Workers have upper hand in job market, Idaho economist says

COEUR d’ALENE — With businesses throughout North Idaho struggling to find applicants, the balance of power has shifted from employers to workers.

“All the leverage is with the job seekers right now,” economist Sam Wolkenhauer said when he addressed the Rotary Club of Coeur d’Alene during Friday’s monthly meeting.

Gov. Brad Little announced last month that Idaho will end its participation in three federal pandemic unemployment compensation programs, effective June 19, with the aim of getting workers back on the job.

But Wolkenhauer said it’s “naive” to blame unemployment programs for the labor shortage.

Employers in Kootenai County are currently looking to fill more than 5,000 positions.

Meanwhile, Wolkenhauer said, fewer than 500 Kootenai County residents are collecting unemployment benefits.

The same pattern is visible at the state level. For approximately 80,000 job postings throughout Idaho, there are about 30,000 unemployed people.

“At a certain point, we’re playing a game of musical chairs with employees,” Wolkenhauer said.

The COVID-19 pandemic isn’t entirely to blame for this paradigm shift, Wolkenhauer said.

In August 2020, the Federal Reserve announced a major policy shift to “average inflation targeting.”

That means the Fed will be more inclined to allow inflation to run higher than the standard 2% target in order to maximize employment.

Federal policymakers encouraged the economy to run hot. Meanwhile, many baby boomers retired early, shrinking the labor market, and an ongoing pandemic caused other workers to reconsider their priorities.

These conditions created a “perfect storm,” Wolkenhauer said — one with far-reaching implications.

Rather than returning to the office full-time, some employees are choosing to quit their jobs and seek full-time telework or hybrid options.

“COVID has given people a taste of alternative work arrangements,” Wolkenhauer said.

For many Idahoans, child care remains the biggest obstacle to returning to work. Even when it’s available, child care is often prohibitively expensive, making it more practical for some parents to stay home.

“Child care is a huge bottleneck,” Wolkenhauer said.

Meanwhile, the availability of teen labor that many employers count on is changing.

After a year of remote learning and physical distancing, many teens would rather spend the summer socializing with friends than working.

Wolkenhauer said teens know they can find a fast food job that pays around $15 per hour, work for a few weeks to earn spending money and quit. When the money runs out, they can find another job without difficulty.

“They’re not stupid,” Wolkenhauer said.

But it’s not all bad news for employers. Labor shortages incentivize businesses to make their labor more efficient, Wolkenhauer said.

Whether through automation or other means, productivity often increases as a result of labor shortages.

In any case, Wolkenhauer emphasized that labor is a market like any other.

“Right now, it’s a seller’s market,” he said.

At Friday’s meeting, Coeur d’Alene Rotary Club President Luke Russell revealed a new distinguished service award.

Named for a Rotarian of more than 30 years, the Don Allen Service Award recognizes true leadership and achievement in service above self, as well as commitment to the values of Rotary.

“(Allen) is our godfather of all things Rotary and is a shining beacon of what it means to be a Rotarian,” Russell said.

The first recipient of the special award is Sue Thilo.

“In this kind of crowd, to be singled out is beyond touching,” said Thilo, who received a standing ovation when the award was announced. “I’m honored.”

The Coeur d’Alene Rotary Club has also been named Club of the Year by Rotary District 5080. Comprised of almost 60 clubs, the district covers North Idaho, eastern Washington and British Columbia.