Idaho labor achieves pre-pandemic employment rates

The Idaho Department of Labor (DOL) released the October unemployment rate for the Gem State on Nov. 18, which was unsurprising both in content and tone. The unemployment rate crept up o.1% to 2.9% compared with September, making October “the ninth consecutive month the state rate has been below 3%.” To wit, unemployment is up, but it still continues to stay really low.

Unpacking unemployment

The U.S. Bureau of Labor Statistics (BLS) issued October unemployment statistics for the 50 states and U.S. territories on Nov. 18. The first notable number from the BLS release is that the national unemployment rate for October “rose to 3.7% over the month but was 0.9 percentage point (sic) lower than in October 2021.”

The release went on to state that the unemployment rate crept up in 24 states, dropped in one and stayed the same in the rest.

Unpacking these numbers a little further: the national unemployment rate was 3.5% in September, 3.7% in August, 3.5% in July and 3.6% from March through June. Between March 2022 and October 2020, when unemployment was 6.9%, the rate steadily dropped as the nation recovered from the pandemic economic downturn.

Given that economists consider between 4% to 5% to be a healthy unemployment rate, the nation is currently in the midst of stable low unemployment, regardless of recent horror stories of layoffs in big tech that might suggest otherwise.

Idaho exceptionalism?

Idaho’s unemployment rate at 2.9% is almost a percent lower than the national rate. This has been the case for over five years. Like the national rate, Idaho’s unemployment rate also has dropped substantially since the pandemic downturn in spring 2022. Idaho’s labor market is credited with recovering faster and smoother than the national average.

It is illuminating to compare Idaho’s unemployment rate with not just the rest of the country but also with two neighboring states that most closely resemble it. Up to the onset of the pandemic downtown, Idaho’s unemployment rate was equal to or just above Utah’s, while the rate in Wyoming has been consistently higher than the nation rate.

A new trend has shown up since the pandemic downturn: since the summer of 2020, Idaho’s unemployment rate has been consistently a half to a whole percent greater than Utah’s. Idaho’s unemployment rate averaged 2.9% from the start of 2018 up to the onset of the pandemic, with Utah just a little bit lower.

As the end of 2022 approaches, Idaho’s rate is now close to returning to the pre-pandemic rate of just under 3% while Utah’s rate has been floating at just about 2% for most of 2022, almost a percent less than its pre-pandemic rate. An August 2022 report by the Utah Department of Workforce Services attributed the downstep in the state’s unemployment rate to disproportionately large job growth in 2021, when the Beehive State added 55,00 jobs to its economy. So while Idaho has seen better job recovery compared to the rest of the country, Utah’s labor market has outpaced the Gem State’s since the COVID-19 economic downturn.

The slight rise in the unemployment rate may or may not be a new trend. The rate that is reported by DOL and BLS is always the seasonally adjusted rate that applies a correction to account for the temporary jobs added and subtracted during the summer and the winter holidays every year. The correction is based on the economic conditions of prior years; the last half decade has hardly been normal.

Because the seasonally adjusted numbers are based on modeling using previous years’ data, it is useful to eyeball the unadjusted raw numbers, included in the table of unemployment statistics for September and October. The unadjusted numbers, which will include those seasonal employees quitting their summer jobs, don’t look so bad. On a year-over-year basis, the unemployment rates for September and October 2022 are just a tad better than 2021.

It is too soon to tell if the slight upswing in the unemployment rate is a real trend that will carry into 2023. Given that both Idaho and national rates have often wobbled by 0.1% to 0.2% month-to-month, these fluctuations could be just normal monthly variation, which is why quarter-to-quarter trends can be more useful than the monthly unemployment rates for looking at trends.

Other labor rates

Idaho’s labor force participation rate climbed steadily since the first of the year then leveled off in September, repeating August’s 62.7% rate. In October, this rate fell by 0.1% in a trend suggesting quarter-long reversal in more people working. A similar trend showed up in the employment-to-overall-population ratio.

The explanation for this emerging trend is not explained by the BLS Job Openings and Labor Turnover Survey (JOLTS) data released on Nov. 17, but rather in the Nov. 18 DOL data. The rate of job openings in Idaho has leveled off and remained steady since March 2022. The rate of people quitting continues its slow decline since the first of the year. Meanwhile, in September and October, the rate of people being hired increased compared with this summer.

Excluding the spurious July 2022 data point discussed in last month’s labor column, the low number of involuntary terminations in Idaho continues to vary between 0.6% and 1.5% with no discernible pattern. Idaho’s tight labor market has not loosened as the churn of openings, hires and quits has calmed down compared to last year. The recent DOL data release explains: the number of unemployed workers was larger than those employed.

There’s another factor sometimes overlooked when looking at all this data expressed as rates and percentages: in Idaho, the raw numbers involved are small. The increase in unemployed persons from September to October was 533 and the increase in the workforce was 1,951.

These small shifts are more than enough to move Idaho employment rates 0.1% to 0.2%. What this really means is that the liquidation of a business like one of Idaho’s phosphate mines or layoffs at big business such as a grocery chain is a statistically significant shift in Idaho’s labor market, where hundreds of people could lose their jobs all at once.