Idaho’s cost of living doesn’t make up for its wages  

Lately I’ve been asking people to talk about political issues that concern them.

Wages and housing costs get a lot of mentions.

Idahoans tend to think of our cost of living as low compared to other states. Yet, I’ve talked to newcomers from California who were surprised that our food costs here weren’t  lower. Others found our property taxes to be an unwelcome surprise. (California bases property taxes on the purchase price; people who’ve lived in a home for 20 or 30 years pay relatively little.) 

Idahoans, however, tend to complain about house prices. In March 2019 Zillow Research Data reported that the price of Idaho homes had increased over 17% during the previous year. The national average was 7%.

Idaho’s cost of living isn’t low.   

The World Population Review for 2020 ranks 18 states as cheaper to live in than Idaho. It figures Idaho’s cost of living as 92.3% of the national average. That study is based on what people are actually spending. Housing costs are low–87.1%–because homes were cheap not long ago. A 3-bedroom home in Caldwell worth $115,000 in 2006 dropped to $55,000 in value during the Great Recession.    

Sperling’s Best Places, a ranking for those who’re considering moving, estimates the cost of setting up a new household. It claims Idaho housing costs are 114% of the national average. That home worth $115,000 in 2006 now has an estimated cost of $220,000. With Boise’s higher prices averaged in, Sperling cites a median value for an Idaho home at $263,900.

Sperling’s figures place Idaho’s cost of living at 97.7% of the national average. 

Idaho’s median household income would need to be $57,167 to be 92.7% of the national median and $60,512 to be 97.7%. It is actually $55,583.  

So Idaho’s cost of living is high in comparison to incomes here–but it has been worse.  

In 2015 the Idaho Department of Labor published a study entitled “Idaho Wages–An Historical Perspective.”  The second paragraph ends this way: “Even with a cost-of-living adjusted, Idaho wages ranked last in the country in 2012.” 

In the early 1980s, Idaho’s median wage ranked 35th in the nation; it sank to 47th by 1990, rose to 40th by 2000–and then declined steadily. Fortunately, 2012 was the low point.  By 2018 we had risen to 43rd place.  

Unfortunately, studies which might explain these ups and downs don’t exist. Have the 20-years of tax cuts succeeded in their purpose? Has right-to-work lowered wages and/or led to a loss of skilled workers? What seems to improve the success rate of small businesses?  

For decades we’ve used promises of a cheap labor force and a low cost of living  to attract business growth. As recently as 2011, legislators were purposely driving qualified teachers out of our state. 

Now we’re putting real efforts into encouraging young people to become better trained and educated without getting the results we need. Taxpayer money is trying to revive apprenticeship programs that unions finance elsewhere. But Western Idaho College couldn’t get funding for a building to make offering more technology programs possible.  And no way are we about to train someone for openings like Micron’s recent call for an ‘emerging memory process integration engineer.’

Moreover, we can only guess at the effect of our mixed reception for minority and LGBT persons on corporate decisions.  

Idaho has too many legislators who talk up our low cost of living, make mountains out of wedge issues that affect few lives, and parrot, “Tax cut, good.”  

We need more pragmatists tackling real problems.      

Economy: Graduates Leave Idaho

by Judy Ferro

“More than half of the graduates from Idaho’s universities leave the state within four years of receiving their degrees,” according to a recent Idaho Statesman article by Kyle Green.

Half. Within four years.

That isn’t the worst news I’ve read this week.

SB 1339, passed by both the Idaho House and Senate, authorizes the Department of Lands to force Idahoans to allow oil drilling on their property if any landowner in the “spacing unit” applies for “forced integration.” This can occur even if the person owns both the surface and mineral rights on their property.

As bad as this is, however, the outward migration of young people bothers me more.

To be honest, I know nothing about the drilling of oil wells other than diesel smells bad. I’m not sure Land Board officials—who answered questions about property rights with a list of possible fences for screening—understands much more.

