Ages and Wages Affect Idaho’s Future Workforce Capacity

This is the first of a two-part article, providing an overall view of worker ages across the state by industry sector.

The aging of Idaho’s workforce indicates future labor shortages in manufacturing, transportation and warehousing, utilities and government sectors.

Possibly most noticeable is the potential future of a worker shortage in educational services , which is key to providing essential education and training to propel individuals into higher-skilled, better paying jobs.

Age Breakdown by Sector

The age distribution of Idaho workers is telling in terms of the supply of labor in Idaho’s economic future.

(Note: to get the best view of charts in this article, click once to open in a larger window.)

IdahoAges

Idaho WagesDash

The tables above show the age breakdown of Idaho’s employed population and the average annual wage in 2013 by industry sector.

Statewide, 14 percent of workers are between ages 14 and 24. Generally this group is still in high school, technical school or college, or they are high school graduates with relatively low-skill jobs. The high number of people in the low-skill, low-wage sectors of the economy is to be expected as they are either working around school, and these jobs tend to have the most flexibility, or as high school graduates they have decided not to pursue additional education or training in favor of working.

Workers aged 25 to 34 hold 22 percent of jobs statewide. This critical age group has recently entered the job market equipped with the skills that they will carry with them for the rest of their careers. While career changes occur later in life,  jobs held by this group are often a first attempt at supporting themselves and a family using the skills they gained in college or technical school or in the first few years on the job as a high school graduate.

Forty-four percent of the state’s jobs are held by 35- to 54-year-olds. Generally, these workers have established stable careers. While they might still change jobs, even moving between sectors, many stay in the same type of work in the same industry sector.

Workers between ages 55 and 64 hold 16 percent of Idaho’s jobs. These workers typically have entered their final working years, and most expect to retire within 10 to 20 years. More workers are remaining in the labor force into their late 60s and early 70s, but many have settled into the final stage of their careers by the time they are 60. Others will continue to work part time in jobs unrelated to their careers such as retail or home health. As these workers retire, they need to be replaced by younger workers.

Finally, workers aged 65 and older fill 5 percent of Idaho’s jobs.

Assuming a given age dispersal of workers in any sector does not change, sectors where certain age groups hold a higher proportion of jobs than the group holds in the overall economy have an oversupply of workers that group. When the share is below the overall average, there is an undersupply. To maintain the current employment distribution by age across industry sectors, there must be a shift between sectors with oversupplies of certain age groups to those with undersupplies of that group. While this happens, it is costly to the worker, who either spends more on education to qualify for jobs in another sector or accepts a lower wage in a sector that has no significant skill requirements.

Retail trade and accommodations / food services are two sectors where workers might invest in more education and training so they can move. These are sectors often occupied by younger workers who are pursuing an education to qualify for higher-skill, higher-wage jobs in other sectors. If this kind of shift does not occur, there will be an ample supply of low-skill, low-wage workers and a shortage of labor with the knowledge, skills and abilities to succeed in other sectors. This is one of the best arguments for continuing education and training past high school and the best reason to invest in postsecondary education.

Sectors where young workers hold a higher percentage of jobs than they do in the overall economy will likely grow into the future while those where young workers hold a lower percentage of jobs will probably shrink. Workers aged 14 to 24 can be expected to acquire skills and training to succeed in any sector given the availability of and access to that training while that is not as likely among workers aged 25 to 34 because they have probably settled into a career that reflects their past education or training.

Administrative and support services, which includes call centers, employs more than its share of 25- to 34-year-olds at an average annual wage barely above $25,000. At the same time, 25- to 34-year-olds are woefully underrepresented in jobs in manufacturing, government, transportation and warehousing and utilities. If these sectors are to maintain their place in the economy in the future, they have to attract more 25- to 34-year-olds.

