How Public Policy Affects Iowa Manufacturers

September 11, 2023 | Manufacturing packs punch in Iowa's economy Brad Hartkopf, Senior Director, Public Policy, ABI,

Iowa is a manufacturing powerhouse. In 2022, according to the National Association of Manufacturers, the industry accounted for 17.14% of total output in the state, employing 14.45% of the workforce. Total output from manufacturing was $38.56 billion in 2021. There was an average of 225,000 manufacturing employees in 2020, with an average annual compensation of just over $79,000 in 2021. With approximately 4,100 manufacturers located across Iowa, the state of the industry is clearly vibrant and strong.

Public policy proposals drafted in Des Moines each spring can have an extraordinary impact on our economy, whether that be positive or negative. Given that a plurality of ABI members are manufacturers and the outsized influence the industry plays in providing opportunities and growth across all 99 counties, ABI public policy staff is working hard to ensure the needs of manufacturing and other industries are met when the Legislature convenes.

For example, Iowa is on a path to a 3.9% flat individual income tax rate 2026. The corporate income tax rate will be 5.5% in just a few years as well. It wasn’t too long ago that Iowa had one of the highest individual income tax rates (8.98%) and corporate income tax rates (12.0%) in the country. We’re now on our way to being one of the most competitive states in the nation, which will allow manufacturers to invest more in their companies and people.

Another example is unemployment insurance tax reform. Iowa’s unemployment system was transformed in 2022 as policymakers passed reforms that put a focus on re-employment and will ensure the long-term integrity of the unemployment insurance trust fund. Manufacturers and industry as a whole are seeing over $100 million in payroll tax relief this year because of the legislation.

Following the arrival of COVID-19 in 2020, manufacturers were asked to step up, turn over product lines overnight and create personal protective equipment and other goods to help our fellow citizens in their time of need. Given their efforts and the significant liability risks and uncertainties created by COVID-19, policymakers passed “the gold standard” when it comes to COVID-19 liability protections for business and industry. 

None of the aforementioned changes would have occurred without the leadership of Governor Kim Reynolds and pro-growth legislators. When manufacturers and others in the business community engage in the public policy process, elected officials listen as they know what kind of impact you have in making our state thrive. ABI public policy staff strongly encourages you to develop a relationship with your legislators and make your voice heard so that the state of manufacturing in Iowa continues to remain robust.