With the “Great Recession” in our rear view mirror, I’d like to take a quick look at our current situation here in Idaho. Especially in respect to the job outlook in technology related fields. This is something that will impact all of as us, whether we are doing the hiring or being hired.
Year over year labor pool growth has been favorable. There was no year over year shrinkage, measured in January, and there has been a strong upward trend since 2013. Even with this type of labor force growth, there will be challenges filling the strong demand for skilled workers in the technology industries.
The Bureau of Labor estimates job growth from 2016 to 2026 as follows:
Computer Support Specialist 11%
Systems Analysts 9%
Data Base Administrator 11%
Information Security 28%
Network Administrator 6%
Software Developer 24%
Web Developer 15%
These numbers show excellent growth rate projections. Related fields like Technical Manufacturing have also been explosive, 2016 to 2017 saw a 7.7% growth in jobs. Current estimates posted by cyberstates.org put the Technology Sector at 9.4% of Idaho’s economy and growing, with an estimated GDP at $61 billion in 2017.
Do we have the labor force to support this? Even with strong growth in the labor pool size, we have a very tight unemployment rate and challenges with skilled workforce. Below we can see that as we recovered from the “Great Recession”, unemployment rates in Idaho have continually declined through the years. Overall wage growth has been fairly stagnant, especially when accounting for inflation rates.
We’ve been running under 3% unemployment rate for several months. Natural unemployment rate (the percentage of people unemployed as they transition jobs) was previously thought to be around 5%. It is likely the natural unemployment rate is now closer to 3%, due to the technical changes to how individuals seek work and how firms hire labor. That said, we’ve exhausted our labor surplus. Economists have been waiting for wages to catch up, having been stagnant for so long. The circumstances in Idaho are prime for a wage explosion as industry fights for qualified candidates. High wage growth may be offset by our labor pool growth rates. Whether wages stay stagnant or rise sharply will likely vary by sector and be based on the demand and availability of specific skill sets in the labor market.
Idaho’s July 2018 wages increased 1.09% month over month, the first time Idaho has seen that level of month over month growth since a blip in 2010. Idaho hasn’t seen income growth at this level at a sustained rate since 2008 and 2009 timeframe. Whether this is just a blip similar to July/August 2010 or the beginning of a strong upward trend will be seen in the coming months.
We may need to reconsider what it means to have a qualified candidate. Many big companies have already been suspending the previous hard requirement for a candidate to have a bachelor’s degree for many positions. In Idaho, we need to give this a hard look. NSC Research Center puts the current average graduation rate in Idaho for 2 and 4 year intuitions at just over 50%. Even with slight overall growth of higher education enrollment in Idaho, it seems unreasonable to believe the typical educational requirements can be met with the job growth expected.
Idaho needs to focus now on ensuring we have the skilled labor force needed for the future. We should be looking at new opportunities in alternative educational systems and apprenticeship programs to help create the skilled work fork we need from the labor market we have.