KUFM / KGPR
T. M. Power
Just What Is Happening to the Montana Economy?
Recent positive information released on the Montana economy has got to be more than a little disorienting to most citizens given that our political leaders have been repeatedly telling us that our economy is in a state of collapse.
While the national unemployment rate has been hovering around 6 percent as the national economy remains mired in the aftermath of a recession, unemployment in Montana this last month had fallen to a 30 year low. Not since November of 1972 has the unemployment rate been as low as it is, 4.4 percent, almost 25 percent below the national level. While unemployment rates have been rising in the nation over the last two years, Montana’s unemployment rate has been declining since 1998.
At the same time, while the total number of people holding jobs continued to fall across the nation, the number of employed people in Montana expanded by over 3 percent. There were over 13,000 more people employed this November than a year ago. 13,000 jobs is not a small number of jobs in Montana. It is more than the total number of people employed in our forest products and metal mining industries combined. Nationally, unlike Montana, employment fell 200,000 and employment across the nation is now below the level attained three years ago. In addition, average pay in Montana over the last year rose at twice the rate of inflation.
If, Scrooge-like, you are looking for negative economic news on the Montana economy, you can find that too, at least if you are among those who believe that the more people we have living in our state, the better. Annual population growth in the first two years of this decade was only a fifth of what it was across the whole of the 1990s. This is not a new trend. Population growth began to slow in the late 1990s. Using the statewide data, Montana was in the bottom 10 states in terms of population growth between 2000 and 2002. Neighboring North Dakota was dead last, the only state to actually suffering a population decline during this period. South Dakota and Wyoming were barely above us, as were Kansas and Nebraska.
This grouping of slow growing states on the Northern Great Plains should suggest that whatever is inhibiting population growth is not homegrown in Montana. All of the Great Plains region, from the Prairie Provinces of Canada to the panhandle of Texas, face similar problems.
If we divide Montana between the Great Plains counties and the mountain counties of the west and southwest, the picture of Montana polarizes dramatically. Instead of being among the slowest growing regions over the last two years, Western Montana is almost exactly in the middle of the 50 states in terms of population growth. But Eastern Montana is at the very bottom, with a rate of population loss that was twice that of North Dakota. Within Western Montana were some of the fastest growing counties in the United States, including the Bitterroot, Flathead, and Gallatin Valleys. But all was not going entirely well across Western Montana either: The Butte-Anaconda area lost 1,200 people over the last two years while five other western counties combined gained 6,000 people. When the loss of population in the east is combined with the gain of population in the west, Montana as a whole appears to have seen almost no growth at all.
The slow population growth and rising real wages in Montana are not unrelated. As long as workers were willing to move to Montana despite its low wages, job creation had not impact on wages. New jobs just brought new people and wages remained low. As net in-migration to Montana has slowed, partly as a result of economic decline and uncertainty in the national economy, but job creation has continued, normal labor market pressure has been pushing Montana wages slowly upward. Over the last year 13,000 additional people were put to work, but there were almost no new workers migrating into Montana to take those jobs. Businesses had to compete to obtain the workers they needed. Unemployment fell and wages rose.
As the national economy recovers, and we, as a nation, continue to recover from the trauma of September 11th, this is unlikely to continue. If net in-migration does not recover, one of the primary engines of growth in the Montana economy will have shut down. If that net in-migration does recover and returns to past levels, it is likely to continue to keep wage levels in Montana depressed.
Economics earned the name of “dismal science” during the 19th century for making negative projections of this sort. But this is not really a negative projection. The substantial in-migration in past years despite the low wages in Montana was proof that when other qualities of life in Montana were considered, we were not worse off relative to the rest of the nation. At the same time, the ongoing population growth in Western Montana was creating very real problems of its own: increased congestion and pollution, loss of open space, fragmentation of wildlife habitat, loss of affordable housing, etc. Slower growth may be just what a lot of people in these rapidly growing areas of Montana are looking for.
In any case, the next time you hear a politician talking about how bad off the Montana economy is, you ought to be a bit skeptical. We may not have shared fully in the expanding bubble of the 1990s, but we have also avoided the damage from the collapse of that bubble. The adventurists among us, who love the thrill of roller coaster rides, will mourn that, but most of the rest of us will not.