Examining Idaho’s Strong Job Growth from Industry / Wage Perspective

In March, Idaho had the distinction of being the leader nationally in the percentage growth of non farm jobs over the previous year. As a share of its economy, Idaho added the most jobs of any state — 3.6 percent over the past year, followed by Oregon and Utah, both at 3.3 percent, and Tennessee and Washington each at 3.2 percent.

Fig.1_Year-to_YearWhile this is excellent news for Idaho’s economy, it’s important to take a look at what kind of jobs are being added to each state. The following chart compares the over the year growth rate of each industry with the average wages for new hires in those industries from mid-2014 to mid-2015. While the time periods of new hire earnings and the number of jobs added do not match up entirely, the most recent data is a good proxy for the average monthly wage that the people in those new jobs earned during the most recent period.

Fig.2_Relationship_Growth_New-HireIn Idaho, accommodation and food services, arts, entertainment and recreation, administrative services, educational services and other services were the top five industries that drove non farm job growth from March 2015 to March 2016. As the Average Monthly Wages of New Hires chart shows, the entry level earnings in these industries were some of the lowest-paying in the Idaho economy. In fact, three of the top five fastest growing industries paid less than any other industry in Idaho’s economy.

Compared with the three other fast-growing states that surround Idaho, new hires in 2014-2015 earned less than their neighbors. Idaho new hires earned over $1,000 a month less than new hires in Washington, $436 a month less than new hires in Oregon and $237 a month less than new hires in Utah.

Fig.3_Avg_Monthly_WagesRather than compare Idaho to the most recent over the year drivers of employment growth in other states,  the 12-month rolling average change for each industry across Idaho and the three other western leaders — Utah, Oregon and Washington – more accurately accounts for volatile industry movements and captures the earnings of workers being hired in the time when the earnings in this study are being counted.

Fig.4_Characteristics-tableThe top fastest growing industries in each of the four fast-growing western states share some similarities. Accommodation and food service, for example, is one of the fastest growing industries in each state. This makes sense considering this support industry pops up wherever there are people to frequent restaurants and bars. Similarly, the construction industry is the top grower in all of the states but Oregon, where it doesn’t even appear in the top five. Perhaps the most interesting conclusion to draw from this chart, however, is the appearance of high-paying service-sector export industries in each of the states but Idaho. For example, in Washington, information, which includes software publishers, management of companies and administrative services, which include technical and business support services, all pay relatively well and all provide service exports out of the region. In Oregon, those industries include management of companies and information. In Utah, professional, scientific and technical services, and to a certain extent, finance and insurance, are the fast-growing, service-providing export industries.

In Idaho, transportation and utilities are fastest growing industries that pay new hires the most. And while these are relatively high-paying service jobs, they rely primarily on the local market to provide the demand for services. Similarly, retail and food service can be an important source of export services in communities that rely on tourism, and are typically services are consumed by people who live within the area.

The following graph shows the relationship between wages for new 2014-2015 new hires and the 12-month rolling average growth rate for each industry across the four states.

Fig.5_Relatiships_StatesIdaho and Utah both show a negative relationship between industries adding new jobs and new hire earnings, suggesting that the jobs added more quickly are jobs in industries that, on average, pay the least. On the other side of the coin, Washington and Oregon are adding jobs in industries where new hires typically earn more than other industries.

Finally, mining and logging has seen declining employment in the 12-month rolling average figures.

Fig.6_Mining_LoggingIdahoans have long lamented the loss of high-paying natural resource extraction jobs. These extractive uses were seen as the only road to the creation of high-paying jobs. Now it appears from some perspectives that Idaho is replacing these jobs with service jobs, which, it is assumed, are low wage. However as this analysis shows, placing the blame on the growth of service jobs doesn’t capture the full story. In reality, some service-producing jobs can provide high wages and dynamic employment opportunities, as evidenced by the growth of high-paying export-oriented service industries in the surrounding states. Idaho is not the only western state to experience a significant decline in forestry and mining employment, but other states have turned to high-paying service industry jobs as engines of growth. Resource extraction is only one card in a suite of economic development strategies. This research suggests Idaho should turn toward fostering the growth of high-paying service industries like engineering and technology in addition to pursuing manufacturing and extraction jobs.

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