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Local, state economies continue to boom, despite pandemic, labor challenges in Nebraska
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Local, state economies continue to boom, despite pandemic, labor challenges in Nebraska

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A Kawasaki employee applies decals to a utility vehicle on the Lincoln plant's assembly line in July. Like many other businesses in the state, Kawasaki's plans to expand are largely dependent on finding more people to fill available jobs.

The Internal Revenue Service (IRS) says thresholds on income tax brackets will rise in 2022.  

When fears about the coronavirus pandemic caused much of the economy in Lincoln and Nebraska to shut down in March 2020, the effects were swift.

Many businesses that cut operations or shut down entirely laid off thousands of employees. Unemployment rates soared to levels not seen even during the Great Recession of the late 2000s.

By April of 2020, the unemployment rate in the Lincoln area soared to a record 9.3%, while the state rate hit 8.3%.

Initial claims for unemployment set records week after week as the state amassed as many claims in a month as it had over the previous two years.

There were dire predictions that Nebraska could be facing an economic downturn that would surpass the Great Recession and possibly rival the Great Depression of the 1930s.

But then, as quickly as things had gone bad, they started to rebound.

Unemployment claims leveled off and then began to drop as businesses not only stopped laying off people, they started hiring them back.

The unemployment rate dropped almost as sharply as it had risen, though it took a year to get back to where it had been before early stages of the pandemic. This year, it has continued to fall, not just to the state's lowest level ever but to the lowest level ever recorded by any state.

Many other parts of the economy not only weren't hurt by the pandemic, they seemed to benefit from it. As shutdowns marked the first weeks and months, prices fell sharply for gasoline and other goods. For those who were able to keep their jobs, the lower prices and less spending on things like entertainment and commuting meant people had more money to pay down debt or put into savings.

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Other economic indicators were positive as well. Nebraska saw its lowest number of bankruptcies last year since at least 2000, and numbers have declined ever further this year.

Home sales in the Lincoln area reached another high in 2020, and prices continue to rise to record levels. Building of new homes, apartments and commercial buildings also hit multi-year highs. In fact, Lincoln issued more than $1 billion in building permits for the first time ever last year.

One of the big factors in the strong rebound was the magnitude of economic support packages from the federal government. The state's small businesses, nonprofits, farmers and ranchers received nearly $5.4 billion through the Paycheck Protection Program, an amount that equaled about 5% of total personal income in the state.

There were also three rounds of stimulus checks and months of enhanced unemployment benefits that pumped hundreds of millions more dollars into the state's economy.

On top of that, more than $1 billion in federal aid went directly to the state's counties, school districts and universities.

That influx of cash helped keep many of the state's top industries afloat, and some were even able to flourish.

For example, the most recent three-year forecast from the University of Nebraska-Lincoln’s Bureau of Business Research and the Nebraska Business Forecast Council predicts that farm income in the state will hit a record level of $8.1 billion this year — a more than 50% increase over 2020. While some of that gain is due to high crop prices, much of it can be attributed to generous government payments to the ag sector.

Without those payments, farm income is forecast to fall more than $2 billion in 2022.

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The story is much the same for personal income, which was forecast to grow 5.9% this year for Nebraskans, again largely due to government stimulus, although there has been substantial wage growth. Next year, income is forecast to be flat, with only a 0.3% gain.

Perhaps one of the biggest effects of the pandemic has been the labor shortage.

Nebraska has set records in consecutive months for the lowest unemployment rate ever recorded in the U.S. As of November, the state's rate was 1.8%.

Lincoln's unemployment rate is even lower, at 1.1%. As of October, when the rate was 1.3%, Lincoln had the third-lowest rate among all metropolitan areas in the country.

Having an unemployment rate that low is largely a good thing, indicating virtually everyone who wants a job can get one, but this time it's proving to be a problem thanks to a roaring economy and a shrunken workforce.

Nebraska had about 17,000 fewer unemployed workers in November than it did in November 2020. However, it also had slightly fewer workers overall, which indicates that while unemployed people are finding jobs, other people are dropping out of the workforce altogether.

To illustrate how bad things are, consider this: In November, Nebraska's labor force participation rate was 68.4%. That was tied for second-highest in the country, which sounds good, right? But the state's rate is near its lowest level in 30 years.

That's likely why a recent study from the Pew Charitable Trusts found that Nebraska has the largest shortage of workers in the country based on available jobs to unemployed workers, with a ratio of 3 open jobs to every 1 unemployed worker.

Many politicians and some economists have blamed people's reluctance to re-enter the workforce on the stimulus payments and enhanced unemployment benefits. But those ended several months ago, and Nebraska's labor force participation rate has not budged, with the November rate the same as in August.

The reasons some people continue to stay out of the workforce appear more complicated. Some chose to retire early thanks to a booming stock market that made them feel more comfortable about their nest egg. Others are being held back by fear about the pandemic, a lack of child care options and other factors.

Employers have gotten creative, increasing pay and more frequently allowing flexible schedules and remote work. Some retailers and manufacturers have increased automation. But that's only been partly successful.

Lincoln has seen a number of restaurants close over the past few months, and while economics played a role, some likely would have stayed open were it not for the fact that they couldn't find workers.

The longer the labor shortage extends, the greater the consequences to the overall economy.

"Obviously, (it) inhibits both short-term and long-term economic growth for the state," Creighton economist Ernie Goss told the Journal Star in October.

What will the future hold? If the three-year forecast from the Bureau of Business Research and the Nebraska Business Forecast Council is to be believed, things will cool to more historical norms.

Reach the writer at 402-473-2647 or

On Twitter @LincolnBizBuzz.


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Business reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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