt said there's good reason for employers to come or stay in Ames: The workforce is educated and dependable.

"There's a lot to be said for the work ethic in Iowa," she said. "People come to work here and they do their jobs and I think that's an important thing."

Employment Stability: Hope From Hospitals, Strong Workforce

Iowa City is another place in the Hawkeye State with very low unemployment, and Iowa City has more than just that in common with Ames. It, too, can at least partly chalk up its low rate -- 3.8 percent -- to a local university. The University of Iowa employs more than 20,000 people.

The Iowa City area also boasts a large health care sector: University of Iowa Hospital & Clinics, Mercy Hospital and a veterans medical center employ more than 10,000 people.

Together, the university and the local hospitals "insulate us from some of the current economic challenges," said Nancy Quellhorst, the president of the Iowa City Chamber of Commerce.

But that insulating effect might not last for long. Moody's Economy.com predicts that the weakening economy will hurt spending by both the university and local hospitals.

But, as in Ames, Iowa City can still tout its workforce. More than 40 percent of the city's adult residents, Quellhorst said, have bachelor's degrees and four percent have Ph.D.s.

"As employers look for a strong workforce, we're very competitive," she said.

The city has also embarked on a program to encourage residents and merchants to do more of their shopping locally instead of online or elsewhere.

Local business owner Doug Parsons, who runs Frohwein Office Plus, an office furniture and supply store, said it's impossible to judge how well the program has worked. But, he added, "there's no way it could have a negative effect."

"If we need plumbing help or lawn care or whatever it may be, we go and do business locally, and we look for companies that we think might be interested in doing business with us," he said. "From our standpoint, it works out for everybody."

Cities with Highest Unemployment Rate

While Iowa boasts two of the three lowest-unemployment metro areas, California has a more dubious distinction. The three metro areas with the top unemployment rates on the BLS survey are all in the Golden State: Yuba City, with an unemployment rate of 18.9 percent; Merced, at 19.9 percent; and El Centro, with the highest rate at 24.5 percent.

The regions have more than just a state in common. All three have economies that are largely based on agriculture. The seasonal nature of much agricultural work, particularly when it comes to the kinds of niche farming popular in California, results in unsteady employment, Cochrane said.

"A lot of that farm labor is not fully employed throughout the year," he said.

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