By Zach Hagadone
This article is the introductory piece in an ongoing series during which the Reader will examine various aspects of the labor shortage affecting area employers.
When the state entered Stage 4 of its Idaho Rebounds COVID-19 reopening plan in May, businesses threw open their doors, events and gatherings that had been waylaid over the previous year went back on the calendar, families busily planned for long delayed vacations and those who had received both doses of the coronavirus vaccine in the spring happily threw away their masks.
Amid the optimism for the return of a “normal” summer came a harsh reminder that not all was “normal.” Employers ranging from restaurateurs to retailers to manufacturers found themselves unable to attract — or even retain — enough labor force to offer their previous levels of service, let alone keep those doors open on a consistent basis. From across the national, state and local economies came a similar question: “Where are all the workers?”
The answer to that question locally lies in both the long- and short-term trends at play in North Idaho, which revolve around three broad factors: demographics, the effects of the ongoing — and worsening — COVID-19 pandemic and the affordability of housing. Of first importance, however, is grasping the extent of the problem.
‘All the employers are feeling the same thing’
Clyde Montgomery has been in the temp-to-hire business since 1989, helping connect employers with job seekers in North Idaho through Coeur d’Alene-based Integrated Personnel, Inc. With offices in both Kootenai and Bonner counties, the company works in all five northern counties and can fill positions in both eastern Washington and western Montana.
He said the current job vacancies in the region are “close to triple” the typical number.
“We’ve seen an uptick in possible new clients, which would be employers coming to us and they’re looking for employees, but for the most part we’ve had to turn them away because we have more than 300 openings that we have to fill with our existing clients,” said Montgomery, who serves as vice president of the company, which is owned by his now-retired father-in-law. “I’d just be wasting their time. There’s way more jobs than there are people now. … All the employers are feeling the same thing.”
According to data from the Idaho Department of Labor, the civilian labor force in the five northern counties of Benewah, Bonner, Boundary, Kootenai and Shoshone comprises 117,989 workers, as of July 2021. The regional unemployment rate is 3.8% — the highest in the state, which has recorded 3% joblessness since July — though still far lower than the national rate of 5.2%, reported in August.
Meanwhile, Idaho has added more jobs to its economy over the past year than any other state in the country and, alongside Utah, the only state in which nonfarm payroll employment actually increased from the beginning of the pandemic shutdowns in March 2020 and March 2021.
In other words, according to an article published in July by late-Labor Department Regional Economist Kathryn Tacke, “Idaho’s good fortune is one reason for the labor shortages. Its economy has proven hardy during the pandemic …,” yet, “While jobs have grown since the pandemic’s start, some Idahoans left the labor force.”
That said, the labor force in the northern region increased from 115,524 in July 2020 — when unemployment was 6.9% — to 117,989 in July 2021. That’s an additional 2,465 workers, which boosted the total number of employed laborers in the five northern counties by nearly 6,000 year over year, bringing unemployment down to the current 3.8%.
Those job gains haven’t been distributed evenly across the region, however. In Bonner County — which has a civilian labor force of 20,852, representing 17.6% of the regional whole — unemployment is 4.2%, as of July 2021. Labor Department data shows that Bonner County lost workers year over year, falling from 21,440 in July 2020 to its current number.
That’s a reduction of 588 over the 12-month period, which doesn’t seem like much, but during the same time total employment rose by 74 workers — meaning that, in Bonner County at least, there are numerically fewer workers but more of them are working than a year ago.
It’s a bit of a head-scratcher, considering that as the county’s labor pool has shrunk, its population has increased. The recent U.S. Census data, covering the 10-year period from 2010 to 2020, showed that Bonner County grew by 15.2% for a total population of 47,110 — and that doesn’t include the new residents who have continued to flood into the area since over the past year.
Sandpoint City Administrator Jennifer Stapleton told the City Council in August that Sandpoint’s population grew 17.3% over the decade to 8,639, but, “We believe these [numbers] are lower than what we’re all experiencing, feeling and seeing. We’re looking at data based on the surveys and door-to-door surveys that were completed well over a year ago … What we’ve seen is that it feels like we’re at that 17.3% growth just from last year to this year.”
So what gives? Shouldn’t a bigger population equal more workers?
Retirees, Zoomers and COVID collide
Part of the conundrum facing Sandpoint, and Bonner County as a whole, is demographics and the changing nature of work stemming from the COVID-19 pandemic. While the median statewide age is 40, regionally it’s 45 and in Bonner County it’s 47.9. Only 20% of Bonner County residents are under the age of 18 (compared to 25.7% statewide) and 23.8% are 65 and older (statewide that figure is 15.4%).
“Historically we’ve leaned more toward the retirement age of residents,” said Ryan Robinson, interim executive director of the Bonner County Economic Development Corporation, meaning that many of those who live here do so not to work but to enjoy its amenities.
Meanwhile, the pandemic “accelerated that dream of moving to a place as beautiful as it is here,” he said.
That’s a trend that has been felt nationwide. According to data cited by AARP, about 2 million “older workers” opted to drop out of the labor force altogether since spring 2020 and more than a quarter of all workers said that COVID-19 has spurred them to plan for an earlier retirement.
As Tacke, with the Idaho Department of Labor wrote, “the number of Idahoans 55 years or older in the state’s labor force fell 11%” from March 2020 to March 2021, due in part to a combination of fear of COVID-19 exposure and early retirement. During that time, more than 16,500 Idahoans applied earlier than expected for Social Security benefits because of the pandemic, Tacke wrote, citing a Census Bureau survey conducted in March.
Meanwhile, that has caused a ripple effect as many other, younger, workers dropped out of the labor force to care for non-working elderly relatives.