This is where education comes in. Only 16 percent of jobs in the education sector are held by 25- to 34-year-olds while 29 percent are held by those over age 55. With an average annual wage of only $30,440, it is difficult to attract new workers into this sector. Recognizing the high concentration of young people in accommodations and food services, arts, entertainment and recreation and retail trade, education services must be a priority since it plays a pivotal role in shifting the economy from a low-skill, low-wage future to a high-skill, high-wage one.

Understanding 25- to 34- and 55- to 64-Year-Olds

The ages and wages of Idaho workers can help forecast emerging labor market trends. Each age group has a different story within the labor market. Arguably the most indicative of Idaho’s economic future are workers entering careers for the first time and those expecting to retire in 10 to 20 years.

Depending on the region, almost 50 percent of 25- to 34-year-olds work in Idaho’s health care, retail trade, accommodations / food service and manufacturing. These four sectors are among the five with the most jobs in the state.

%Employed25-34

South central Idaho’s concentration in the food products industry created opportunities for young workers beginning their careers. This is evident in the higher-than-average concentration of 25- to 34-year-olds in agriculture and manufacturing. Southwestern Idaho has a high concentration of this age group in administrative and support services due to its large number of call centers. North central Idaho’s competitive advantage in education with the University of Idaho and Lewis-Clark State College is reflected in the high concentration of this age group in education services – almost twice the concentration statewide.

Wages25-34

Wage Rank

Wage patterns for young workers are consistent with the state overall. In all but three sectors, wages for young workers in the southwestern region rank in the top half of the state’s six regions. The exceptions are in mining – where the northern and eastern regions dominate; agriculture, forestry and hunting – where the northern and north central regions dominate; and arts, entertainment and recreation – where the northern and southeastern regions dominate.

Generally wages for 25- to 34-year-olds are lower than the average annual sector wage across all ages. Sometimes, as is the case in manufacturing in southwestern Idaho, the difference is over $20,000 a year. This reflects entry level versus average wages in each sector. Those with little experience in a field should expect to be paid less, even if their skill level is equal to that of someone who more experienced. But if the gap becomes too wide, young workers may avoid that sector despite its better long-term prospects in favor of one with higher initial wages even if increases will be limited in the long run.

In the case of 55- to 64-year-old workers, nearly half are employed in four sectors – education, health care, manufacturing and retail trade, all among the five sectors with the most jobs in the state.

%Employed55-64

The difference is older workers are concentrated in education services instead of accommodations and food services, the fourth high-concentration sector for younger workers. Education employs only 7 percent of 25- to 34-year-olds but 13 percent of the 55-to 64-year-olds. In contrast, 10 percent of 25- to 34-year-olds are in accommodations or food services compared to just 4 percent of 55- to 64-year-olds. Either fewer younger people are entering education now than 30 or 40 years ago or there is a natural tendency to enter the education field after ending another career or completing a doctorate – probably after reach 35. Either way there appears to be a potential future shortage in education jobs, primarily teachers.

Recent reports indicate people who want to be teachers right out of school leave Idaho for better wages in other states. This problem is highlighted in southeastern Idaho and Idaho State University in Pocatello. Just 9 percent of 25- to 34-year-olds are teachers in that region compared to 20 percent of those aged 55 to 64. The north central region with two four-year education institutions — University of Idaho and Lewis Clark State College — is experiencing a similar problem. Though one would expect to see a similar pattern in southwestern Idaho, where Boise State, Idaho’s largest public university, is located, and eastern Idaho, where Brigham Young University-Idaho has the most undergraduates in the state, these two regions more closely approximate the average age group concentrations.

South central Idaho’s dominance in food processing is again apparent in the higher-than-average concentration of 55- to 64-year-olds in agriculture and manufacturing.

As expected, wages for this group are higher than the average, reinforcing the point that job tenure and experience can trump new and innovative skills often brought to the workplace by younger workers.

Part 2 of this article examines age distribution of Idaho workers by sector at the regional level.

Ethan.Mansfield@labor.idaho.gov, regional economist
(208) 332-3570 ext. 3455

A future analysis will look at the age distribution of workers by sector at the regional level.