The state of Washington’s high minimum wage puts pressure on wages in northern Idaho, especially in the communities closest to the border — Lewiston, Moscow, Coeur d’Alene, Post Falls and the Priest River area. With Washington’s jump from $9.47 to $11 per hour on Jan. 1, 2017, wage pressures on the Idaho side increased.
In November 2015, the Washington Legislature approved Initiative 1433, which will increase its minimum wage incrementally until it reaches $13.50 an hour in 2020. After that, it will automatically increase with the cost of living. Three other states – Arizona, Colorado and Maine – also passed initiatives in November increasing their minimum wages. All three will raise their wages incrementally until they reach $12 in 2020. Prior to the election, California, New York and Oregon already established pathways to $12 an hour or more in the coming years. Altogether, 29 states and the District of Columbia now have minimum wages above the federal minimum wage of $7.25 per hour. In addition, some cities impose minimum wages above their states’ minimum wages. For example, Seattle’s minimum wage for larger employers is set to increase to $15 by 2020.
Many factors have affected the economic picture on international, national, state and local levels over the past five to 10 years.
In Southwestern Idaho one example is a strong population growth. Over the decade from 2005 to 2015, this region’s population increased from nearly 617,000 to 750,000, a 22 percent increase. The two urban counties, Canyon and Ada, grew faster than this rate, while the other eight counties grew slower, highlighting the continually deepening divide in urban-rural population growth that is occurring across Idaho.
Source: U.S. Census Bureau
Home health care services is a small, yet rapidly growing industry group within the heath care sector. However these positions – home health aides, personal aides and nursing assistants – typically experience a high turnover rate, independent of wages, as employees gain experience and move up to more advanced careers.
Wages in this industry group – considered low compared to jobs in other healthcare subsectors – are largely determined by externally set Medicaid and Medicare reimbursement rates, making it difficult for home health care employers to remain competitive in the face of declining unemployment rates.
The average pay for home health care service positions is $18,500 a year, 68 percent less than the average hospital employee. This industry group also experiences a higher turnover rate than any other health care industry sub-sector. A strong wage-turnover relationship can be implied in this case, but factors outside of natural forces of supply and demand drive this relationship.
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.
In a competitive labor market, wages are determined by the supply and demand of labor. Over time, a worker’s wages should increase as he or she gains proficiency in the job and obtains more valuable skill sets, or because of changes in the macro economy that influence the demand for those particular skill sets.
Although wages are only a portion of an individual’s income, they are a primary source of income for many Idahoans and an important indicator of their economic wellbeing. As an individual’s wages increase, so does his or her standard of living. This study will evaluate the wage growth of Idaho’s permanent workforce using data collected through Idaho’s unemployment insurance program from 2005 to 2014. Unless otherwise indicated, only those with reported earnings each year are included in the study.
Growth by Wage Group
For much of the past decade, the take home pay for Idaho wage earners has been on the rise. In 2005 the reported median annual wage for Idaho’s permanent workforce was $25,061. By 2014 the state’s median wage had increased to $35,146. The $10,000 increase marked 40 percent growth over the decade or 3.8 percent annually.
Recent employment and economic projections indicate southeastern Idaho’s economy may finally be heating up.
For much of the last decade, southeastern Idaho’s economy has struggled to grow. Impacted by the previous recession, covered employment in the region increased less than 2 percent from 2004 to 2014. While the region saw impressive growth leading up to the recession, growing 8 percent from 2004 to 2007, employment in the region began to fall as the housing crisis affected the economy. After peaking in 2007, the region lost jobs the following four years. By 2011, covered employment in southeastern Idaho had fallen by more than 5,000 jobs.
Although the region began adding jobs each year since 2011, the tepid growth has done little to make up for the jobs lost during the recession. By the end of 2014, total covered employment was still 3,500 jobs shy of the region’s pre-recession peak, and total job growth over the decade increased less than 2 percent – well below the statewide growth of 10 percent over the same time.
Wage growth in the region has proven more resilient. The average wage in the region has increased from $26,370 in 2004 to $33,687 by 2014, growing by an annual average of 2.5 percent over the decade. This outpaced the statewide annual growth by a tenth of a percent. It should be noted however, that after accounting for inflation the actual buying power for the average wage earner improved slightly more than 2 percent over the decade.
Every two years, the Idaho Department of Labor releases 10-year-projections of what Idaho’s economy may look like. After years of sluggish economic growth the department’s most recent projections indicate that Idaho’s economy may finally be heating up. From 2012 to 2022 Idaho payroll jobs are projected to grow 16.3 percent – 1.5 percent annually – and add more than 109,000 jobs to the economy. While 16 percent growth would be excellent news for the state’s economy, Idaho’s economy appears to be well ahead of schedule and on track to significantly outpace the national economy.
Another positive sign in Idaho’s current expansion is that the growth has been distributed throughout several sectors of the economy. With two years removed from the latest projections, 12 industries in Idaho have posted higher-than-expected growth rates. Health care and social assistance reported the largest net growth adding 6,764 jobs – 2,800 more than projected growth – followed by leisure and hospitality adding 4,749 – 2,060 more than projected growth – and construction at 4,332 – 2,100 more than projected growth. Eight industries performed below expectations, four of which experienced losses.
Source: Idaho Department of Labor, QCEW