January 2016, marked the third month in a row in which Idaho led the nation in annual employment growth.
Idaho has also had a comparatively low unemployment rate the past several months, ranking 12th lowest in the nation at 3.9 percent. Idaho’s residents play a major role in the state’s overall economic performance. While many factors contribute to economic success, the state’s demographics have a strong effect on the current status and future trajectory of Idaho’s labor market.
Idaho has one of the youngest populations in the nation. Second only to Utah, Idaho had the largest population share of school-age children ages 5 to 17 in 2014. It also had the fifth-highest share of population under age 5, behind Utah, Alaska, Texas, and South Dakota. In contrast, Idaho has the second-smallest share of working-age population, and its retirement-age population is in the bottom third. Overall, it has the sixth-lowest median age and sixth-highest number of persons per household.
This poses unique advantages and disadvantages for Idaho’s labor market. One advantage is that a smaller working-age population leads to a tighter labor force and lower unemployment rate. Lower unemployment generally leads to higher wages, which can increase spending and boost the economy. However, if the working-age population doesn’t have the right skills, employers struggle to fill open positions. Thankfully, net migration can help cover the gap. Strong migration into Idaho in 2014 increased Idaho’s population by 1.3 percent, which was the ninth-largest increase in the nation and the highest one-year gain in six years. By the end of 2014, Idaho’s population had reached just over 1.6 million.
While many people are moving into Idaho, residents are shifting state demographics by moving from rural to urban areas. As of 2012 Census estimates, Idaho’s 11 urban counties accounted for 65.5 percent of the state’s total population. From 2011 to 2012, Ada County expanded by about 1.99 percent, and Canyon County grew by about 1.32 percent. Twenty-eight rural counties are shrinking, however, and 2012 marked the fourth straight year that rural Idaho experienced net outmigration.
So what does this young, increasingly urban population mean for Idaho’s economy? First, rural exodus means that these areas will struggle to find skilled employees to replace retirees. While some young people return to rural areas after college, the majority remain in urban areas. On the other hand, skilled workers are also needed in urban areas, and the tight labor market creates promising job prospects. Second, supporting such a young population requires that state leaders make smart investment in education to ensure children are prepared with the cutting-edge skills to contribute to the economy when they join the workforce. Finally, growing counties will need to continue developing infrastructure—like water purification and transportation solutions—in order to sustain the growing population.
Idaho’s economy is poised to support innovation and industry expansion to employ the large number of young people who will enter the workforce. With continued investment in education, infrastructure, and employment, Idaho will remain an inviting and economically profitable location for its residents.
Idaho job report. Idaho’s unemployment rate remained unchanged at 3.9% in January, and the national unemployment rate decreased 0.1 percentage point to 4.9% in January.
Housing market. In January, the CoreLogic® Home Price Index (HPI) for Idaho, which measures home price appreciation, experienced a year-over-year increase of 8.4%. Nationally, the HPI increased 6.9% during the same period.
Consumer confidence. The U.S. Consumer Confidence Index® decreased 5.6 points to 92.2 in February. The Present Situation Index decreased 4.5 points to 112.1, and the Expectations Index decreased 6.4 points to 78.9.
Inflation. The U.S. Consumer Price Index increased 0.2% from December to January. Year over year, the index increased 1.4%, which is below the Federal Reserve’s target annual inflation pace of 2%.