Bringing the Economy Home

Economist Says Idaho Is in a “Low-Skill, Low-Wage Trap”

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Cooke says Idaho has seen growth in low-wage call center jobs, and losses in high-paying electronics manufacturing positions.

A new Pew Research Center report on public perception of the growing gap between America’s rich and poor has been widely discussed in the last week.  Retired University of Idaho economist Stephen Cooke focuses on a different kind of wage gap.  Idaho jobs pay considerably less than the U.S. average — nearly $11,000 less in 2009.  In a recent study, Cooke and co-author Bharathkumar Kulandaismy began with a simple question: why?

It’s a complicated question to answer, but Cooke and Kulandaismy’s study comes to straightforward conclusions.  “We have above average growth in low-wage jobs, and we are losing high-wage jobs,” Cooke said.  “And the high-wage jobs that we do have pay less than high-wage jobs elsewhere.”  All of that adds up to bad news for the state.  “It’s possible to get stuck in a low-skill, low-wage trap,” Cooke said.  “I think Idaho is in that trap, and once you get on the low-wage road, it’s hard to get on the high-wage road.” 

To explain, Cooke points to a couple of categories.  First, he says, look at the administrative and support services sector.  In Idaho, that sector is beating national numbers.  Since 2001, in has grown 1.2 percent faster in the state than it has in the U.S. as a whole.  Many of the sector’s jobs are in call centers.  “This is a growth industry in the state,” Cooke said.  “The problem is [the jobs] are low-wage, on the Idaho scale and on the national scale, as well.”  In 2009, the sector paid an average annual wage of about $25,500 here in Idaho (see Table 7).

Cooke contrasts that to the state’s computer and electronics manufacturing sector (shown in Table 8).  Jobs in the sector are much more desirable, paying an average annual wage of more than $82,000.  But Cooke says there’s a problem.  “Since 2001, we’ve grown 3 percent slower in the computer and electronic product manufacturing sector than the nation as a whole,” he said.  “Even though we’re growing, we haven’t been keeping pace with the nation.”

Cooke has a message for state leaders, if they want to shift these patterns and bring about growth in high-skilled, high-wage jobs.  “The state needs to make an investment in human capital through education — make it affordable and available — and they have to make an investment in research and development,” Cooke said.  And, in his view, that’s not where leaders’ priorities appear to lie.  He points to the budget that Gov. C.L. “Butch” Otter proposed last week, which sets aside $45 million for tax cuts.  “If you look at it, at where the priorities are — it’s to decrease taxes to business,” he said.  “That’s their priority.”

Cooke will present his study at an Idaho Jobs Coalition event this evening.  He will testify before the Senate Local Government & Taxation Committee tomorrow.


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