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Washington Post, August 18, 2018
Stuck in a belligerent doldrum’: Wages rise in the nation’s hottest job
market — but so do costs
By Todd C. Frankel
AMES, Iowa — Isabel Moctezuma was cooking again. Now, at least, she was
doing it at home, making salmon for dinner in her small apartment. Her
daughter, Mia, 8, sliced carrots next to her. Moctezuma was just off the
clock and still wearing her Texas Roadhouse work shirt, which on the
back read, “I (heart) my job.” The slogan made her laugh.
Moctezuma, 39, worked this summer in the restaurant’s kitchen for $11.50
an hour — less than what she had made as a cook six years ago. The rest
of the year she worked as a cook at Iowa State University, where the pay
was a little better. But she had seen the “Help Wanted” signs all over
town. She’d heard how the local economy was soaring. And she’d recently
applied for a supervisor’s job. She wondered if this was her chance. It
was only later, when dinner was over and with the dishes done and Mia
watching TV, that she allowed herself to imagine what that might feel like.
“It would be nice to not have to worry so much,” she said.
Moctezuma lives in what might be the nation’s hottest job market — the
metro area with the lowest unemployment rate, a hard-to-imagine 1.5
percent. It’s not a new claim to fame. Ames has boasted the country’s
lowest annual average unemployment rate for more than two years.
“You’re hard-pressed to feel like things aren’t really robust here,”
said Dan Culhane, president of the Ames Economic Development Commission.
“Everyone who wants a job has one.”
The jobs are plentiful, but the widespread prosperity usually tied to
ultra-low unemployment has failed to materialize here, especially for
workers such as Moctezuma. Wages have risen, but not much faster than in
other places. At the same time, costs such as rent have continued to
rise. And other measures of economic health have failed to improve.
“It’s like we’re stuck in a belligerent doldrum,” said David Swenson, an
economist at Iowa State.
The unemployment rate is often viewed as a barometer for how the country
is doing — and the places with the lowest rates are usually described in
breathless terms as boomtowns where workers are fawned and fought over.
But what is happening in Ames highlights an experience much of the
nation appears soon to confront. The economy is growing faster and
unemployment is falling, yet wages barely budge. When they do, higher
costs can wipe out their value. Indeed, the government reported in early
August that Americans, on average, are making less money than they did
at this point last year, after accounting for rising prices.
This helps explain why the current expansion has felt so weak for so
many — in Ames and nationwide — despite headline numbers that paint an
enviable picture.
The Ames experience illustrates how it occurs. Some employers have
turned to tactics other than raising wages to make hires. Some workers —
particularly parents — struggle with employers’ increasing demands for
weekend hours and just-in-time schedules. Some of the barriers to
better-paying jobs are old, like Iowa’s shortage of affordable child
care. Others are newer, such as state lawmakers last year weakening the
bargaining power of unions. These all become a drag on wages,
especially for low-income and middle-class workers.
“I believe that a rising tide lifts all boats,” said Rick Sanders, the
Republican chairman of the board of supervisors for Story County, home
to Ames. “But we haven’t seen that impact on lower-skill and blue-
collar workers yet. I’m hoping it’s just a matter of time.”
Swenson, the economist, said the wait has already defied conventional
theory.
“When will wages rise? I don’t know why we keep waiting,” he said. “It’s
been like waiting for Godot.”
Challenges of low unemployment
The Ames metro area is a flourishing region of nearly 100,000 people
built around a college town, just 40 miles north of Des Moines.
The Barilla pasta plant here is expanding. Tech firm Workiva is growing.
A steady supply of jobs flow from Iowa State, the National Animal
Disease Center and the Energy Department’s Ames Laboratory.
But the region’s No. 1 ranking in unemployment has created challenges.
When a food processor visited Ames this summer to look at opening a huge
new plant, Culhane had to reassure the company it could find enough
workers at the right wage.
“We have to demonstrate that we can find a workforce from time to time,”
said the head of the local development commission.
