1/13/2003

KUFM / KGPR

T. M. Power

 

Is Montana Really the “Least Best Place”?

 

            The new year was ushered in by a flurry of news stories and editorials announcing and bemoaning the fact that Montana in the year 2001 had the lowest annual pay of all the fifty states.  The Missoulian editorialized that Montana, rather than being the “last best place,” was more appropriately labeled the “least best place.”

            These interpretations of the raw economic data suggest that we are all fools for continuing to live here.  After all, we only have to drive three hours west to Spokane where average pay is $5,000 a year higher. Continue driving for another five hours to Seattle and you will find average pay that is $20,000 per year higher than Montana.  If that is not enough, head south; a ten-hour drive will bring you to San Francisco where average pay is more than double that in Montana. But once you are there you might as well spend another hour in the car and drive to San Jose where average pay is $40,000 a year above that in Montana, fully 160 percent higher.

            If these average pay numbers are correct indicators of how well off we are, the highways should be clogged with people headed south and west and Montana should be empty of human habitation. Of course, it is always possible that we all are just so plain stupid that we don’t know the difference between more and less and also don’t know where the highways leaving town would take us.

            It is important to put these average pay numbers into both a geographic and time context.  Montana is not alone at the bottom of this average pay barrel.  Our neighbors are keeping us close company.  Immediately above us in the state rankings are North and South Dakota. Joining us in the bottom ten are also Idaho and Wyoming. Not far above this geographically contiguous set of low pay states in the rankings are also Utah and New Mexico.  Golly gee wiz, there must be something in the air or water in this neck of the woods. This geographic grouping of low-pay Western states in which conservative Republicans have dominated for some time suggests that low pay in Montana is not tied to particular public policies we have adopted, unless our political leadership wants to suggest that it is they, themselves, who have caused the problem.

            Looking back over time is instructive too.  Montana’s real pay per job was nearly identical to the national average back in 1974. At that point we were ranked right in the middle of all of the states. We then began a steep decline in the state rankings. Just three years later, we were in the bottom ten, largely due to declining farm and ranch incomes.  That was 25 years ago. By 1984 we were among the bottom 4 states in the rankings by pay, and we have not moved from that position in the 20 years since. For eight of the last 11 years we have had the lowest average pay in the nation.

            So just as this low pay phenomenon is not unique to Montana, it is not new either. Nor does it seem plausible to blame it on environmentalists or “tax and spend” liberals since conservatives have controlled the state government for a good part of that time.  If you are holding your breath waiting for tax cuts on large corporations, cuts in spending on public services, and the gutting of environmental laws to bring an economic renaissance in Montana, you no doubt turned blue and died a long time ago since these policies, followed for over 15 years now, coincided with Montana reaching the bottom of the pay barrel and staying firmly there.

            What should we to make of these peculiar numbers?  Probably not much. These numbers are not adjusted for geographic differences in the cost of living. If someone were to try to dispute this decline in relative average pay in Montana by saying it was a silly concern since money income in Montana has tripled since 1974, almost everyone would know enough to object that such a comparison was stupid since inflation ate up all of that increase in average pay and then some. 

            While we all know we have to adjust for cost of living over time, we regularly ignore the need to do the same thing when comparing pay and income in different geographic areas.  As a result, Montana’s average pay is compared to that of the top ranked areas, New York state and Washington DC. But the cost of living in those places, as well as in Seattle, San Francisco, and San Jose, are much, much higher than in Montana.  During the 1990s Montana, the lowest pay state, saw significant net in-migration of people while New York, the highest paid state, saw net out-migration. Either the residents of both states are crazy or these numbers obviously do not tell us much about local well being.

            Next time you hear a politician asserting that cutting taxes, savaging basic public services, and gutting environmental protection will boost pay and income in Montana, you might want to be a bit skeptical, since it has been the people preaching these failed policies that presided over Montana’s apparently permanent descent into the national low pay basement. How many more years do we have to give these people so that they can finish their damaging work?