DC thinktank Brookings Institute is out with a new report that looks at Boise’s economic health through an analytical lens.

Authors Marcela Escobari, Ian Seyal, José Morales-Arilla and Chad Shearer argue the area’s growth isn’t sustaining or long-lasting. They say trouble could be ahead without major changes. The report is a critical one, but works to provide a blueprint for how to pivot to keep prosperity in the area going.

The report, titled “Growing Cities that Work for All,” looks at four cities: Nashville, TN, St. Louis, MO, South Bend, IN and Boise.

The analysis aims to bring ideas for leaders and business people across the country to drive economic growth. It uses what it called “data-driven network analytics” to reveal patterns. The report used the four cities to demonstrate its model.

[Analysis: Brookings report is a call to action for Boise’s future]

Boise’s heritage: HP, Simplot, Micron

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The report lays out how Boise got to its perch as the fastest growing place in the country. It traces Hewlett-Packard’s decision to locate in Boise in the early 1970s. That seminal decision fueled JR Simplot and Micron over the next few decades.

The authors note HP brought a “critical mass of technical know-how” to the area. It cites the leadership of then-governor Cecil Andrus, who attracted HP with leadership and relationships. It cites Andrus’ autobiography:

The H-P campus once housed 7,000 workers. Now it is owned by the State of Idaho and houses call centers, state offices and just 1,500 tech workers. Photo: Don Day/BoiseDev file

“We don’t believe in existing business subsidizing new business. When you come to Idaho you become a citizen, and we all play by the same rules. A few years down the line and you’ll be an old-timer. Do you want to subsidize the next guy who comes along?”

HP’s investments in advanced mineral extraction benefitted Simplot’s fertilizer business. In turn, Simplot helped fund Micron Technology, which complemented HP’s workforce and capabilities.

“Synergies and industrial clusters can emerge from unlikely combinations,” the report’s authors note.

‘Rapid growth may be unsustainable’

Aggregate earnings in the Treasure Valley dropped 6.3% since 2007.

Recent reporting said Ada County & Canyon County could hit 2.7 million people in coming decades – a nearly four-fold increase. It’s based on modeling from the Community Planning Association of SW Idaho – COMPASS.

But the Brookings analysts note there are big challenges ahead that could constrain that growth. It also points out the average Boisean is worse off now than they were in 2007.

“Today Boise no longer possesses the same critical mass of high-tech companies,” the report says, harkening back to the HP/Simplot/Micron flywheel. “The synergies that drove Boise’s growth over the past 40 years are no longer sufficient for the region’s economy to compete globally.”

@CityOfBoise growth started with @HP – question now is how can Idaho’s City, State, Education work to ensure wage growth doesn’t stagnate. Network analysis research from @BrookingsInst points out adjacent opportunity industries pic.twitter.com/aIALzhUzrp — Gordon Jones (@thegojo) May 21, 2019

Aggregate earnings in the Treasure Valley dropped 6.3% since 2007. What’s worse, a higher percentage of residents are in poverty today than they were in 2007 before the economic recession. Today, 12 percent live in poverty versus 10.3 percent in 2007.

The report points out HP Boise dropped from 7,000 employees at its peak to less than 1,500. Micron fell from 12,000 to 6,000. And it noted Micron is dropping billions into the local economy for a new plant. That is, the local economy of Virginia.

“Despite Idaho’s generous state subsidies and a long local history as a darling firm in Boise, Micron chose Manassas, Virginia for its newest expansion, a $3 billion dollar investment expected to create about 1,000 jobs.”

Micron’s facility in Manasas, VA. Courtesy Micron.

Boise is growing – but it is coming in industries that don’t penetrate beyond the area’s borders. Instead of high-tech computer chips, potato products or even supermarkets – the jobs are coming in healthcare, hospitality, and government. These sectors only serve the population – they don’t export anything.

“These… service sectors… do not themselves drive growth.”

Disinvestment ahead?

