Mix of Occupations Influences Idaho’s Median Wage

Idaho’s median hourly wage ranks seventh to last among the 50 states. Almost one in five Idaho jobs are in food preparation, serving and sales and related occupations. At first, it might appear that Idaho’s low wage ranking is the result of too many food prep and sales jobs, which require less education and training and typically pay far less than Idaho’s median wage of $14.93 an hour. But that story is incomplete.

The share of food prep and sales-related occupations in Idaho is actually slightly smaller than their share nationally. Additionally, the wage gap between Idaho and the nation for these two groups of occupations is smaller than that gap between other higher-skill occupations. While the average Idahoan makes $2.16 an hour less than the national median wage, food prep pays only 33 cents an hour less in Idaho than it does nationally. Two statistics contributing to the low wage ranking in Idaho are: 1) median wages in high-skill, high-wage occupations are much lower in Idaho and 2) the concentration of some of the highest paying occupation groups is lower in Idaho relative to the nation and the surrounding states.

Fig 1 Ethan

table 1Fig. 3 EthanEconomists compare employment shares between two states by a single number called a location quotient, which is helpful because it can tell two stories at once. First, it indicates whether a state has a larger or smaller share than the nation. Second, it can be used to compare multiple states to each other. A location quotient of one means the shares of that occupation in a state are exactly equal to the nation’s. A location quotient higher than one indicates that the share of that occupation is higher within the state compared with the nation. A location quotient of less than one means the share is smaller within the state compared with the nation. For food prep and serving occupations in Idaho, for example, the location quotient is .98, indicating the share of those jobs throughout Idaho is 2 percent less than the nation.

Fig 4 -Ethan

The graph above shows the location quotient for each occupation group in Idaho, Oregon, Utah and Washington, sorted by the concentration of each occupation in Idaho. Despite having the second smallest employment in the state, farming, fishing and forestry has the highest concentration of any occupation group in Idaho — 2.8 times the share of that occupation nationwide. This also is one of two occupation groups where the pay is better in Idaho than the nation. However, the median wage in farming, fishing and forestry is still $3.65 an hour lower than the state’s median wage.

Life, physical and social science occupations are significantly clustered in Idaho as a result of strong natural resource management, a significant share of public lands and the presence of food and agricultural technology. Occupations in this group that are concentrated in Idaho include forest and conservation techs, hydrologists, wildlife biologists, and agricultural and food science technicians. The downside is these high-skill occupations pay on average $6.13 an hour less in Idaho than they do nationally. This is the fifth largest disparity out of the 22 occupation groups. An additional challenge faced in this group is its strong ties to the low-wage farming, fishing and forestry group. Compared with other Northwest states, Idaho’s location quotient in this occupation group dominates, suggesting a regional competitive advantage in these high-wage, high-skill positions, perhaps one that should be leveraged as our economy moves forward.

The state also has higher-than-average concentrations of management occupations and architecture/engineering occupations. However, these two groups tell drastically different stories about the economy. Management occupations in Idaho face a significantly lower wage in the state than in the nation. The difference is the largest of any occupation group — over $13 an hour less in Idaho than the nation. This makes it difficult to attract top managerial talent to the state, and those who have risen through the ranks in Idaho face comparatively lower wages as they move into managerial positions. Those who “shop around” for managerial jobs are likely to leave the state if wages are their primary consideration. With more than 33,000 management jobs in Idaho, the significantly lower median wage in that group plays a major role in driving Idaho’s median wage lower than the nation’s.

Architecture and engineering occupations, however, do pay well — just about a dollar less than the national wage for the group — and are comparatively more abundant in Idaho, although less abundant than in Oregon, Utah or Washington. Besides privately held small firms, the primary sources for these jobs are the Idaho National Lab and its associated contractors, semiconductor giant Micron Technology and computer, printer and parts manufacturer Hewlett-Packard. While jobs in this occupation group pay on par with the national rate, there is competition from other surrounding states. Out of Washington, Oregon, Utah and Idaho, the concentration of these jobs in Idaho is the lowest by far. Compared with Idaho’s 5 percent above-average concentration, Oregon is 21 percent above, Utah is 17 percent above and Washington is 47 percent above the national concentration.

It is worth giving special mention to office and administrative support occupations because they are the largest occupation group in Idaho. One in every six jobs in Idaho falls into this category. Median wages are $1.69 an hour lower in the state than the nation for those jobs, The group’s median wage in Idaho is also less than the statewide median wage, suggesting this occupation group, despite its comparatively smaller Idaho-nation wage gap, still plays a major role in keeping Idaho’s median wage low because of the sheer number of people employed at relatively low wages within the occupation group. Since there are so many people employed in this occupation group, the lower-than-average wage has a significant effect on the state median wage.

Some of the occupation groups targeted by Idaho policymakers as being the most influential also have some of the most “normal” levels. This is not to say that they are unimportant sectors, rather, their role in the state’s economy is roughly equal to their role nationally. They have a comparatively average impact. Among these occupation groups are production occupations, food prep and serving, sales and related, and healthcare occupations.

Perhaps the largest barrier to higher wages in Idaho is that the three least concentrated occupation groups in the state — legal, business and financial, and computer and math occupations—are high-skill, high-wage jobs. The share of these occupations in Idaho is 22 percent less, 30 percent less and 34 percent less than the nation, respectively. This has a negative effect on Idaho’s wages for two reasons. First, the wages in these occupations are much lower than the average of $2.16 below the national median (see Wage Differential Chart). Of the 22 groups compared, legal occupations have the third largest disparity, business and financial occupations have the seventh largest, and computer and math occupations have the second largest, with a difference of over $9 an hour. Second, even though each group’s median is significantly below the national group median, all three groups pay significantly better than the state median wage of $14.93 an hour. So, if the share of jobs in the state in these occupations were higher than the national average — or higher at all — this would be good for the state’s median wage. The wage and employment concentration dynamics can help explain the supply of labor in Idaho. For example, businesses move where there is a proven supply of workers in the jobs they look to fill. This brings in more people in that occupation looking for jobs. Eventually, an occupational cluster will form. Businesses know they will find talent, and job seekers know they will find a job. The cycle reinforces itself as is evident in places like the Silicon Valley, Austin and Seattle for high-tech manufacturing and software development, Hollywood for actors and producers or the Magic Valley for food processing.

Taking advantage of cluster development depends on heavy investment in educational pipelines. Before firms look to locate in an area, they need workers to fill open positions. Workforce development through education and training is a primary example of where public investment pays off. One way to see wages increase in Idaho would be education and training for high-skill, high-wage occupations.

Ethan.Mansfield@labor.idaho.gov, regional economist
(208) 332-3570 ext. 3455