Monday, November 18, 2019
When is Low Unemployment Not a Good Thing?
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Sun Valley Economic Development is leading the community in trying to figure out how to trim the economic disparity for workers like these, who have been planting trees on Sun Valley Resort land where Moritz Hospital was removed.
 
Wednesday, October 30, 2019
 

STORY AND PHOTO BY KAREN BOSSICK

Unemployment is the lowest it’s been in 50 years. But that’s not necessarily a good thing, an economic and public policy officer for Zions Bank told those attending the 8th annual Economic Summit on Monday.

The nation’s unemployment level is 3.5 percent—the lowest in 50 years. But, historically, when unemployment drops below full employment, which is considered to be between 4.5 percent and 5 percent, the economy struggles, said Robert Spendlove, a member of the Utah House of Representatives.

Labor shortages are very apparent with 8 million jobs going unfilled. Every day 10,000 baby boomers are retiring and leaving the workforce and that will continue for the next 10 years. But, while we’re losing older workers, we’re not picking up workers on the lower end, he added.

 
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David Patrie said we need to do better to provide a livable wage in Blaine County.
 

Teenage participation in the workforce has decreased from 53 percent to 35 percent. And what’s called “prime age” participation, has slacked off from what it was in 2000.

There’s less than one unemployed worker per job opening.

“Idaho can’t grow where it wants to grow because it doesn’t have the labor,” Spendlove said.

Spendlove addressed more than 400 people, including 50 Wood River High and Sun Valley Community School students.

 
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Cox Communications Vice President Guy Cherp and Bellevue Mayor and Realtor Ned Burns are among those who attended the Economic Summit.
 

The summit has looked at such things as quality of place, innovation, investing locally and resilience in the face of wildfire and economic downturn over the years. This year it tackled the extreme income inequality gap in Blaine County, which is 27th worst in the nation, according to the Economic Policy Institute, said David Patrie, SVED’s membership and outreach director.

We’re living in the longest economic expansion in the nation’s history—108 consecutive months of job creation, Spendlove said. But job creation has been slowing. Last month just 136,000 new jobs were created, down from an average of 220,000 in 2018.

  • We’re entering a fundamental change in the labor force due to innovations like artificial intelligence, Spendlove noted. Grocers who can’t find people to bag groceries are putting in self-checkout stations. McDonald’s franchise owners are putting in kiosks when they can’t find order takers.
  • Generally, when the demand for labor exceeds the supply wages go up. But wage growth has largely stopped growing.
  • Inflation is 1.4 percent—under the 2 percent that Feds say it should be. The Feds won’t have much room to cut in the next downturn.
  • The United States is getting more imports from Mexico, South Korea, Taiwan and Vietnam due to the trade war with China. But, a lot of those imports are Chinese-made items entering the United States through those other countries.

    The United States is doing the same thing, shipping Maine lobster through other countries, Spendlove added.

  • Despite its braggadocio, the Chinese economy is struggling—it’s experiencing its lowest GDP growth in 30 years. But it didn’t just happen because of Trump’s trade wars—its GDP growth has been going down for years.
  • Economic weakness is being experienced throughout the world, including Germany and the United Kingdom.
  • Manufacturing is at its weakest since the 2008 recession.
  • Consumers drive the economy. If they continue to spend, we should be okay. If they stop spending, we’re in trouble. Currently, Spendlove said, consumers are pulling back because of uncertainty caused by the trade war.
  • The next recession will likely not be instigated by a housing bubble, Spendlove said. “I’m concerned about student loans, which are up 170 percent since the last recession, and auto loans, which are up 59 percent.”
  • Zions Bank is laying off 5 percent—or 500--of its 10,000 employees nationwide as a proactive measure after repo, or short-term lending rates, went from 2 percent to 10 percent in September.

    “No one saw it coming…Last time, that played into the recession,” Spendlove said.

  • Idaho and Nevada were the nation’s fastest growing states between July 1 and 2017 and July 1, 2018, with both states’ populations increasing by 2.1 percent. Idaho, which had less than a million residents in the late 1970s, now has 1.75 million people; Nevada, 3.03 million.
  • The largest percentage increases were seen in Boise, Custer, Valley, Jefferson, Teton, Canyon, Camas, Ada and Franklin counties.
  • Idaho’s employment growth is the second highest in the country, gaining 158,700 jobs in 2010.
  • Idaho has the second highest personal income growth—personal income growth growing 3 percent between 2016 and 2017. But it hasn’t kept up with inflation. The median full-time salary in Idaho is $33,259 a year—more than $10,000 below the U.S. median.
  • Home values have been increasing dramatically leading to a $270,900 median price. But growth is slowing, with values predicted to be half of the 13 percent they have been increasing in the oversaturated market. The housing market in the United States is also slowing.
  • Blaine County’s unemployment is 2.3 percent—lower than the statewide unemployment rate of 2.8 percent, which is the lowest since the Department of Labor began keeping records in 1976. There were 11,819 employed workers and 264 unemployed residents in Blaine County.
  • The local economy is going well, Spendlove said. But Blaine County leaders need to make sure everyone benefits from the strong economy, he added.

    Leaders must ask the community: What are your values? And then line out what could happen if you do nothing and what could happen following a variety of other options. Then ask: What do you want to do? he advised.

  • Currently, 12 percent of the families in Blaine County have incomes below the poverty line, said Patrie. Sixteen percent don’t have health insurance. And 23 percent of those earning less than $50,000 do not have health insurance.

    “We decided we can do better than that. We need to do better than that,” said Patrie.

  • Affordable housing is key to providing a sufficient workforce, said Spendlove. But, with housing and jobs plentiful in booming Twin Falls, fewer workers are heading north to work in Sun Valley.
  • St. Luke’s Wood River is having to take extraordinary measures to recruit employees, despite the opportunity to live in what many call paradise, Patrie said. And restaurants are not able to stay open as long as they would like because of the labor shortage.

Change has to happen, Patrie said, quoting former Economic Summit speaker Jon Roberts who said, “The more you want to remain the same, the more you need to change.” Patrie also embraced Albert Einstein, who famously said that the measure of intelligence is the ability to adapt.

“Communities are like species—every time you fail to adapt, you make yourself less resilient and more susceptible to outside shocks.”

 

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