The recession and Idaho’s continuing recovery have underscored a significant structural shift in the economy of the five-county Boise metropolitan area. Jobs at call centers and in computer chip manufacturing have moved in opposite directions.

Behind health care which has been steadily growing as the state population ages, call centers posted the second largest job gain of all subsectors from 2007 through 2013, while chip production posted the largest decline.

Employment and wages in each industry beginning in 1991 are tracked through two different recessions, using shift-share analysis from 2001 to 2013 to help explain the divergent employment trends.

Employment

Employment in semiconductor manufacturing grew steadily through the dot-com boom in the 1990s, adding 8,073 jobs between 1991 and 2001, but this trend reversed following the 2001 recession. Despite Idaho being one of the few states to escape that recession with no overall job losses, the semiconductor industry lost 2,387 jobs between 2001 and 2003 before experiencing a recovery that generated 827 jobs through 2006. The second recession, which began in December 2007, claimed 4,470 jobs between 2007 and 2010 – half the gains of the 1990s. Since then, the 2010 the recovery has been slow – with an increase of 855 jobs. Even with a modest gain, the industry lost more jobs from 2007 through 2013 than any other sector in the metro area, which includes Ada, Boise, Canyon, Gem and Owyhee counties.

In contrast to the semiconductor’s 23-year history in Idaho, call center jobs churned steadily upward, with their strongest growth during recessions. Between 1991 and 2001, the call center industry added 618 jobs in metropolitan Boise, compared with more than 8,000 jobs computer chip makers added during the same decade.

While semiconductors lost 2,000 jobs from 2001 to 2003, call centers added 1,500. Both industries grew during the recovery, but call centers added three times more jobs than semiconductor makers did through 2007. The biggest difference in employment growth came between 2007 and 2010 when semiconductor manufacturers lost nearly 4,500 jobs while call centers added 1,900. Finally, in the post-recession period, call centers dropped 57 jobs while semiconductors added 855.

These trends suggest semiconductors react more to recessions than call centers. In fact, employment in call centers grew through both the 2001 recession and the 2007-2009 recession. In the current recovery, employment in semiconductor manufacturing has been climbing slowly while call center jobs are stagnating.

Wages

Inflation-adjusted wages for both call centers and semiconductor manufacturing remained relatively constant from 1991 to 2000. Real wages at call centers more than doubled from 2000 to 2004 then slowly increased until 2007 to 2008, when the real wage declined and has stagnated and declined slightly since. From 2001 to 2007, the industry’s real wage within the MSA was greater than the national average real wage. At the same time, real wages within the region were disproportionately affected by the recession, and the national average real wage crept above the region’s average real wage in 2008 and has remained there since 2013.

Real semiconductor manufacturing wages tell a different story. The inflation-adjusted average wage fluctuated wildly in the 1990s, increasing overall through the decade. After a decline between 2000 and 2002 when the technology bubble burst, the average real wage climbed steadily, more closely following the real wage nationally until the recession when it moved higher for two years before matching the national rate once again. In 2013, the industry’s average real wage in the metropolitan area was $17,810 greater than the national average.

Over time, the difference between average semiconductor wages and average call center wages was nearly $81,000. In 2013, real semiconductor wages were $69,314 greater than the average wage for all sectors in the Boise metropolitan area while call center wages averaged $11,670 less. Since call center employment increased sharply through the recession while semiconductor employment declined, the metro economy appears to have weakened.

Occupations – A shift away from higher-wage, higher-skilled jobs?

Each of the top six occupations in semiconductor manufacturing have experienced double-digit percentage declines from 2007-2013 while four of the six top occupations at call centers saw double-digit percentage growth.

The contrast in the education requirements for expanding and contracting occupations is stark. While four of the top six occupations in semiconductor manufacturing require an associate or bachelor’s degree, none of the top call center occupations do and only one requires  post-secondary training.

Shift-Share Analysis

A shift-share analysis shows the Boise metro area has a competitive advantage in semiconductor manufacturing that accelerated job growth during the expansion of the mid-2000 while tempering the job losses during the last recession.

This analysis determined the change in semiconductor employment in metro Boise resulted from total employment growth nationally, from semiconductor manufacturing growth nationally and from factors affecting semiconductor manufacturing that are unique to the metro area.

Overall employment growth nationally applied to semiconductor jobs in the Boise area generated 419 jobs from 2001 through 2006 while semiconductor job losses nationally from 2001 to 2006 translated into about 4,200 job losses in the Boise metro area over that span. However unique factors giving the metro area a competitive advantage in semiconductor manufacturing generated 2,200 jobs during the years between recessions and for Boise, limited what should have been a loss of 3,800 semiconductor jobs to under 1,600.

The analysis indicates that through the first decade of the 2000s, the regional competitiveness  semiconductor manufacturing experienced early on in the decade was lost and grew negative toward the end of the decade through the recession. Meanwhile, the region experienced a strong competitive advantage throughout the decade for call centers. While this competitive advantage remained positive through the recession, the most recent five-year span shows the call center industry most recently is experiencing more employment change due to national rather than regional factors.

From 2007 to 2013, which covers the recession and several years of recovery, the competitive share for both semiconductors and call centers mirrored the national growth for those sectors but has been more amplified.

Both nationally and regionally, semiconductor manufacturing has lost jobs, and there has been no regional competitive advantage, suggesting that a primary reason for the lost jobs is not national, but regional in nature. In other words, the national decline in semiconductor manufacturing employment cannot be blamed for the loss in metro Boise because more than half those jobs were lost to regional factors. So there is a role that economic development policymakers can play in encouraging regional conditions that encourage high-wage, high-skilled jobs that have semiconductor manufacturing shed.

The story is reversed for call centers. The metro Boise job growth is due in large part to regional factors. While only 732 jobs were attributable to national call center growth, 1,140 jobs resulted solely from local factors influencing location decisions.

Essentially, local conditions in the Boise metro area have been more amenable to employment growth in call centers than semiconductor manufacturing.

Two policy questions loom. What is the trade-off between slow-growing, low-wage but stable jobs and fast-growing, high-wage and drastically cyclical jobs and what regional policy initiatives, if any, can mitigate the semiconductor boom-bust cycle?

Ethan.Mansfield@labor.idaho.gov, regional economist
(208) 799-5000 ext. 3984