8/30/99

KUFM/KGPR

T. M. Power

Record Low Unemployment in Montana

Montana’s Department of Labor and Industry announced last week that in July unemployment rates in Montana reached a twenty-year low, 4.2 percent, even lower than the national rate.¹ Actually, Montana’s unemployment rate has been below the national average for much of the 1990s.² Unemployment has not been this low in Montana since 1978.³ Even Lincoln County in the extreme northwest corner of the state saw its unemployment rate fall out of the double-digit range for the first time I can remember over the last two decades.

The other signs of economic vitality are also positive. The population continues to expand, but employment has been expanding even faster, adding about ten thousand new jobs over the last year. Personal income grew at twice the rate of inflation.

This positive economic news is somewhat curious given the uniformly negative description of the economy that was the conventional wisdom earlier this year while the legislature was in session. We were regularly told that the Montana economy was in crisis, tumbling downward in a tailspin. All sorts of emergency measures were proposed to stop the downward tumble and rescue the state from economic crisis.

The positive economic news in Western Montana is also curious. Unemployment rates in the timber-belt were quite low:⁴ 4.7% in Flathead, 4.8% in Lake, 4.3% in the Bitterroot, and about 6% in Sanders and Mineral Counties. In Missoula the unemployment rate was a startling low 2.9%. These low unemployment rates come when National Forest timber harvests continue to be only a third of what they were in 1989, down in the range they were a half century ago. It is important to note that the unemployment rates are not low because workers have become discouraged and left the state. The population and total employment in all of these counties continues to grow, in some of these "timber" counties at very rapid rates.

This is not to suggest that employment in the forest products industries is way down because of low federal timber harvests. It is not. Forest products employment has largely held steady despite the dramatic decline in National Forest timber harvests. In that sense forest products has provided a relatively firm base while employment in other sectors has expanded dramatically. Our economic structure has changed not as a result of massive job losses in natural resource sectors but as a result of disproportionately high employment growth rates outside of the natural resource sectors.

The state’s and Western Montana’s economic vitality despite loss of free access to the warehouse of raw materials that federal lands used to represent suggests that we are not as economically dependent upon extraction from those lands as we were led to believe. We have lived through a major reorientation of forest management as forest managers began looking at the complete forest and not just the commercially valuable trees they contained. The same is beginning to happen with federal grazing and mineral lands. The ability of Western Montana to maintain vital economies as forest management shifted away from extraction bodes well for our communities as similar adjustments are made for other natural resources on federal land.

Of course, there is no shortage of things to worry about in the Montana economy. Relative to the nation our pay and incomes are quite low and they have not been growing as fast as the national averages. Although we like to treat this as a problem unique to Montana and one tied to the relative decline in our natural resource sectors, that just isn’t the case. We are surrounded by states on similar economic trajectories: Idaho, Utah, Wyoming, and the Dakotas. And the low, slow growing pay and incomes in those states are not unique within the nation either. All of the US nonmetropolitan economy as well as all metropolitan areas with population below about 300,000 have been experiencing the same thing. It is only areas with populations above about a million that have seen real pay and incomes rise steadily for most of the 80s and 90s. It is those larger urban areas that also dominate the national averages.

Compared to other rural areas and other small cities, across the country, in all regions of the nation, Montana is doing relatively well. If we want significantly bigger pay checks, we are going to have to find a way to grow our major cities to over ten times their current size while freezing the growth of big cities elsewhere in the nation. I would be interested in the policies that boosterists think would allow us to accomplish this. I would also be interested in knowing how many Montanans would support this type of transformation of Montana into a densely urban region similar to the Denver area front range, Utah’s Wasatch Front, Las Vegas, Phoenix, or Portland.

There may be those who think that we can arrange to enjoy big city wages while protecting and enjoying our small city and rural environments. That’s like having your cake and eating it too. Those holding this up as a goal and objective of public economic policy should be made to spell out just how they will accomplish this economic magic. Meanwhile, it sounds suspiciously like pie-in-the-sky or hand-waving intended to divert our attention from special interest hogs who want to feed at the public trough unobserved.

1. Montana Labor Market Information, Statistics in Brief, July 1999. This monthly data is not seasonally adjusted. A greater prominence of summer seasonal jobs in the Montana economy compared to the national economy could explain the low summer unemployment rate.

2. Montana Department of Labor and Industry, Profile of the Montana Worker, 1999, p. 43.

3. Montana Department of Labor and Industry, Press Release on July 20 on the Monthly Employment Situation.