Idaho Long-Term Employment Growth Optimistic

The Idaho Department of Labor has recently published long-term projections forecasting what Idaho’s labor market will look like in the year 2024. The outlook is very optimistic. Idaho’s employment is projected to grow by 1.8 percent annually through 2024. This compares favorably to the national growth projections of only 0.6 percent annually over the same time period, according to the federal Bureau of Labor Statistics. This forecast would surely put Idaho in a familiar place among the fastest-growing states.

Optimism is warranted by more than just the overall growth rate. Within the projections program, Idaho Labor has forecast scenarios for dozens of different major sectors and industries in the economy, with accompanying forecasts for occupations. According to these projections, Idaho’s economy will see significant growth in two important areas: service sectors and STEM occupations – science, technology, engineering and mathematics. The graph below shows the projected growth rates across various sectors of the economy.

graph-1Source: Idaho Department of Labor

The dominant industries in this projection mirror Idaho’s strong rate of population growth. Construction – the leading goods producing industry – is driven by an anticipated need for housing to accommodate new residents, while the accompanying service industries will cater to this anticipated population growth. Health care and financial activities are expected to post a strong growth rate of 2 percent annually; these industries generally support high-paying jobs and will be a boon to Idaho’s economy, which perpetually suffers from low wages relative to other states.

This growth in services is a key driver in the geographical dispersion of Idaho’s employment growth. Service sectors follow population growth. This means that the regions in Idaho with the strongest growth forecasts are also those with greatest potential for future population growth. Southwestern and northern Idaho, associated with the growth in the Boise and Coeur d’Alene metropolitan areas, have the highest projected growth rates at 2.2 percent, while southeastern and north central Idaho, which have seen their populations decline relative to the rest of the state, have the lowest projected growth rates at 1.2 percent and 1.1 percent.

The most significant cause of optimism, however, is the projected growth in STEM occupations. Idaho’s economy has suffered from a relatively undersized science and technology sector. Over the decade from 2004 to 2014, occupations in science, engineering, math and information technology have growth by 11.3 percent in the United States. Over that same time period, however, the same occupations have grown by only 0.4 percent in Idaho. To a large extent, Idaho has been left behind a national boom in technology jobs. This may go a long way in explaining why Idaho’s incomes remain lower than the national baseline.

In the latest long-term forecast, however, this scenario is reversed. Driven by strong projected growth rates in industries like health care, electronics manufacturing, business and professional services, and construction, the department’s 2014 projections now forecast a net 26 percent growth rate in these STEM occupations, compared on a net 8.8 percent growth forecast nationally by the Bureau of Labor Statistics. This forecast implies that Idaho can make up the ground it has lost in the technology sector over the past decade, which should help push Idaho’s wages upwards towards national baselines.

The strong growth in STEM occupations will have significant implications for the makeup of Idaho’s workforce. By transitioning to an information economy, Idaho’s future workforce will require technical and professional skills. By examining the educational requirements of occupations in Idaho, department economists can extrapolate the skills which will be required of Idaho’s workforce in 2024. Based on these projections, by 2024 61 percent of workers will need education beyond high school, either with college degrees or certifications while 29 percent of Idaho’s workforce will need a bachelor’s degree or higher. Given that only 25 percent of Idaho’s population has such a level of education attainment according to the most recent data, it is clear that Idaho’s workforce will need to attract more recent college graduates to meet future needs. The chart below shows the projected educational requirements of Idaho’s 2024 labor market.

pie-chartSource: Idaho Department of Labor

The challenges of evolving Idaho’s labor force will pay dividends if they are successfully met. A transition to high-paying service industries and technology fields will boost personal income and improve the quality of life for Idaho’s residents. Not only will residents have more disposable income, but the growing service sector will offer an increasing array of amenities in urban areas. Rather than focusing on the challenges, however, it is important to note the optimism in the department’s current forecasts. Idaho has tremendous opportunities for strong growth, which is something that many states around the country cannot claim.

Sam.Wolkenhauer@labor.idaho.gov, regional economist
Idaho Department of Labor
(208) 457-8789 ext 4451