But I like imagining what Idaho would be like if we had double the number of educated and enterprising young people.

If nothing else, politicians and pundits would have to stop blaming Idaho’s poor wages on an uneducated labor force or bad schools.

In the best case sscenario, a growing number of Idaho enterprises would be offering entry level jobs with opportunities for advancement. Imagine if other Idaho industries developing hundreds of small operations around the state like gun and bullet manuracturing is.

And I think of Dan Price, CEO of Gravity Payments, paying all of his workers $70,000 or more each year. His 120 employees manage transfers for credit card payments—largely through long-distrance computer transactions.

Price became interested in the field while a Boise student. What if he’d built his business here? How many businesses built by other Idaho kids have benefitted folks elsewhere?

This isn’t a new problem. My senior year at Caldwell High, a man from the Employment Office explained job prospects in Canyon County. My memory is that he predicted there would be 14 openings in the next ten years—ten barbers and four boys’ PE teachers.

And that was before the Beetles made long hair fashionable.

Of course, the prediction was wrong. Food processing expanded, and trailer and construction of the Interstate and dams offered many new jobs. Still, there were enough of us in Seattle to joke that we should hire a bus for our 10-year reunion.

Wages became a greater problem as student loans grew. If an Idaho job couldn’t support a graduate and loan payments, he or she had to look for a better paying job elsewhere.

Green’s article, however, points out a third reason educated young people are leaving Idaho. He quotes graduate Jillian Moroney as saying:

“It’s frustrating that the Legislature always questions why people leave, but then they ruin things we care about: higher education, women’s rights, a living wage, affordable health care, LGBT rights, the environment. That’s a hostile environment to come in as a young person if you want to see change.”

Idaho is in a cycle. Young people leave because they want to see progressive change—and Idaho doesn’t progress because the young people leave. I’m sure some legislators want to see more young people stay in the state. I suspect others are secretly relieved that milennials are taking their ideas elsewhere.

Economy: Higher Minimum Wage Means More Jobs

by Judy Ferro

True or False: Increasing the minimum wage destroys jobs.

If you answered false, you have 600 economists agreeing with you.  That many joined in signing a letter saying it isn’t so and advising the Federal government to increase the minimum wage.

About 17 states have banked on the economists being right and have adopted higher minimum wages.  The Center for Economic and Policy Research studied the 13 states who raised the minimum wage in January 2014 and found each had higher employment growth.  Some of the highest growth was in Massachusetts, Vermont, Hawaii, Maryland, and Connecticut—all of which are phasing in increases putting their minimum wages over $10 an hour.

Washington State’s job growth has been above average for years as its minimum wage increased with the cost of living.  Last year the State had the nation’s highest increase in small business jobs.  That’s right.  Small businesses there are thriving even though they have to pay employees more.

Some argue that increasing the minimum wage makes it harder for teenagers to get a job.  Actually, that’s probably true for teenagers in our neighboring states who have to compete with all the Idahoans crossing the border to work. Montana’s minimum wage is $7.80; Nevada’s, $8.25; Oregon’s, $9.10; and Washington’s, $9.32.

Idaho, however, has long “protected” teen employment by allowing a lower minimum wage for them.  Right now, employers can pay those under 20 as little as $4.25 an hour during their first 90 days of employment.  There is no minimum wage for those under 16 who work part-time. Others that employers don’t have to pay $7.25 an hour include outside sales people, some farm workers, and some seasonal employees.

Restaurant wait persons receive just $3.35 an hour though the fine print says the employer has to pay more if tips don’t bring the wage to $7.25.

The proposed Idaho law would raise wages to $8.25 later this year and $9.25 in 2016.  An increase in 2017 would be based on the change in the consumer price index.

