Slow Downward Spiral: The Otter Economy

These words about Idaho’s economy should stir serious reflection: the call center industry is exploding in Idaho.

Make no mistake, a robust economy should include jobs of all kinds. But, if lower paying jobs are coming and higher paying jobs are leaving, that’s a trend that hurts communities and families and businesses.

A call center economy is no accident. This slide into low wages results from more than two decades of GOP experimentation with Idaho’s economy. Rather than invest in roads, bridges and schools, the GOP has roared ahead with tax cuts and spending cuts. Schools are cut so deeply that 37 school districts now run four-day school weeks because they cannot afford a fifth day. For years, our university presidents have pleaded with the legislature and the governor to stop cutting higher education; to no avail.

Amid it all, Gov. Otter showcases our low-wage work force as a reason for companies to locate to Idaho. What company is attracted to low wage workers? A company that pays low wages. The very last sentence of the story below points out another troubling fact: “On average, nationwide, call center workers made $31,800 last year. In Idaho, they earned about $25,000.”

Building a strong Idaho workforce takes public investment, experts say

Published: August 20, 2013
By STORY AND PHOTOS BY MOLLY MESSICK

Bob Lokken, CEO of Boise-based WhiteCloud Analytics, is three years into building his new company. It designs software for health care professionals with the aim of allowing doctors and others to interrogate vast amounts of health care data. Lokken founded it after his previous company, ProClarity Corp., was bought by Microsoft.

Recently, he showed me around the Downtown office where software developers work intently at large computer screens. I wasn’t there to talk about better health outcomes through guided data analysis. I was there to talk about Idaho’s workforce.

Retired University of Idaho economist Stephen Cooke offers a blunt assessment of Idaho’s shifting employment picture. He believes the state is on a path toward a growing number of low-skilled, low-wage jobs.

“There was an era, a golden age, if you will, when high-tech manufacturing came to Idaho,” he says. “That era seems to be fading, and now we’re into an era of low-wage jobs associated with call centers and retail.”

I wanted to hear what an employer would say. Not just any employer, but someone in that bastion of high-skilled and high-wage jobs: the tech industry.

ECONOMIC DEVELOPMENT THROUGH EDUCATION

“I routinely see two or three companies a year move out of state because of the shortage of engineering talent,” Lokken told me. “Those are just ones I personally know of.”

Lately, Lokken has a new focus – Idaho’s workforce. He’s the vice-chairman of Idaho Business for Education and a member of Gov. Butch Otter’s education task force. He used to think the shortage of Idaho workers qualified to fill high-skilled jobs was specific to the tech sector. Now he believes it’s broader than that.

“This wasn’t a tech-sector problem,” Lokken says. “It was an every-sector problem, and that’s become increasingly clear over the last 10 years. Tech just happened to be the canary in the coal mine.”

These days, Lokken is accustomed to rattling off facts and figures about education in Idaho. Here’s a key point: State funding for higher education has dropped. Over the last two decades, Idaho colleges, community colleges and universities have received a decreasing share of state general fund revenue, even as enrollment climbs.

Others single out that detail, too. Kevin Klowden is managing economist of the California-based Milken Institute. “Human capital investment is the place where policy decisions can have the biggest long-term impact,” he says.

Klowden co-authored a recent report on how states compare in the science and tech industries. A state’s workforce, he says, is its “most important intangible asset.”

State policymakers can have a positive effect by prioritizing higher education, but Klowden finds that Idaho invests less than most.

“There hasn’t been the same development of a research infrastructure producing grads, post-grads,” he says. “And there isn’t the talent that’s readily there that can easily move into the tech sector.”

In terms of its workforce investments, Idaho comes in 43rd in Klowden’s report, behind West Virginia, Alaska, and Oklahoma.

CALL CENTER ECONOMY

Critics of Idaho’s job market invariably wind up uttering two words: call centers. At a call-center recruitment fair hosted by the state Department of Labor in May, dozens of representatives from eight companies talked up the opportunities to would-be employees. The companies were trying to fill more than 800 jobs in the Boise area.

“Your schedule is up to you,” DirecTV’s Eric Sims said, making his pitch to 24-year-old Kayla Laws. “We have eight-hour shifts available, we have 10-hour shifts available.”

Laws is a new mother who was taking classes at the College of Western Idaho. She has worked at call centers before, and she says it pays better than the alternatives.

“Anywhere from $9 to $11.25 an hour,” she tells me. “Which isn’t enough to live very, very comfortably, but it’s enough to get by on with my family.”

There are positive things about call center work. It’s available. Starting salaries are several dollars above Idaho’s $7.25 minimum wage, and many companies offer benefits.

But here’s the context: The industry is exploding in Idaho.

According to one analysis, there were fewer than 3,000 call center jobs in the state in 2002. Since then, that number has tripled. By 2022, it’s estimated the state will have more than 14,000 call center jobs. Nationally, call center employment is expected to rise by a fraction of that rate over the same period.

That leaves people like Bob Lokken shaking their heads. “We can’t just sit on the sidelines for the information age,” Lokken says, emphatically.

Without knowing it, Lokken echoes economist Cooke. A state with a less-educated workforce will draw businesses that want less-educated workers, he says.

The governor has been known to use Idaho’s low wages as a selling point to companies that might relocate to the state. Lokken believes that’s a bad strategy. He’s prevailing upon others to understand this specter of Idaho’s future.

“We’ll continue to have ag and natural-resource sort of industries, but every year that will be slower and slower, because most of the growth in the economy comes from innovation,” he predicts. “And if we’re not participating in that economy, then you can see that the economy in the state would get into a slow downward spiral – and I think we’ve already seen the front edges of that.”

Here’s one indication that Lokken may be right. Those call center jobs that Idaho is gaining pay less here. On average, nationwide, call center workers made $31,800 last year. In Idaho, they earned about $25,000.

Read more here: http://www.idahostatesman.com/2013/08/20/2715027/building-a-strong-idaho-workforce.html#storylink=cpy

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