Idaho led the nation last year in its workers’ earnings growth, a new federal report says. A Wall Street Journal blogger even wrote about it under the headline, “Why Pay in Idaho Is Rising at the Fastest Rate in the Nation.”
But that’s not quite right.
Fueled by a strong job market, wages and salaries earned last year by Idaho workers increased 5.3 percent, the federal Bureau of Economic Analysis said. That is indeed the nation’s fastest rate. Nationally, the rise was much more modest: 3.1 percent.
The problem is that the statistics measure overall earnings, not earnings per worker. And because Idaho added 24,880 jobs in 2017, wages paid to those workers bulked up the earnings growth.
The average Idahoan earned $778 per week in the third quarter of 2017, the latest quarter for which data is available. That’s $40,456 per year. Idaho workers still make less than workers in every bordering state. Washington workers make the most, averaging $1,208 per week, followed by Oregon at $969, Nevada at $914, Wyoming at $868 and Montana at $793.
For all of 2016, the average Idahoan earned $762 per week. The increase to the third-quarter 2017 amount was barely 1 percent. The increase a year earlier was 2 percent.
There are several reasons Idahoans still earn so little, said Jan Roeser, a regional labor economist with the Idaho Department of Labor:
▪ Idaho is one of 15 states that follows the federal minimum wage of $7.25 per hour. Neighboring Oregon has a minimum wage of $10.75. Washington’s is $11.50. Montana workers earn at least $8.30. Nevada requires $1 above the federal minimum for employees who aren’t provided health insurance.
▪ Idaho lacks a statewide community college system. Such systems boost wages in rural areas of Oregon and Washington.
▪ Idaho doesn’t have the natural gas and shale deposits that bring high-paying jobs to Wyoming, Montana and North Dakota.
▪ Union membership, which peaked in Idaho at 10.2 percent in 1993, was less than half that last year. Unionized workers generally are paid more than nonunion ones. Only eight states, including Utah, have a lower rate of union workers than Idaho’s 4.8 percent.
▪ Idaho has a fairly large inmate population, and former prisoners find it difficult to land more than minimum-wage jobs when released.
“When we look at some of those things that maybe don’t seem interrelated, they all contribute to the underlying cause,” Roeser said.
The good news is that Idaho’s low unemployment rate, 3 percent in February, has put some pressure on employers to raise wages for their lowest-paid workers, many of them fast-food workers and service employees in the tourist industry. The national jobless rate is 4.1 percent.
“The tight labor market has intervened so that most of the minimum-wage jobs are paying a little higher,” Roeser said.
Skilled workers in durable-goods manufacturing, construction, agriculture and professional, scientific and technical services fields are seeing their wages increase because those jobs are hard to fill, Roeser said.
“Construction workers and others are hugely in demand, which drives up the cost of labor,” said Ethan Mansfield, research manager for the Boise Valley Economic Partnership, an arm of the Boise Metro Chamber of Commerce. “Payrolls are growing fantastically.”
The number of jobs in Idaho has increased by 91,000 since 2013 and now totals 721,379. That’s 38th in the nation. Idaho’s total population ranks 39th.
Roeser said earnings growth has been especially strong among the 50 companies in the Treasure Valley that make components for computers and other electronics. They’re part of the durable goods category — manufacturers of products that last a long time.
Micron Inc. is the best known of those companies, though many of its workers are classified in other labor segments. Others include Plexus, a Nampa electronics manufacturer, and PKG Inc., a Meridian contract manufacturer.
“These are some pretty high-level, highly skilled jobs, and they have been seeing some really great growth [in pay],” Roeser said. “You have the need to be able to understand mechanics, electronics and electrical and be able to run a project.”
Average annual wages earned by Idaho workers
2017: $40,456 ($778 per week)(3rd quarter only)
2016: $39,624 ($762)
2015: $38,844 ($747)
2014: $37,960 ($730)
2013: $36,816 ($708)
Source: Idaho Department of Labor