Charting Idaho’s Economy: Our Economy: On the road again …

In the past I have used the metaphor that Idaho’s economy is like an automobile speeding down the highway. The faster the Idaho economy grew, the faster that metaphorical automobile went.

At times we were passing everyone else on the highway. But during the past three years our economic engine choked, sputtered and at times stalled beside the road.

John S. Church
Special to
The Idaho Statesman

http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20041031/NEWS0203/410310308/1029/NEWS02

Over the last nine months we have pulled back onto the roadway and merged into the fast lane. We’re on the road again!

The latest monthly nonagricultural employment figures reveal that Idaho is not only adding jobs, but is doing it at a pace that is twice the 1.4 percent national average. In September 2004, nonagricultural employment in the state was up 2.8 percent — 16,400 jobs — above year-earlier levels.

Only Nevada and Utah are outpacing Idaho in terms of annual percentage growth in nonagricultural employment. Nevada has been one of the fastest growing states in the nation for a decade, and the latest state-by-state breakout of non-ag employment growth is no exception. September 2004 non-ag employment in Nevada is up a whopping 4.6 percent over September 2003 levels. Utah came in second in the latest employment growth rankings with a 3.0 percent annual gain.

In fourth place was the state of Hawaii with a 2.8 percent gain in non-ag employment — it was really a 2.76 percent increase compared to Idaho’s 2.81 percent, so it wasn’t actually a tie. Four other Western states captured spots in the top 10 fastest growing states in the latest employment figures.

Why are so many Western states among the fastest growing in the nation?

Hawaii is tourism-driven. Washington and Oregon suffered most during the recession and are experiencing a corresponding "bounce-back" as job growth resumes.

The other fast-growing Western states, including Idaho, may be benefiting from an exodus of businesses from California.

California has posted overall job gains in 2004, but it has not seen a notable increase in high-tech employment which was a large force in the state’s growth in the 1990s. In addition, the Federal Reserve Board suspects that because of the high cost of doing business in California, it is likely that some of the state’s job growth is moving to other nearby states: Arizona, Nevada, Utah, and yes, Idaho. Because of the size of the California economy, a small outward trickle of jobs can easily push these other nearby Western states into the fast lane of job growth.

Closer to home, employment growth has returned in the Boise Metropolitan Statistical Area of Ada and Canyon counties. The latest employment figures indicate that the Boise MSA has added nearly 9,400 new jobs, a 4.1 percent gain, since September 2003. Among the 10 fastest growing MSAs in the nation were four from the Western states. Las Vegas which posted a 4.7 percent annual gain in employment, Boise with a 4.1 percent increase, Reno with an annual gain of 3.8 percent, and Casper, Wyoming, which posted a 3.8 percent September 2003-to-September 2004 gain.

The service industries in the state and Boise MSA have been leading the way in this revival of employment growth. Nearly 54 percent, or 8,900, of the state’s 16,400 jobs gained in the past year have been in the service industries. And the job gains have been in nearly every subcategory of the service sector. Employment in professional and business services is up 6.5 percent statewide and 7.9 percent in the Boise MSA over year-ago levels. Statewide and Boise MSA employment in educational and health care services are up 2.7 percent and 2.9 percent, respectively, in the latest figures.

The number of jobs in Idaho’s leisure and hospitality services sector increased by 2.5 percent from year-ago levels. The third-quarter average increase of 4.7 percent pushed employment in Idaho’s hotels and motels to levels which surpassed those seen statewide prior to the recent recession. Locally, the Boise MSA posted a strong 4.2 percent increase in leisure and hospitality services employment.

While the service industries in Idaho accounted for over half of the state’s overall job gains since September 2003, the construction industry managed to account for 25 percent — 4,200 of the state’s overall employment gain of 16,400 jobs over the past year.

Wholesale and retail trade accounted for another 2,100 jobs, or 12.8 percent, of the state’s overall employment growth over the past year.

Unfortunately, the state’s manufacturing industries have not been able to post an overall increase in employment.

Nevertheless, the picture is improving. Employment in Idaho’s high-tech manufacturing industries has improved somewhat, and the employment losses in the state’s food processing sector may be abating.

John S. Church is president of Idaho Economics, an economic consulting and forecasting firm based in Boise, and a visiting assistant professor of economics at Boise State University.