What a difference a year makes. In April 2020, pandemic shutdowns and collapse of consumer spending pushed Idaho’s unemployment rate to an all-time high of 11.6 percent.

This April, media sources across Idaho reported on widespread labor shortages and how some businesses are struggling to stay open because they can’t find enough workers.

The labor shortages are widespread—not only showing up in the state’s fast-growing urbans areas, but also in rural communities. The businesses finding it hardest to recruit workers are construction firms, home care agencies, employers of certified nurse aides, restaurants, motels, trucking and package delivery companies, and some manufacturers. School districts throughout the state are finding it difficult to hire substitute teachers and paraprofessionals.

Why has the job market become so tight? Before the pandemic, labor shortages were common. Now, thousands of Idaho employers are trying to make their normal seasonal hires and add new jobs as the state continues it recovery and as its manufacturing and construction industries are accelerating.

Difficulties recruiting workers also are prevalent in many parts of the U.S. but Idaho employers seem to be experiencing more acute difficulties. This article explains the complex reasons for all the “help wanted” signs in Idaho and why employers are getting little or no response to want-ads—whether in newspapers or on-line

Strong job growth, low unemployment

Idaho’s good fortune is one reason for the labor shortages. Its economy has proven hardy during the pandemic. Idaho’s seasonally adjusted unemployment rate in March was 3.2 percent--just six-tenths of a percentage point lower than its all-time low of 2.6 percent in February 2020. Only five states had lower rates in March. Idaho’s March rate was less than half of its historic average of 5.9 percent from 1978 through 2019.

Idaho employers added jobs faster than any other state in the last 12 months. Idaho and Utah were the only two states whose nonfarm payroll employment rose between March 2020 and March 2020.

Since the early 1970, Idaho’s job markets have been primarily employers’ labor markets, where relatively high unemployment gave employers more power.

In the period around 2005, most of them transformed to job seekers’ markets, as employers found it difficult to recruit workers and workers felt more comfortable quitting jobs to take other jobs.

The severe recession that began in Dec. 2007 flipped them back to employers’ markets for a few years. But as Idaho’s economy has grown at an exceptional pace since 2012, power returned to job seekers. The shutdowns last spring briefly changed that dynamic, but now Idaho has returned to low unemployment, and employers have ramped up efforts to woo workers.

Construction stands out for its job creation this year. Idaho’s construction employment rose 7.0 percent between March 2020 and March 2021, faster than any other state. Construction employment fell in 34 states during that period. Idaho construction jobs this March reached a record high as the graph above shows.

Coronavirus-caused

reductions in labor

availability

While jobs have grown since the pandemic’s start, some Idahoans have left the labor force.

Coronavirus caused some Idahoans to temporarily drop out of the labor force. Based on responses to the Household Pulse Survey conducted in late March, the Census Bureau estimates 3,992 Idahoans did not work during the two-week period because they were sick with coronavirus symptoms and another 6,845 did not work because they were caring for someone with coronavirus symptoms.

Another 6,529 did not work because they were concerned about getting or spreading the coronavirus

Many older workers dropped out of the labor force during the last year. The Current Population Survey, the source of U.S. labor force statistics, found the number of Idahoans 55 years and over in Idaho’s labor force fell 11% from 257,100 in March 2020 to 227,400 in March 2021. Some of the drop occurred as seniors temporarily withdrew from the labor force because of fear of Covid-19 exposure or because of difficulties finding care for aging family members during the pandemic, much of the drop was more permanent as some people retired early.

The Census Bureau’s Household Pulse Survey conducted March 17 through March 29 found 16,590 Idahoans decided to apply earlier than expected for Social Security benefits because of the coronavirus pandemic.

Some workers dropped out of the Idaho labor force during the last year because of child or elder care issues. Microdata from the March 2021 Current Population Survey found that 5,169 Idahoans were not looking for work because of family responsibilities, compared to 2,087 in March 2020. Many of these individuals are staying home because of a lack of child care or elder care.

