3/30/98

KUFM / KGPR

T. M. Power

Do Jobs Follow People or Do People Follow Jobs?

One of the major sources of disagreement over appropriate environmental policy in Montana and elsewhere in the West is the belief held by many, especially political and industrial leaders, that protecting the environment costs jobs. Since it is assumed that we are relatively poor to begin with, the conclusion logically follows that we cannot afford much more environmental protection. In fact, we probably have gone overboard in this area. That may explain the Montana legislature’s enthusiasm for weakening environmental laws and defunding enforcement of the laws they don’t weaken.

Environmentalists, on the other hand, argue that at least in the long run we cannot afford to continuously degrade the environment and sacrifice our unique western landscapes. To them, quality of life is seen as a very important source of human well-being. In addition, regardless of the economics, environmentalists are likely to argue that we have an ethical obligation to protect our national heritage for future generations.

The question of whether environmental protection is likely to hinder or hurt the economy can be empirically tested. Those who worry about the economic impact of environmental protection believe that economic vitality is built around people moving to where jobs are found and that those jobs in the west are tied to natural resource industries and related manufacturing. Those who believe environmental protection enhances economic vitality argue that the economic forces are the opposite of this: people pursue what they perceive to be high quality living environments and economic activity, including jobs, shift, and follow them – jobs follow people. This is a factual dispute. We should be able to analyze the economic data over the last 25 years and figure out whether one or the other (or both) of these is correct.

A recent study by University of Arizona economists of the Rocky Mountain West has done exactly that. They analyzed employment and population changes in all of the non-metropolitan counties to try to determine which was driving which and what role local amenities were playing in the economic growth that has been transforming the region: Their conclusions were emphatic and unambiguous : jobs follow people’s location decisions and local amenities have been playing an increasingly important role in supporting local economic vitality.

Their analysis allowed population and employment to interact in either or both directions. Earlier nation-wide studies had shown a complex joint interaction: people following jobs as well as jobs following people although in more recent years even the national-wide data indicated that increasingly it was jobs following people.

For the Rocky Mountain West over the last quarter century, employment growth did not play a positive role in supporting population growth but population growth, regularly and systematically led to job growth.

The empirical results were even more interesting than this. They showed that people were drawn to areas with relatively low wages and high cost of living. This, of course, would be economically irrational unless there is something attractive about these areas that more than offsets the narrow economic disadvantages. Measures of landscape-based amenities confirmed that it was the "second paycheck" provided by valuable quality of life characteristics that was offsetting the lower real incomes.

One important result was that the extent of US Forest Service land in a county had become increasingly important in supporting local economic vitality, especially in the 1990’s. This is interesting because it was during this period that the harvest of timber off of federal lands was increasingly curtailed. If the primary economic role of Forest Service land was to provide timber to local mills, one would have expected that the presence of Forest Service land would have had a negative impact on local economic vitality. But that was not the case, suggesting that the primary economic role of these federal lands is not timber but the valuable amenities that these lands provide to residents: recreation opportunities, scenic beauty, water quality, wildlife, fisheries, etc. These non-commodity values of Forest Service land are of increasing economic significance.

These empirical economic results, tied to what has actually been going on in our non-metropolitan Rocky Mountain economies, supports the shift in management emphasis that the new Forest Service Chief has announced. That emphasis on protecting water shed and ecosystems, whatever might be said for it from a purely environmental or stewardship point of view, has a strong economic logic to it. Unlike the claims of the rather hysterical Western Republicans about a renewed "war on the west", the Forest Service is reading the western economies correctly and making adjustments in forest management that are both good for people and good for the forests.