A higher wage not only means more money circulating in the community, it usually leads to less turnover and better morale.  That’s a great combination for business.  You have heard that Wal-Mart plans to raise the wages of 47% of their employees to $9 or more an hour this year?  Could they have noticed all the how great Costco and Winco are doing while paying good wages?  Gap and Ikea have raised starting wages; T.J. Maxx plans to follow suit.

Of course, it is not just minimum wage that needs raised in Idaho.  News last week indicated that our neighboring state to the southeast will be hiring a lot more engineers.  According to the Utah Technology Council, a survey of just 40 high tech companies showed “an immediate need” for 500 engineers. “By next year, those same 40 companies anticipate nearly 2,000 job openings.”

And our northwest neighbor is desperate for teachers.  Washington has instituted full-day kindergarten, smaller class sizes through the third grade, and new graduation requirements in science, world languages, and social studies.  The Spokane District alone plans on hiring 300 new teachers by next fall.

Can raising the minimum wage help us raise teacher salaries?  It should.  First, Idaho wouldn’t have to pay as much for various aid programs and for earned income tax credits.  Second, tax revenues should grow as the economy expands.

A higher minimum wage would even help more students graduate from college and keep Utah from draining all our engineers.

 

Taxes: Cutting Too Much

by Judy Ferro

You know if you cut down calories and exercise a little bit, you can lose weight.   But you should also know that if you cut calories and exercise a whole lot, you can mess your whole system up.

For 30 years Republicans have said that the best way—maybe the only way—for the government to create jobs and prosperity is to cut taxes. At first, Republicans—including both Reagan and Bush the First—sought to find the proper balance by following major tax cuts with needed tax increases.

But in the years since cutting taxes has become more than a means to a healthy economy, but a goal in itself. Vote for me. I’ll cut taxes. My opponent says he’ll but taxes? Well, I’ll cut more.

When Republican leaders find the economy sluggish and government faltering after one tax cut, they seek to fix things with another tax cut.

Late in 2012 Republicans in Kansas—home of the Koch brothers—cut taxes 25% for most of the state’s citizens.   Nothing halfway for Kansas. So schools and state pensions are underfunded. We obviously need the biggest, baddest tax cut ever.

Forbes magazine praised Kansas Republicans for their boldness and predicted massive job growth.   As recently as March 10, Governor Brownback was on FOX news telling the nation about the wonders taking place in Kansas

Then the May 1 report from the Kansas Department of Revenue revealed that tax income was down 45% from a year earlier. The state is on track to collect $1.3 billion less this fiscal year. That’s right—tax revenue down a whole lot more than the 25% cut. The economy is slowing.

Moody’s cut Kansas’s credit rating. Governor Brownback went on FOX news to explain that it was Obama’s fault. Then the legislature got to work—debating another tax cut. After all, it’s an election year.

And neighboring Missouri, faced with the prospect of all their businesses racing to take advantage of lower taxes in Kansas, passed their own tax cut over Governor Nixon’s veto. Republicans there will go into the campaign season claiming their cut—moderate compared to Kansas–will only lower revenues $420 million a year.

If it didn’t mean kids packed like sardines into classrooms, drivers facing hazardous road conditions, and the mentally and physically disabled citizens being dumped in the streets, it’d be a laugh. Abbott and Costello go to Kansas.

A recent Idaho poll indicated that voters believe Republicans are better at managing the economy.

That really hurts.

Idaho has a median income just half of what’s considered a living wage. It has more people using payday loans even though interest rates here can be up to 400%. It has the second highest number of people working for minimum wage, and 75% of our citizens qualify for subsidized health care.

Idaho has one of the lowest tax rates in the nation.

A new report out this week indicates that there is no correlation between average wages and tax rates. But researchers found a direct correlation between the percent of a state’s workers with college degrees and average wages.

Idaho has been shorting higher education for years and only four states made higher cuts after 2008.

What a surprise. Higher education and higher wages go hand-in-hand. The economy must be a liberal.

If we want more good-wage jobs, we should postpone cutting taxes and take care of our schools.