The report uses a complex analytical model to look at the future based on current factors and trendlines. The news for Boise isn’t strong: “Our industry network mapping predicts… disinvestment from Boise.”

It says Boise has a “limited capability to support advanced, technically sophisticated industries” like computer manufacturing (HP) or semiconductor manufacturing (Micron).

“That either company exists today in Boise is a result of the path-dependent nature of industrial development, an inertia partially resulting from HP’s investment nearly 50 years ago.”

The report authors note that Boise shouldn’t “neglect the opportunity to build on that legacy,” and says many other areas would love to have the high-tech base Boise has now.

It’s all about education: “the future doesn’t look promising”

Utah has twice as many employees with advanced degrees – and Colorado has five times as many.

It’s no surprise that education is a focus for the Brookings Institute – anyone who has studied the Treasure Valley’s economy, or Idaho’s in general, knows the educational system is a big hurdle.

“Unfortunately, the education system in Idaho hasn’t kept up with the human capital demands of local industry, forcing companies to expand elsewhere.”

With 65 percent of all jobs requiring some sort of post-high school training, Boise is behind. Brookings points out that high-tech sectors need more than 80% of workers with postsecondary degrees.

The Micron Center for Materials Research, planned for the Boise State campus.

“Although Idaho has a fairly average fraction of residents with a postsecondary degree, the absolute number doesn’t compare well to its neighbors,” Brookings wrote.

Utah has twice as many employees with advanced degrees – and Colorado has five times as many. Brookings said “the future doesn’t look promising either. Among Idaho’s 18-24-year-olds, 6.6% have a college degree compared to 10.5% for the entire country.”

The Idaho Department of Labor says Idaho will need 36,000 people with degrees in science, technology, engineering and math. But only 2,000 students graduated with degrees in those fields in 2016.

Brookings says to keep up, Idaho must also attract workers from outside the state, and give existing Idahoans new skills through training.

“For Idaho to meet industry demands and build workforce capabilities, education goals should further encompass adults, such as Idaho’s nearly 200,000 low-wage workers, who also stand to gain from increased training opportunities tied to local industry.”

Early childhood education is also a focus of the report. It argues many Idaho children are entering Kindergarten without needed skills. Time spent on getting them up to grade level is time lost over their educational career.

Without change, no growth

“Nearly everybody wants growth, but almost nobody wants change.”

A crane over a future hotel site in Boise. Photo: Don Day/BoiseDev

“It is the case in cities around the country that nearly everybody wants growth, but almost nobody wants change. Yet the two come hand-in-hand.”

The report’s authors laud recent efforts in Twin Falls, and says similar approaches could take root in Boise. They suggest a strategy focused on “growing jobs, wages and opportunity for those with less than a college degree,” as well as working to build an effort that can host more advanced businesses and industries and help retain companies like Micron.

Brooking said the Boise area needs to attract firms that will pay a living wage and provide benefits. It dings the approach of attracting firms who bring data centers to the area to harvest cheap power costs – but don’t employ many people.

“Leaders should reserve tax dollars for companies that add high-tech density and high-quality jobs and encourage other industries that absorb existing skills.”

The report goes as far as suggesting a specific industry its data modeling says holds promise: beverage manufacturing.

“The industry requires many inputs that Boise already provides to other sectors; it is growing across the country, and is likely to provide jobs to people who have been discouraged by the labor market since the recession.”

In short, such business could help the workforce find jobs, gain skills and grow towards future opportunities in more advanced sectors like tech.

Idaho can build a better future

[Analysis: Brookings report is a call to action for Boise’s future]

The report ends on a note of optimism.

“Idaho’s more intangible capabilities, such as its resilient, pioneering, can do attitude, constitute invaluable social capital as the capital city strives to transform. The state’s

access to the outdoors and its livability will continue to draw entrepreneurs the same way these characteristics spoke to David Packard nearly 50 years ago. The task for policymakers and local leaders is to plant the seeds and to build communities where any citizen can turn luck and grit into an American Dream.”