Iowa Businesses Remain Resilient Despite Inflation, Workforce Pressures

Iowa businesses continue to remain resilient, despite continued economic uncertainty, according to a new survey from The Iowa Association of Business and Industry (ABI). 

The 2026 executive survey found that the majority of businesses are growing (57%) or holding steady (38%). But executives report continued operational pressures — particularly from inflation — workforce shortages, rising healthcare costs and regulatory concerns. Results were released ahead of the organization’s annual executive forum, taking place Aug. 4 and Aug. 5 in Okoboji. 

“There are always ebbs and flows with the economy,” said Connor Harrington, CEO of Kuder. The Adel-based technology company specializes in career development services, working with K-12 school districts, nonprofits, and other federal and state governmental departments. “But the inflationary pressures we’ve faced recently, well I don’t see a path around it. I wish I had a crystal ball on that. Things have leveled out since COVID but that inflationary piece has stayed high. This new normal can be hard to balance out and probably will be for the next 10 years.” 

Scott Peterson, the CEO of Sioux Center-based Interstates, said he believes the economy has been fairly stable for the past number of years, with about one-third of clients growing, one-third of clients treading water and one-third of clients scaling back. The company works with industrial manufacturers and processing facilities to build, maintain and protect facilities. It has more than 1,900 employees in 15 locations across the United States and Germany, including Minnesota, Colorado, Texas and Ohio, among others. 

“The one thing that skews our data a bit is the data center buildout. That sector is so big and growing so fast that it covers up other weaknesses.” 

Annual healthcare cost increases remain one of the most consistent financial pressures, according to the survey. About 70% of respondents saw an increase in healthcare costs between 5% and 19%. Workforce availability also remains a persistent challenge, with talent recruitment and retention identified as one of the top concerns.

“Finding and retaining talent is a major challenge,” Mr. Harrington said. “When I started five years ago, almost everyone was based in Iowa — now we have employees across 17 states. We have an incredible software development team, but the majority don’t work in this office.” 

The company, which has been around for 30 years, has just under 100 employees, Mr. Harrington said. It can be difficult to compete for talent because while Kuder excels at software development, it doesn’t have the funding and backing of a private equity firm. That gives it more stability in the long run, he said, but also means it doesn’t have the same resources to recruit.

Kuder has had to increase salaries for new and existing employees to remain competitive, Mr. Harrington said, but he’s nervous about the sustainability of that.

“Our people are very attracted to what we’re doing,” he said.”We’re not going to sell or take outside capital, so we can pivot more quickly. Many have experienced the private equity model or a bigger company where they were just a cog in a machine. Our people are why we’re steady and why we’re committed to grow.”

Mr. Peterson said his company, for the most part, has had success hiring and retaining enough skilled employees to keep up with project demand. However, it has become more difficult this past summer, he added. He points to Interstates' strong internship program as a reason for its success. 

“We’ve been doing it for decades and it’s a great pipeline,” he said, adding the company works with 23 schools — both two-year and four-year institutions — to recruit student candidates. “We really create and maintain relationships with them. We don’t just show up at a career fair,” Mr. Peterson said. 

Business leaders view both the Iowa and U.S. economies as generally stable, though optimism remains measured. Nearly six in ten CEOs reported business growth, while almost all remaining organizations describe business conditions as stable, according to the survey. However, businesses have had to pivot to find creative new revenue streams amid uncertainty. 

A majority of Kuder’s business comes through governmental contracting, including the U.S. Federal Bureau of Prisons, Mr. Harrington explained. 

“Every time there’s a government shutdown, there are delayed payments,” he said. “We have to plan for people to not pay us — and it’s not for six or eight weeks, it's for six or eight or 12 months.” 

Mr. Harrington said Kuder has sought to work more with nonprofits and private entities to help balance out those delays and uncertainty. 

Survey respondents expect more of the same in the second half of the year, with the average economic outlook rating 3.19 out of 5. 

“Throughout the different challenges and recessions over the years, our mantra has always been one of calm and confidence,” Mr. Peterson said. “We control what we can control, we listen to our clients and help them be flexible and agile. If they have to change their plans, we help them adapt and do that.” 

Mr. Peterson said that Interstates works hard to have a diverse mix of clients across multiple markets. The company has seen a 20% growth over the past two years, he said, and a big reason why is thanks to an increase in data center projects. But it continues to work with and build relationships in more traditional industries. 

“It’s important not to overlook traditional markets and industries because data centers are such a hot topic,” he said. “There are underserved clients when people are flocking toward a gold rush.” 

The survey also highlighted the increasing importance of artificial intelligence (AI) in the workplace. More than 70% of organizations have either formal AI policies or informal guidelines in place, demonstrating that businesses are actively adapting to emerging technologies while recognizing the need for governance. 

“AI has been incredibly valuable to us. We have a great team of people willing to learn, engage and explore,” Mr. Harrington said, adding Kuder’s development team can deploy better technologies at approximately three times a faster rate than a few years ago. The company has partnered with another Iowa company, Lean Techniques, to enhance its best practices when it comes to AI. 

“But it’s got to be challenging for young people — we won’t hire anyone without a knowledge and know-how of how to use those technologies,” he said. 

Mr. Peterson agreed. 

“There is a tremendous opportunity with AI,” he said. “The way we’re approaching it, is to view AI as an amplifier.” 

Interstates is focusing on giving its employees tools, standards and data integrity. “We’re getting people comfortable with it by giving them a good infrastructure and good direction for use,” he said.