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Idaho private sector pay down in ’08 and ’09

Private sector wages in Idaho fell more than a percentage point during 2008, the first year of the recession, because of declines in a half dozen rural northern counties and the Boise metropolitan area, Idaho Department of Labor Communications Manager Bob Fick writes in the Idaho Employment newsletter for May.

The U.S. Bureau of Economic Analysis estimated 2008 compensation from private businesses at just under $22.9 billion. In 2007, compensation was a record $23.1 billion. While still producing the second-highest annual compensation total in Idaho history, 2008 marked the largest percentage decline in annual compensation and the first time private payrolls fell since 1982 when private business paychecks dropped just under 1 percent during another severe recession.

The picture was darker in 2009. Preliminary estimates put private employer compensation down another 6 percent to just over $21.4 billion, but the regional and county breakdown will not be released for another year. Private sector compensation is total wages and salaries including those paid to corporate officers but not including farm or government wages. The private sector accounts for about 80 percent of all compensation in Idaho.

The compensation decline in 2008 occurred at the same time private sector employment was essentially stagnant, rising less than half of a percentage point statewide. Had it not been for offsetting wage increases in a number of areas and a number of industries, the payroll decline would have been even greater as the 2009 estimate indicates, the state Department of Labor stated.

Layoffs in construction, high technology and timber left thousands without any work and pushed some into jobs paying substantially less either because the hourly rate was much lower or the hours available much less than a full week. Employers tried to temper layoffs by keeping workers on their payrolls but for fewer hours each week. Restoring those hours as the economy begins moving off the bottom is a reason for the restrained hiring of recent months, according to the labor department.

As the preliminary statewide estimate for 2009 suggests, the recession did not hit Idaho hard until late in 2008 with the brunt of the economic damage coming the following year. But the impact in 2008 was significant once jobs began a decline in July and a sign of what was to come.

The Boise metropolitan area, which has nearly half of Idaho’s private sector jobs, saw employment drop a half percentage point in 2008 – a net loss of about 1,300 jobs – while earnings by private sector workers decreased by nearly 4 percent, according to Idaho Department of Labor figures. All five counties in the metro area posted compensation declines.

Surprisingly, Jefferson County, which is part of the Idaho Falls metro area, was the only one of the other six metropolitan counties – Kootenai, Nez Perce, Bonneville, Bannock and Power – to post a decline, and it was less than a percentage point. Other increases affecting 26 percent of the state’s employment and just a third of the metro employment were not enough to overcome the losses reported in southwestern Idaho, state labor officials said.

The Boise metro area lost 4,400 comparatively good-paying construction jobs in 2008 at a loss of $270 million in wages and the slide continued into 2009. Manufacturing – primarily high-tech – dropped 2,700 jobs with a loss of $155 million in payroll. Those declines were only partially offset by 2,000 lesser-paying jobs in health care and modest job gains in several other sectors.

Idaho’s 33 rural counties, which have less than a third of the state’s jobs, posted a 2.5 percent gain in compensation during 2008 despite significant declines in six of the 10 resource-reliant rural counties in the northern and western parts of the state.

Valley and Adams counties were affected by the Tamarack resort bankruptcy, which ended the extensive construction that had bolstered the economies of both counties for several years. Construction paychecks dropped 53 percent in Adams County and 34 percent in Valley.

Bonner County and the city of Sandpoint also suffered a significant decline in construction wages – nearly 10 percent – after riding the housing boom through the expansion following the 2001 recession.

Bonner along with Benewah, Clearwater and Idaho counties – all heavily reliant on timber – experienced closures of mills and other manufacturers in 2008. Bonner County was again hard hit, seeing payrolls from wood product manufacturing cut in half. Losses in the other three counties were significantly less but still serious.

Counties in southern and eastern Idaho withstood the recession’s initial year much better. Only three counties – Franklin, Oneida and Teton – posted declines in private employer wages and salaries. Franklin saw a curtailment in wages from trailer manufacturing, Teton from furniture production and Oneida from mining.

The full newsletter, with data tables and regional commentaries, is available here.

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