Local businesses have needed to be creative to find workers. Story
County Medical Center started allowing people to drop in unannounced for
job interviews. They called it “Walk-In Wednesdays.” The hospital also
began offering sign-on bonuses and could add job referral bonuses. But
the hospital has mostly resisted raising wages.
John Crawford, owner of Alpha Copies, started rotating the location of
the “Help Wanted” signs he posted outside his two stores so they didn’t
blend in with all the other job postings.
“It’s like changing the wallpaper,” Crawford said. “People notice the
changes.”
But wage increases were also not yet part of the picture.
While he expected that one day he would need to offer $15 an hour,
“that’s when the economy says you don’t have 10-cent copies anymore.”
Amid Ames’s economic prosperity, signs of duress remain — and in some
cases, they are getting worse. The share of schoolchildren qualifying
for free and reduced-priced lunch in the Ames metro area has risen 35
percent since 2008, twice as fast as in Iowa overall. At the same time,
local demand has not fallen off at the Food Bank of Iowa. In fact, the
food bank plans to open five new pantries in the Ames area soon.
The booming economy hasn’t eased the strain felt by many families, said
Jean Kresse, president of the United Way of Story County. A United Way
report released in June found the percentage of households struggling to
afford basic needs has grown — not fallen — since the recession. Kresse
said the problem is driven by households that earn enough to be above
the poverty line yet still face low wages and rising expenses.
“There’s this whole middle ground where people are working and
contributing to the economy, and they’re not fine,” Kresse said.
The average weekly wage in the Ames metro area grew a modest
inflation-adjusted 7.4 percent from 2013 to 2017, according to the
Bureau of Labor Statistics. That was slightly faster than the state and
nation. But income growth for families in the Ames area was slower by
comparison.
And Ames is becoming a more expensive place to live. The median home
listing price is up 9 percent in the last year to nearly $230,000,
according to Zillow. The median rent for a two-bedroom home has risen 10
percent in a year to $930 a month, according to Housing and Urban
Development data — and even higher within city limits, where residents
compete with 36,000 Iowa State students. Local officials have started
looking at how to develop more affordable housing.
Trimming expenses
Moctezuma, a single mom, lives in a two-bedroom apartment where the
hallway is decorated with Mia’s drawings and a painting of Jesus hangs
on the wall across from the kitchen.
Her rent went up $50 a month two years ago. And $30 more last year.
“I got a nice letter this year saying they were going to increase it
just $10,” she said.
She trims expenses to keep up. She opens windows instead of turning on
the wall air-conditioning unit. Eating out is a once-a-month trip to
McDonald’s. She drives an old truck that her church helped her buy.
Still, she holds on to her dream of one day owning a house with a small
garden.
Earlier this year, she got excited when Ames asked for volunteers to
care for small city gardens. She and Mia planted flowers such as red
impatiens and yellow snapdragons in a plot in a local park. They
returned often to check on their flowers and pick weeds. One day, they
noticed a small sign: “Flower Garden Adopted by Mia & Isabel Moctezuma.”
“I’m never going to have a garden of my own,” Moctezuma said, “so this
is my chance.”
She loves Ames. She said it again and again. The schools are among the
best in the state. Her church is here. Her auto mechanic understands
when she needs to stretch out payments on a repair job. She gushes about
the Ames Public Library. She and Mia visit at least once a week for
books and the Internet.
She even left Ames once. Three years ago, Moctezuma moved to Chicago
with her daughter in search of something better. But the city felt too
big. Traffic was stifling. And Chicago’s public libraries just made her
miss the one in Ames.
No,” she said, recalling it now, “my library is better.”
She and Mia returned a few months later.
The Ames Public Library — a huge light-filled building in the heart of
downtown — plays a central role in the city. In 2016, the library began
offering free lunches for children three days a week during June and
July. Demand was so strong that the next summer the free lunches
expanded to five days a week and into August, too. This summer, the
number of meals served a day has jumped by more than 10 percent.
“It surprises us every year,” said Sarah Bohlke, the library’s volunteer
services coordinator.