Covid restrictions increased the costs of operating child-care centers, which already operated on thin profit margins, causing many child care providers going out of business. Lori Fascilla, executive director for Boise-based Giraffe Laugh Early Learning Centers, told the Idaho Statesman in early May that more than 200 Idaho child-care providers closed last year.

Many of those that remain open are finding it difficult to hire enough qualified staff to operate at full capacity. As a result, finding child care has become increasingly difficult.

The pandemic also reduced the number of people willing to provide care for the elderly in their homes, resulting in some family members becoming full-time caretakers.

High unemployment benefits may provide some unemployed workers with incentives not to look for work.

Last spring, Congress approved the addition of $300 per week to regular state unemployment benefits and provided benefits to many individuals who normally are not eligible to unemployment—including the self-employed, contract and gig workers, and workers who did not earn enough to meet the normal monetary requirements for benefits. While unemployment benefits typically expire after 26 weeks. Congress extended benefits for longer.

Early this year, Congress extended special benefits through early September. Under the special rules created by Congress in 2020, people receiving benefits didn’t have to prove they’re looking for work, a requirement prior to the pandemic. In late April, Gov. Brad Little returned Idaho to the pre-pandemic requirement, so now Idaho claimants are required to look for work or lose their benefits. In the week ending April 24, 20,242 people received unemployment benefits.

Long-term demographic challenges

There are more people reaching retirement age than there are youth to replace them: Despite Idaho’s rapid population growth and relatively youthful demographics, the number of teens entering the labor force has grown much more slowly than the number of people entering their retirement years. While the number of 16-year-olds grew 18 percent--by 3,970--between 2000 and 2019, while the number of 65-year-olds grew 146 percent--by 12,930, according to Census Bureau statistics. Half of the counties in Idaho saw their population 15 to 24 years old drop between 2000 and 2019.

Employers in Idaho must spend more time preparing for and dealing with retirements than they did 20 years ago. In 1992, 10 percent of their employees were 55 years and older. By 2020, 22 percent were.

Contributing to the challenges posed by demographics is a decrease in youth’s willingness to participate in the labor force. The 2000 Census found 55.7 percent of Idaho’s 16-to-19 age group participated in the labor force. By 2019, according to the Census’s American Community Survey, their participation rate dropped to 46.9%.

Other factors

The rapid rise in housing costs—both rents and home purchases—is exacerbating Idaho’s dearth of affordable housing. That makes it harder to attract new workers to the state.

A reduction in international migration into Idaho also may affect employers’ efforts to fill jobs. In the era around 2005, when Idaho’s economy also was growing at a feverish pace, a surge of immigrants from Central America helped fill some of the labor gaps, especially in the construction industry.

For a few years, net international migration added about 2,700 people a year to Idaho’s population. The severe recession roiling the labor market from 2009 to 2012 reduced international migration.

From 2010 to 2018, net international migration added about 2,000 people a year to Idaho’s population, according to the Census Bureau. Restrictions on migration caused it to drop sharply between 2018 and 2019, falling to only 170. The pandemic is likely to have brought the flow to a trickle, as it did for the nation. These in-migration numbers represent only the tip of the iceberg, since most foreign nationals that come to Idaho to work move from other states.

How long will labor

markets be tight?

If labor shortages persist at their current intensity, they could hamper economic growth. They also will likely add to the inflation caused by rising raw material costs, supply chain disruptions, and logistics bottlenecks. Many employers already are raising wages and expanding benefits as they bid for workers.

Fortunately, some of the factors contributing to the current intensity are temporary and likely to work themselves out in the next few months—as more people become vaccinated, special benefit programs run out, and availability of child and elder care improves. On the other hand, some of the current difficulties are likely to persist because of long-term demographic challenges.

Most employers will be forced to spend more time and resources—attracting new workers and keeping existing workers.

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