Idaho’s economy and labor market experienced extreme and varied conditions in recent years. The COVID-19 pandemic in 2020 sparked an unprecedented burst of job losses, pushing unemployment to record levels in Idaho and across the nation. However, the return to normal economic activity in 2022 left Idaho employers rushing to refill the jobs temporarily lost during the pandemic, resulting in open job postings rising to nearly 80,000 by the summer of 2022.

Within the span of a few years, Idaho experienced record levels of both unemployment and unfilled jobs, reaching both extremes of the labor market. Idaho reached its highest ever level of unemployment in April 2020 at 11.8%, before plunging to its lowest unemployment rate in history in April 2022 at 2.7%.

After years of extreme swings sparked by the COVID-19 pandemic, Idaho’s return to its stable and strong long-term trend of economic growth was a noteworthy and welcome development. By late 2021, Idaho had not only recovered all the job losses accrued during the pandemic but had returned to the state’s pre-pandemic growth trendline. Since 2022, Idaho’s total nonfarm employment has clung very tightly (within 1%) of the trendline derived from a linear extrapolation of the state’s growth in the prior business cycle.

Figure 1: Idaho total nonfarm employment

Source: Idaho Department of Labor, Author Calculations

Idaho’s swift return to stable job growth coincided with a rapid growth in total payrolls, as tight labor market conditions (which peaked in 2022) increased wages. As a result, Idaho’s total wages and salaries rose by nearly 50% from pre-pandemic levels. By the second quarter of 2024, total annualized payrolls (defined as the total covered wages paid out over the previous 12 months) had increased to roughly $49 billion dollars, up from less than $34 billion at the advent of the pandemic.

Figure 2. Total covered wages in Idaho, rolling 12-month total

Source: Idaho Department of Labor, Author Calculations

This welcome cycle of stabilizing growth on the heels of the pandemic has allowed Idaho’s labor market to soften and return to a healthier state of supply and demand balance. Labor markets are subject to two conditions of extremity, neither of which are advantageous: 1.) A relative surplus of labor supply over demand, creating mass unemployment commonly seen in recessions and negatively affecting the economy as a whole and individuals; and 2.) An excess demand for labor relative to supply, creating labor shortages that adversely impact businesses and cap their ability to deliver goods and services to customers.

Idaho experienced a taste of both extremes between 2020 and 2022, with the pandemic year bringing a substantial spike in unemployment (affecting more than 50,000 workers), and 2022 bringing a tight labor market and labor shortages as the economy resumed normal levels of activity. The last two years have seen the labor market stabilize and return to a more palatable level of equilibrium, where the market is able to maintain low levels of unemployment without suffering an exacerbated labor shortage.

This is seen clearly in metrics of supply and demand in the labor market. Labor demand is measured through open job postings, which gauge the economy’s immediate demand for labor and hiring needs. Supply can be measured through the total unemployed population of the state, which includes not only unemployment claimants but also other job seekers, like new entrants, to the labor force. In 2022, these metrics were vastly out of proportion, with open job postings outnumbering job seekers by more than two to one.

As Idaho’s labor force has grown — with both new residents moving to the state and workers returning to the labor market after the pandemic — the number of unfilled jobs in the state has steadily decreased, and the asymmetrical 2:1 ratio of open jobs to job seekers has decreased to nearly 1:1 levels.

Figure 3. Idaho Labor market supply and demand

Source: Idaho Department of Labor, Help Wanted Online

With Idaho’s job growth and population moving steadily forward, and the labor market returning to a more sustainable level of supply-demand balance, the state is projected to see these trends continue in the future. New short-term projections of the state’s labor market show continued growth through 2026, with total employment projected to increase to 916,900 in the first quarter of that year. Growth is expected to be well balanced between goods and service producing sectors, with construction and health care and social assistance expected to lead all industries in growth at 3% and 3.3% annual growth respectively.

Figure 4. Idaho short term industry projections

Source: Idaho Department of Labor Short Term Industry Projections

The overall outlook for Idaho’s labor market is highly positive. Holistic measures of labor market health, like total employment, the unemployment rate and total payrolls show an economy continuing to grow at a lively pace with low joblessness. Additionally, indicators of supply and demand balance show Idaho’s labor market has normalized from the severe labor shortages observed in 2022. With the state’s population continuing to grow, all signs suggest the labor market will continue to expand and thrive in the coming years.

Samuel.Wolkenhauer@labor.idaho.gov, regional economist
Idaho Department of Labor
208-696-2353

This project is funded by the U.S. Department of Labor for SFY25 as part of the Workforce Information Grant (40%) and state/nonfederal funds (60%) totaling $885,703.

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