The library is where Moctezuma conducted her summer job search. She
logged on and saw more than 2,000 job openings. She applied all over.
Target. Hy-Vee. Restaurants. Hotels. Some places wanted her to work
weekends or nights.
With so many “Help Wanted” signs posted around Ames, business owners
such as Alpha Copies’ John Crawford said it helps to move them around.
“It’s like changing the wallpaper,” Crawford said. “People notice the
changes.” (Rachel Mummey/for The Washington Post)
“My friends said I was too picky,” Moctezuma recalled. “But what would I
do with Mia?”
The best offer came at Texas Roadhouse. It was only 30 hours a week. And
the pay was low. Plus, it meant cooking again.
“But I shouldn’t complain,” she said.
Her main job was still at Iowa State as a dining hall cook, where she’d
started six years ago on the night shift, sometimes asking her boss if
she could bring Mia to work with her. Child care was always a worry.
While her mom worked at the restaurant this summer, Mia attended a
reduced-fee day camp.
Moctezuma liked her Iowa State job and wanted to get on year-round. As a
union member, she received regular raises, from 2 percent to almost 7
percent. She had good health insurance with no monthly premium. But that
changed last year when Iowa’s Republican-controlled legislature passed a
law gutting public-sector unions. Collective bargaining was severely
restricted. Large pay raises ended. Union workers got a 1 percent pay
hike this year. And Isabel’s health care now costs $80 a month.
Then, in May, she noticed a job posting for a dining hall supervisor. It
was a year-round position. No more hunting for summer jobs. No weekends,
either. Her boss encouraged her to apply. Moctezuma was nervous. The
job paid about $35,000 a year.
“My eyes got big when I heard that,” she recalled. “It would be so nice.”
She asked a church deacon for advice. John McCully, 83, was a retired
Iowa State English professor. He’d known Moctezuma for years and treated
her like a favorite daughter. He’d noticed how Ames had grown, filling
with new houses and nice cars.
“This isn’t helping those who are poor,” McCully said.
He told Moctezuma to be clear in her mind about her accomplishments —
her experience cooking, the compliments she’d received for how hard she
worked, how well she got along with co-workers. She’d even once had an
offer from a local investor to help her open her own bakery and cafe.
That was a couple of years ago. Moctezuma had turned down the offer,
unsure if she could do it.
“You minimize everything you do,” McCully told her. “You can’t do that
for this.”
She remembered little from her interview. It happened so fast. Then one
week passed with no word. Then another. McCully urged her to call: Ask
them if they’d reached a decision. She didn’t want to.
“Sometimes you don’t want to know,” she said.
Dreaming of the future
Recently, Moctezuma had the day off from work at Texas Roadhouse. She
spent it volunteering at a local food kitchen, where — of course — she
cooked meals. She liked it. Others had it worse than she did, she said.
But the people she saw there, along with her own experiences, made it
hard to understand the local TV news report detailing how Ames once
again had the nation’s lowest unemployment rate.
Later that night, Moctezuma and Mia ate a home-cooked dinner of chicken
and farro salad.
Moctezuma hopes that “someday” she can own a home with a little garden
for herself and her daughter. (Rachel Mummey/for The Washington Post)
Now, Mia wanted to walk down to the neighborhood creek. She liked
throwing rocks into the water. It was still light out. Moctezuma made
sure her house key was on a pink bracelet around her wrist. They headed
out, past a park where T-ball practice was wrapping up, and along
residential streets where Moctezuma loved to look at the houses. Mia ran
ahead.
Moctezuma still hadn’t called about the supervisor’s job at Iowa State.
She worried that she had dreamed too big. She worried about having
enough money and about whether she was working enough and how to be the
best possible mother to Mia.
She stopped walking. A house had caught her eye. It was modest. It had
gray wood trim and a bank of windows along the front. Two large trees
provided shade. It had a small garden.
The economy was booming. Signs for job openings were everywhere.
Opportunity seemed to be all around her. She could see it happening for
her, too. Maybe. Maybe just not now.
“Someday,” she said.
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