David Swenson, an Iowa State University economist who compiled the report, said the ethanol industry will become more efficient as technology advances, meaning fewer workers will be needed to produce ethanol.
Other sectors that supply and service the industry -- such as mechanical, utility and chemical firms -- will similarly expand operations but require fewer jobs, he added.
He offered no specifics on how much he expects the industry's work force to decrease, but he recommended that communities use caution when using public money to heavily subsidize new ethanol plants.
"There are a lot of people that have very inflated expectations for economic gain," he said. "I tell folks that a new ethanol plant has a very discernible and very measurable and positive impact in the communities in which it locates, but I have an obligation to tell them exactly what the dimensions of those impacts are."
Swenson used U.S. Department of Labor statistics to track the number of organic and chemical jobs in Iowa from 2006. He also examined the number of existing and planned plants in Iowa to gauge the industry's future growth potential.
The report projects that Iowa's 42 ethanol plants will employ 1,865 people when 15 plants now under construction are running in the next year. For every one of those ethanol plant positions another three to four jobs are created in related sectors, totaling 8,129 jobs in Iowa supported by the industry, according to the report.
That's in contrast to a report last month from the Iowa Renewable Fuels Association, which claimed 96,000 jobs in Iowa are supported by the ethanol industry.
Swenson said ethanol producers offer unrealistic labor numbers because they use misleading indicators. For instance, he said, existing farmers who provide corn are included in the job growth.
Ethanol proponents argue Swenson incorrectly portrays the economic trends of biofuels production.
Monte Shaw, head of the Iowa Renewable Fuels Association, said Swenson fails to take into account others job sources, such as farmers growing more profitable corn to make ethanol and construction workers building plants.
The ethanol industry has rejuvenated small towns and farm operations, spurring other business growth, he said.
"If you think about it we have record high farm income, we have record high land prices, we have record amounts of tax revenue going into the state treasury," he said. "This is all interrelated; and to somehow say that has a fairly meaningless impact on the economy is just ridiculous."