Low-Stressed Johnson County

Stable Employers Help County Weather Economy

Few counties across the nation have gone untouched by the economic recession, but according to an Associated Press report, few have weathered it better than Johnson County.

According to the Associated Press’s Economic Stress Index — a formula that combines the effect of unemployment rates, bankruptcies and foreclosures — Johnson County was the 14th least economically “stressed” county in the nation with a population of 25,000 or greater.

Local experts say there are a number of reasons why the county was able to handle the recession better than most, but all point to the stability exhibited by the county’s largest employers, particularly the University of Iowa and the University of Iowa Hospitals and Clinics.

“I think there are a number of reasons,” said Joe Raso, president of the Iowa City Area Developers Group. “Probably the one people recognize the most is the stability of the University of Iowa and University of Iowa Hospitals and Clinics. That provides us a very stable economic base for the market. That can’t be overlooked.”

Charles Whiteman, interim-director of the Institute for Economic Research and professor of economics at UI, said the Iowa City area is unique in that it has one “enormous and very stable employer.” Whiteman said the fact that the county does not rely on many large, diverse employers also helped.

“Light manufacturing was hit hard, housing was hit hard,” Whiteman said. “The economy in Johnson County is not dominated by those industries that were hit so hard.”

That’s not to say some of the area’s largest employers have emerged from the worst of the recession unscathed. Officials with those employers said some belt tightening and restructuring were necessary to survive.

Sue Buckley, vice president of human resources at the University of Iowa, said constant change at the UI was beneficial.

“Different parts of the university often grow and contract at a different pace and time,” Buckley said. “This is actually good. Even with extreme financial challenges, because we are diverse and complex, it allows us to, overall, have a more stable workforce.”

For instance, research enterprise at the university exhibited strong growth in the past year while the hospitals and clinics faced some “severe financial challenges,” Buckley said.

“They have taken a number of actions, including significant expense reduction,” she said. “But the picture at the University of Iowa Hospitals and Clinics is really turning around. It’s much more positive than it was a year ago.”

Denice Connell, director of marketing and community relations at Mercy Iowa City, said the county’s other hospital has done well during the economy. Connell said the hospital has seen an increase in the number of applications for positions but a decrease in employee turnover.

“There’s certainly been some belt-tightening,” Connell said. “I feel that we’ve held our own.”

Iowa City Community School District Superintendent Lane Plugge said the district has had to make some staff reductions in the past few years, though most of that has been through attrition and early retirement. Plugge said he doesn’t like having to turn to early retirement as a means to cut costs.

“The reason I don’t like that is it encourages some of our very best teachers and staff members to retire,” Plugge said.

In addition to cutting staff, Plugge said the district has made attempts to make transportation more efficient and has increased class sizes “across the board.”

Iowa City interim City Manager Dale Helling said the city has lost approximately $1.2 million in revenue income from investments. However, he said the loss has been offset by tax revenues from tax increment financing downtown.

“That enabled us to pretty much make up for the lost interest income revenue,” Helling said.

The city also has relied on additional income from the 1 percent utility franchise fee and federal stimulus funding. While the city has made increasing public safety funding a priority, other departments, such as parks and recreation, have had to make do with what they have, Helling said.

“There are a number of areas where we certainly could use more staff, but I can’t say the recession has hit one area harder than the other,” he said.

Whiteman said the economy is expected to rebound and employment is expected to improve in the coming months.

“It’s not a dramatic turnaround, but things are moving in the right direction with respect to income and respect to employment,” he said.

Lee Hermiston • Iowa City Press-Citizen • April 26, 2010