Idaho has not escaped the persistent shift from goods production to service sector employment that has dogged the national economy for over 30 years. But Idaho has maintained a larger share of its economy in goods production through the 1990s and up to the Great Recession than most other states.
And even with the significant recession loss – primarily in manufacturing and construction – Idaho still has a greater share of its economy in goods production than the nation overall – a distinction the state has had since the mid-1980s.
Production jobs are important because they average about $10,000 a year more in wages than service jobs.
As measured by the percentage of personal income earned, goods production peaked in the United States during World War II when it accounted for over half of the income earnings generated by private businesses. Idaho also peaked then at just under 50 percent in 1942.
For the next quarter century, U.S. goods production – mining, forestry, fishing, manufacturing, construction and agricultural services – remained over 40 percent of total annual earnings by the private sector, averaging nearly 45 percent from 1946 through 1981.
Over that same 25 years, Idaho averaged 37.6 percent of its private sector earnings from goods production, exceeding 40 percent from 1976 through 1979 during a national housing boom when wood products production jumped 10 percent to 15 percent.
Unlike the most recent recession that hit goods production hardest, the economic impact of the severe recessions of the 1980s was more evenly spread, and goods production continued to account for an average of 37 percent of the annual private sector earnings through the decade.
At the same time, goods production nationally began shrinking – from 39.2 percent of private sector earnings in 1982 to 29 percent in 1991 to less than 25 percent in 2002 and finally just 21 percent in 2011 and 2012.
Idaho began getting a greater percentage of its personal income earnings than the nation from production in 1984.
Idaho goods production took a dive in 1990 and 1991 with the contraction of wood products manufacturing but continued to account for about a third of private sector earnings from 1990 through the 2001 recession. That was primarily the result of strong construction activity, which accounted for 10 percent to nearly 12 percent of private sector earnings each year, and the steady escalation of computer chip manufacturing, which rose from less than 3 percent in 1989 to nearly 10 percent in 2000. The expansion of computer and electronic manufacturing pushed earnings for all manufacturing to nearly 21 percent of total private sector earnings in 2000, the highest level since 1989.
The strength in construction and manufacturing made Idaho one of just three states – North Dakota and New Mexico were the others – to see goods production account for a greater share of private sector earnings in 2000 than in 1990. Idaho went from 32.4 percent in 1990 – ranking 24th among the states – to 33.4 percent in 2000, ranking 10th.
Nationally, goods production’s share of private sector earnings fell from 30.1 percent in 1990 to 25.8 percent in 2000.
Goods production slipped slightly in the sluggish economy following the 2001 recession. But throughout the expansion and housing bubble of the mid-2000s, it remained responsible for 29 percent of private sector earnings in Idaho while it slipped nationally from over 25 percent to 23 percent in 2008.
Unlike earlier recessions, where job losses were more evenly spread across the economy, the Great Recession claimed the bulk of its jobs in production – 62 percent of the lost jobs nationally and 68 percent of the lost jobs in Idaho.
It knocked construction’s share of Idaho private sector earnings from double digits to less than 8 percent in 2011 and manufacturing to about 13 percent.
Still, Idaho’s goods production sector remained stronger than the nation’s, providing almost 24 percent of private sector earnings in 2012 compared to 21.1 percent nationally. Idaho’s ranking among the states, however, slipped back to its 1990 level, dropping to 22nd.
Bob.Fick@labor.idaho.gov, Communications Manager
(208) 332-3570,ext. 3628
