A rural county in the northern panhandle of Idaho has retained its population in spite of long-term economic changes. Manufacturing, amenities that turn tourists into residents, and small businesses have helped the county grow in good times and bounce back sooner during bad ones, says an economist who studied the county.
EDITOR’S NOTE: Historic changes in mineral extraction, agriculture, and manufacturing have transformed rural communities over the past 40 years, frequently resulting in less work, fewer people, and contracting economies. Among the exceptions to this rule is Bonner County, Idaho, in the state’s northern panhandle. The remote micropolitan county has seen growth in employment and income from 1970 until the Great Recession, and shows signs of recovery in recent jobs reports. What’s different about places like Bonner County? Headwaters economist Megan Lawson offers her report below.
Others, like Bonner County in Idaho’s Panhandle, are quietly sustaining steady growth through a diverse mix of economic activity, and by playing to their strengths. During the most recent recession, Bonner County lost 11 percent of its jobs, but its population remained steady. What has Bonner County done to keep its residents during difficult economic times? A recently released report by Headwaters Economics investigates the reasons why Bonner County’s economy is strong and resilient despite its distance from major population centers and economic hubs.
Figure 1. Growth in population and employment in Bonner County, Idaho, 1970-2012.
Bonner County is rural and relatively remote. In 2012 the county population was 40,476, and its county seat, Sandpoint, had a population of 7,412. Sandpoint is 1.5 hours from the nearest large airport in Spokane, Washington. Because of Bonner County’s geography and location, tourism and timber have long been mainstays of the economy. It has headliner tourist attractions in both summer—Lake Pend Oreille—and winter—Schweitzer Mountain Resort—and travel- and tourism-related industries have accounted for a steady 20 percent of county employment over time.
Timber-related jobs, including growing and harvesting, sawmills and paper mills, and wood products manufacturing, made up 13 percent of jobs in the county in 1998 and 4 percent of jobs in 2013, reflecting both a smaller timber sector and an expansion of non-timber jobs.
Today, the county’s economic resilience is best understood by looking more closely at manufacturing, the sector that recently has grown the most in terms of compensation, increasing by $28.5 million between 2001 and 2013. Health care and social assistance, the sector with the second-largest growth, added $14.3 million in new compensation.
Figure 2. Net change in compensation by industry, Bonner County, Idaho, 2001-2013.
Bonner County’s growing manufacturing sector is an anomaly among U.S. counties, particularly rural ones. The county has experienced the same dramatic decline in forestry-related manufacturing jobs as other communities in the northwest have experienced, from 1,348 jobs in 1998 to 458 in 2013.
However, as these jobs declined, many of them have been replaced by manufacturing jobs in fields known as “advanced industries,” which include industries that invest heavily in research and design, and that employ a high proportion of workers in science, technology, engineering, and math. These include aerospace, pharmaceutical, and electronic instrument manufacturing, as well as non-manufacturing jobs such as computer software developers and architectural and engineering services. Many of these industries are tied to the broader national and global economy, helping to insulate Bonner County from regional economic variability.
The establishment and growth of these manufacturing businesses speak to a broader entrepreneurship culture in the county: in 2013, sole proprietors represented over one-third of all employment. A rise in the self-employed can be an indication of a weak labor market, where working for oneself is the only option.
However, in Bonner County, entrepreneurship has also been a sign of individuals’ commitment to the community and willingness to pursue creative approaches to live in the area. After the 2014 bankruptcy of Coldwater Creek, many were concerned that Coldwater Creek’s highly skilled employees would leave because there were no local employment options in their field.
While many did, others have opened their own businesses in order to remain in the area. Examples of businesses these entrepreneurs opened include an online adventure travel business, a flower delivery service, and a “maker studio,” providing tools and training to other small-scale manufacturing and design entrepreneurs. Although these businesses arose due to the loss of a major employer, in the case of Bonner County they are a testament to its quality of life and committed residents.
Reasons for Optimism
Much of Bonner County’s success has hinged on its ability to maintain its quality of life. This factor is responsible for keeping residents in the area even when jobs are scarce, and encouraging business growth even when other locations would be more convenient. Tourism has played a critical role to new business development as many new business owners first visit the county as tourists, and eventually move there to start businesses.
As the businesses have grown, state and local governments have worked to keep them in the county with incentives such as tax breaks and improvements to the small, local airport. Continued growth in these innovation-dependent fields will depend on the county’s ability to train skilled workers, which is currently a weak point.
Three main factors have allowed Bonner County to build on its economic and community strengths and grow steadily during booms and recover sooner during busts, compared to many rural counties. First, its available manufacturing capacity as timber declined was a springboard to expand non-timber manufacturing. Second, tourism has been an invaluable marketing tool, selling the area to new residents and business owners. Finally, entrepreneurship, a part of the local culture and supported by local government, has enabled highly-skilled professionals to stay in the area. Bonner County’s experience is an example to other rural counties, particularly those in the West that struggle with a declining natural resource economy.
Megan Lawson adapted this article from a report she wrote for Headwaters Economics, where she is an economist. Her research was supported by the LOR Foundation. Headwaters Research is an independent, nonprofit research group that focuses on the Western U.S.