8/17/98

KUFM /KGPR

T. M. Power

Putting Montana’s Economic Experience in a Larger Regional Context

We seem to approach discussions of the economic health of the state the way some superstitious folks approach their own health: If they get sick, they ask "What did I do wrong?" Some times this takes a decidedly moralistic tone: "I try to live a good life, why should I get sick? What is God punishing me for?" The general presumption is that illness is caused by our own behavior or moral failings. That same tone runs through discussions of Montana’s economy. We look for someone to blame for any twist or turn that is not entirely positive.

One way to avoid blaming ourselves (or someone else) for economic change is to put the Montana economy into a larger regional context and see if what is happening here in Montana is different from what is going on in the states around us. Assumedly we are not all committing the same economic sins together that are responsible for our current condition.

Economies rarely follow state boundaries and regional economies often differ considerably one from the other. One way to carry out a comparison of Montana with other areas is to look at economically similar areas. The US Forest Service has classified most the Western Montana counties as "timber dependent." The US Department of Agriculture has listed most of Eastern Montana as "agriculturally dependent." One interesting comparison, therefore, is to compare Montana’s "timber dependent" region with similar "timber dependent" regions in Idaho, Washington, Oregon, and Northern California. Similarly, one could compare the "agriculturally-dependent" counties in Eastern Montana with similarly "dependent" counties in North and South Dakota.

When one does this, one see very similar economic patterns across this very large geographic area.

In the timber dependent counties, one sees dramatic declines in the real earnings flowing from the timber industry over the last twenty years: Oregon and Washington lost a third of these earnings, while Montana lost about a quarter. One would expect such declines in an industry on which these counties particularly "depend" to result in over all economic decline. But, of course, that did not happen. These timber dependent counties added, on net, tens of thousands of new jobs during the same time period timber jobs were being lost: Western Montana’s timber dependent counties added 63,000 jobs; Southwest Oregon added 82,000; and Washington’s timber dependent counties added 72,000 new jobs. Of course, most of these jobs did not pay as well as the timber jobs lost, but folks voting with their feet and looking at their overall well-being, moved into these timber dependent areas, not out of them: Population growth was 30 to 50 percent in these "timber depressed" areas, much higher than in the nation as a whole. The shift from goods-producing activities towards service-producing activities was region-wide, stretching from northern California to northern Montana. The mixture of economic curse and blessing that characterizes Western Montana also characterizes this entire region.

If one looks east of the continental divide one also finds economic patterns stretching across the entire northern Great Plains. What is happening in rural Eastern Montana is not unique. It also is not very nice: Farm-dependent Great Plains counties are in slow, ongoing, decline. Montana’s Great Plains counties are among the most stable, but agricultural specialization seems to drain the region of economic vitality. North Dakota’s farm-dependent counties on the Great Plains have lost almost 30 percent of their population over the last 20 years: almost 50,000 people. South Dakota’s losses have been smaller, about 13 percent. Montana’s farm-dependent counties lost 5,000 people, but at 8 percent, this was by far, the slowest people drain across the northern plains.

These population losses, of course, are tied to the ongoing declines in farm earnings and, unlike the Pacific Northwest’s timber dependent regions, the failure of other sources of earnings to replace those losses. If one uses five year averages to smooth the yearly fluctuations, between 1976, the tail end of the last golden era for agriculture, and 1996, 60 to 80 percent of real farm earnings disappeared from these farm-dependent counties. That is quite a swat! It is no wonder the region is staggering somewhat.

Either we dwell among sinners of a similar sort within the region or Montana’s economy is caught up in larger regional and national trends that have little to do with our local economic sinning. If one evaluates the appropriateness of state economic policy by our relative ability to resist the worst of the economic forces buffeting the state, that policy does not appear to be all that bad. Among regions with similar economic structures, we are doing among the best in a not altogether good situation. That is not intended to damn with faint praise but rather to suggest that we are navigating these major economic changes about as well as might be hoped for.