Iowa Economy: Corn, Insurance, and Wind

Iowa is a mid-sized state economy, usually ranked in the lower-middle of U.S. states by GDP — the dollar value of everything a place makes and sells in a year. The Iowa economy is famously agricultural, but it is also one of the most insurance- and finance-heavy states in the country and has become a leading producer of wind power.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Iowa economy?

For example, recent state GDP for Iowa has run around $230 billion, according to the Bureau of Economic Analysis. Population is roughly 3.2 million, per the U.S. Census Bureau. Des Moines, Cedar Rapids, Davenport (Quad Cities), and Iowa City anchor the state's main regional economies.

The biggest industries

Iowa's industry mix is more diversified than its farm-state image suggests. The main pillars are:

• Agriculture — Iowa is the top corn, pork, and egg producing state in the country, and consistently ranks near the top in soybeans. Roughly one in five Iowa jobs is tied to the broader food and agriculture system.
• Insurance and finance — Des Moines is one of the largest insurance centers in the country, home to Principal Financial Group, Nationwide regional offices, and many other carriers.
• Manufacturing — heavy equipment (John Deere is headquartered in Moline, just across the river, but has major Iowa operations), food processing (Tyson, Cargill, Hormel), and wind turbine components.
• Wind energy — Iowa generates more than half of its in-state electricity from wind, more than any other state by share, and has been a magnet for wind turbine manufacturing and operations.
• Education and healthcare — the University of Iowa in Iowa City and Iowa State University in Ames are major employers and research engines.
• Logistics — Iowa sits on key east-west and north-south corridors, supporting a steady warehousing and distribution sector.

Jobs and wages

Iowa labor data is published by Iowa Workforce Development, with national-level numbers from the Bureau of Labor Statistics. For example, the Iowa unemployment rate has typically run below the national average, with Des Moines and the Iowa City corridor often among the tightest labor markets in the Midwest.

The Iowa minimum wage is tied to the federal floor of $7.25 per hour. Many large Iowa employers — Principal Financial, John Deere suppliers, large hospital systems — pay well above that on their own.

Taxes in Iowa

Iowa has a flat state income tax after a multi-year transition from a more graduated system. Top rates have been lowered repeatedly.

The state sales tax rate is 6%, with local option taxes of 1% in most jurisdictions, bringing the combined rate to 7% in much of the state. State tax forms and rules live at the Iowa Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Iowa is below the national average. Des Moines, Cedar Rapids, and the Quad Cities are all affordable compared with similarly sized metros elsewhere; smaller towns are cheaper still. The federal government tracks region-specific Consumer Price Index data through the BLS Midwest region, and HUD publishes Fair Market Rents for every county at HUD User.

The corn and pork base

Iowa's corn and soybean fields feed both livestock and the ethanol industry. The state has dozens of ethanol plants and crushes huge volumes of soybeans for animal feed, vegetable oil, and biodiesel. Roughly a third of U.S. ethanol production happens in Iowa. Pork operations are concentrated in the north and west; the state produces about a third of all U.S. pork.

Des Moines insurance

Des Moines has been an insurance hub for more than a century, with deep clusters around life insurance, retirement and asset management, and reinsurance. Principal Financial Group is headquartered downtown, and the metro hosts large operations for Nationwide, Voya, EMC, and many smaller carriers. The result is an unusually services-heavy local economy in a state otherwise known for farms and factories.

The wind belt

Iowa's flat, windy landscape has made it the leading state for wind power as a share of in-state generation. Wind turbines are a routine sight on the horizon in much of the state. Manufacturers like Siemens Gamesa, TPI Composites, and Acciona have run plants in Iowa to make blades, towers, and other components. Wind energy has become a meaningful source of property tax revenue in some rural counties.

How does the Iowa economy fit into the national picture?

Iowa is more concentrated in agriculture, food processing, insurance, and wind energy than the national average. Population growth has been modest, with Des Moines, Iowa City, and Ames pulling ahead and many smaller rural counties slowly losing residents.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Iowa Department of Revenue for the most current data.