“There are more people reaching retirement age than there are youth to replace them,” Tacke added. “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.”
Robinson echoed that, pointing out that Bonner County has always had a hard time keeping its kids at home.
“All these high-school-age kids are fleeing the area and not coming back,” he said, pointing not only to the inability to secure affordable housing, but the lack of local post-graduation education and training opportunities.
“There are not a lot of opportunities for high-school kids to go to trade school and then come back,” Robinson said. “By that time they’ve decided to live somewhere else due to the cost of living.”
That, in turn, hollows out the available labor pool for lower-wage sectors such as the service and hospitality industries, which, in Bonner County, make up the fourth-largest employment area (nearly tied with manufacturing, which is ranked third) but its lowest paid. Department of Labor statistics show that the average wage for leisure and hospitality workers in Bonner County is $20,020 — $1,083 lower than the regional rate.
Anecdotal evidence for the pressure placed on the leisure and hospitality sector is made clear by signs posted on restaurant doors apologizing for reduced hours and menus, even abrupt midweek closures, due to lack of staffing. But the reason for the imbalance between population and labor pool also has to do with the surge in remote workers relocating to the area.
The so-called “Zoom economy” has quickly come to typify the workplace in many sectors, enabling employees specifically in technology and information-based jobs to ditch larger cities and relocate to rural areas where their salaries can afford them a higher quality of life for relatively less cost.
This phenomenon has been widely reported, especially as it affects resort communities in the West, but it’s worth noting that when addressing the “worker shortage,” these workers don’t count when tallying up the local labor pool.
Even though remote workers may be living and working in a community, they aren’t technically employed there — their work product is being exported to create profit elsewhere, while their wages are imported and leveraged to demand local services. Ideally that results in a “trickle-down” effect, with their spending spurring economic growth, but just as often creates inflation in critical areas such as housing prices.
“You have people coming in here, not contributing to the labor pool, working remotely or working out of the area and making out-of-area wages, yet demanding services that can’t be met because of a lack of workers in those lower-wage sectors because they can’t afford housing,” Robinson said. “None of these issues are new issues for Bonner County — they’re just magnified because of the situation we’re in.”
The housing crunch and ‘the perfect storm’
The income disparity between local workers and those making an out-of-area wage — and its inflationary effect on housing prices — is a big factor in what Montgomery has also been seeing with regional employers’ difficulty with finding labor. And it’s not just in the service and retail sectors. Integrated Personnel doesn’t even work primarily with those employers, focusing more on manufacturing and timber, in particular.
Those sectors pay much higher wages than most other industries in the area: regionally, manufacturing jobs pay an average salary of $50,928 and, in Bonner County, it’s $52,539.
Still, Montgomery said, “The housing market has a lot to do with it. We do a lot of blue-collar, and the blue-collar worker is getting kind of priced out of this area.
“I’ve seen that happen with some of the employees we’ve hired; they move here, they can’t afford to live here and they have to move back,” he added.
Meanwhile, Montgomery said his clients are raising wages, offering benefits sooner, providing incentive pay on attendance and sign-on bonuses — “anything they can think of to entice employees.”
Unsurprisingly, given its much larger population, Kootenai County is experiencing the greatest need for skilled workers, though Montgomery estimated that about 33% of the total vacancies that he’s trying to fill are in Bonner County, numbering about 100 openings.
“I’ve had work orders before where they say, ‘Send me 100 workers,’ and others are open-ended: ‘Keep sending me people,’” he said.
Robinson, at the Bonner County Economic Development Corporation, noted that Bonner County has long struggled with skilled labor. A concerted effort in the first decade of the century to attract manufacturing firms has been successful enough to raise that sector to the third-highest employment area in the county — centered in large part on aeronautics and firms like Encoder Products and Litehouse Foods — but it still hasn’t overcome the housing hurdle, even though those wages pay better here than elsewhere in the region.
“I’ve had a number of conversations with employers who have higher-end jobs open — $80,000-plus — they offer the position to someone out of town, they accept and as they look at the housing prices they back out,” Robinson said. “Either that or they go back to their current employer, bargain for a higher wage and end up staying.”
That trend has also affected the ability of health care providers, as well as educational institutions, to attract workers, which while combined make up the second-largest number of employees in the county pay an average wage of $38,507, according to the Department of Labor.
Skyrocketing housing prices have been a constant source of both national headlines and local conversations for more than a year, with the median list price for a home in Sandpoint rapidly increasing to somewhere in the $500,000 to $600,000 range over the past year alone, depending on the source. Meanwhile, the area median income is about $60,000 per year.
“We’ve been slow to react on prevailing wages but you’re starting to see employers react to that,” Robinson said, referring to the types of attraction and retention strategies described by Montgomery. “That’s going to help.”
What else would help, he added, is supporting more local professional-technical training to provide opportunities for younger people to stay home and contribute to the economy as skilled workers.
Again and again, however, one of the fundamental factors fueling the worker shortage is the lack of affordable housing pushing out not only workers in traditionally lower-wage sectors but affecting those employees who even in the recent past would have been considered moderate- to high-wage earners.
“The labor shortage and housing issue has always been here, it’s just been magnified because of the perfect storm of COVID, housing prices and people moving out to seek lower cost of living and higher wages,” Robinson said, “and we as economic development people can’t fix it — the market has to fix it or private industry has to put a Band-Aid on it by providing work force housing to get us through it.”
Pick up the Sept. 23 edition of the Reader for the second part in this series, which will specifically look at housing costs as a factor in the local worker shortage. If you have a story of how the worker shortage and/or housing affordability has affected you or your business, share it with us at [email protected]
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