Iowa’s unemployment rate rose slightly in July, Iowa Workforce Development announced Friday, increasing to 4.1 percent from the June rate of 4.0 percent.

But the number of working Iowans also increased, indicating that people are returning to the labor force. Between June and July, 6,400 Iowans entered the labor force, according to IWD data, meaning they either found a job or began seeking a job.

“As we’ve seen over the past few months, Iowans are re-entering the labor force in increasing numbers, and this shows that we continue to move in the right direction,” IWD Director Beth Townsend said in a news release.

July was the first full month after Gov. Kim Reynolds ended Iowa’s participation in a federal unemployment program that gave people an additional $300 a week. Republican governors nationwide ended the payments before a September deadline in an effort to bring people back to work.

Iowa sees slow workforce rebound

Did ending additional unemployment benefits increase the labor force?

It’s complicated.

Peter Orazem, an economics professor at Iowa State University, found that states that ended the unemployment benefits have recovered their labor force more quickly. In those states, the July 2021 labor force was, on average, 1 percent larger than the labor force was in July 2019, not adjusted for population growth. States that kept the additional $300 a month benefit had labor forces 0.6 percent smaller on average than their labor forces in July 2019.

The increase cannot be entirely attributed to ending unemployment, however. The states that opted out of the benefits were also places that already had “policies that favored employment,” Orazem said.

But Iowa’s labor force is still 3.4 percent smaller than it was in July 2019, meaning the state has not seen the same rebound as some of its peers that ended unemployment early.

“If you look at Iowa relative to the other states (that ended the $300 payments), it’s the poorest-performing in terms of labor force participation,” Orazem said.

Iowa did see a significant bump between June and July of this year. In June, there were 4.7 percent fewer people in the labor force than there were in 2019.

“That’s a net increase of 1.3 percentage points in one month, which is huge,” he said.

Iowa unemployment rate and labor force participation go up in July