Idaho

Bringing the Economy Home

Bottom Rung: Longtime Idaho Economist Stresses Education And Healthcare To Boost Wages

Molly Messick / StateImpact Idaho

Mike Ferguson, Director of the Idaho Center for Fiscal Policy.

Idaho has the largest percentage of minimum wage jobs in the country. That’s been the jumping off point for StateImpact Idaho’s series examining wages; we’re calling it Bottom Rung.

We know that an aging population has had an effect on the kinds of jobs available, that a shrinking construction sector has played a part, and that a decrease in education funding could also be partly to blame.

To talk more about the trend, we recently sat down with economist and director of the Idaho Center for Fiscal Policy Mike Ferguson. We also planned to speak with Idaho Department of Commerce director Jeff Sayer, but Sayer canceled our conversation indefinitely.

Q: You’ve got a bit of a chicken and egg situation here. Data from Census and IRS looking at migration patterns show the younger educated workforce is leaving the state, we’ve got older retirees moving in. Which needs to come first the educated workforce in the state, or the businesses that are going to pay high wages?


A: I think the state really needs to look at what it has under its control. The state can’t wave a magic wand and bring a business here. I mean, it can try, but businesses are going to go with what makes sense for their shareholders. They have a fiduciary responsibility to do that.

What the state has in its control is being the best in its class of enterprises. Basically, seeking to be the very best in terms of providing a productive and efficient public sector, I think would be the single most important economic development tool we could bring to the party. That means doing things like education, doing things like setting aside ideology and looking at the hard reality of a nation that has what could best be described as a sick health care system.We spend far more than other developed countries and we’re the only developed country that doesn’t cover everyone. The Affordable Care Act goes a long way toward fixing one of those problems.  We need to avail ourselves of the opportunities that affords.


Q: The Commerce Department is focusing more on helping the businesses that are already here grow and expand, hire more people that way. When will we see the effects of those kinds of efforts, is that kind of a focus enough to start to boost wages, and entice young people to stay in Idaho?

A: I’ve met Jeff Sayer a couple of times, and I like Jeff.  In a way I feel sorry because he’s got a mission that’s very difficult, given his limited portfolio of what he can do. It is important to have a commerce department doing what it does – in terms of interacting with business and taking back to some of the issues seen as barriers and so forth.

The problem is, I don’t think the problem lies in the Department of Commerce; the problem lies with much bigger policy issues. And he [Sayer] really has little control over that. Given this almost steady stream of negative economic performance indicators, it should be a wake-up call that we need to reassess how we’re looking at these things, and what a responsible approach would be for solving our problems.

Q: President Obama wants to increase the minimum wage to $9 an hour, what would that do to Idaho?

A: Well, let me give you an example with a neighboring state. We have 31,000 people on minimum wage, and our minimum wage is the federal $7.25. Neighboring Washington State which has the economy four times the size of Idaho’s, also has the highest minimum wage in the nation, $9.19 and they have fewer people – on that four-times larger economy– on their minimum wage than we do. I’m not sure that dealing with minimum wage in isolation fixes the problem. But, it’s turned into a big of a bogey man. I’m not sure that it is catastrophic by any means. It certainly can help people in that category who are not teenagers, and that’s a great many people who are on minimum wage, in their quest to get by on a daily basis.

We have a real problem – not only is it minimum wage, but the Department of Labor put out a report some time back, basically showing  we’re at the bottom of the rung in terms of a great many occupations and the wages paid in those occupations.

We’re apparently in this race to the bottom and we’re pretty darn close to winning. You can talk about cost of living being lower in Idaho, and maybe it is in certain areas. Housing looked to be that way back in the 1990s, but not so much in the 2000s when we entered the housing boom. But gasoline prices, that’s a national marketplace. Food prices we’re going to feel the effects there – that’s not going to really get us by in terms of justifying being at the low end of the economic rung.

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