1/26/2004

KUFM / KGPR

T. M. Power

The Cultural Inertia Associated with the Popular View of the Montana Economy

There is considerable cultural inertia when it comes to our understanding of our local economy and just who is “buttering our bread.” The rear-view mirror has an almost hypnotic attraction when it comes to the way we think and talk about the Montana economy.

The Montana Chamber of Commerce recently commissioned a poll of Montana citizens to understand how they felt about a variety of public economic policy issues. One of the questions asked whether the state government should “encourage and promote the oil, gas, and mining industries because of the jobs and economic benefits they provided”? The alternative offered was that the state government would discourage these industries because of their potential environmental impact. The same question was asked about the forest products industry.

Seventy to seventy-five percent of the respondents indicated that the state should be promoting these industries rather than discouraging them. Of course, when environmental organizations commission similar polls, the question is asked in the opposite order: First the environmental damage is mentioned and then folks are asked if state policy should control that damage even if there is some economic loss. When the question is asked that way, the overwhelming majority answer that environmental protection is the priority.

But what is more interesting is that the Montana Chamber of Commerce, which one would think would be representing all Montana businesses, should focus on these two particular industries that provide about 3 percent of all our jobs.

There are about 570,000 jobs in Montana. Mining provides about one percent of these and forest products provides about two percent. Both of these industries have also been a declining source of employment for two decades as automation and new technologies systematically have eliminated jobs. Just over the last decade, almost 3,000 jobs have been lost in mining and forest products.

It is unclear why the Montana Chamber of Commerce thinks that the best place for state economic development policy to focus is on these small and declining sources of jobs.

A quick look at the Montana economy and job growth over the last decade would clearly indicate that job growth is taking place in quite different sectors. For instance, while those natural resource sectors lost 3,000 blue-collar jobs, other durable manufacturing companies added 3,500 jobs, expanding by over a half. Construction jobs almost doubled, adding 16,000 jobs. Jobs also expanded in transportation and public utilities, which added 5,000 jobs. That is a total of almost 24,000 relatively well-paid blue-collar jobs that were added since 1990, eight times the number of jobs lost in the natural resource sectors on which the Chamber of Commerce was focusing public attention.

Other sectors of the Montana economy were expanding too. Business, engineering, and management service jobs expanded by almost two-thirds, adding 15,500 jobs. Health services expanded by over a third, adding 10,000 jobs. Financial services jobs added another 10,000 jobs, growing by a third. These relatively well-paid service jobs together added almost 36,000 jobs.

If one combines the blue collar with the service jobs mentioned, they represent an additional 60,000 jobs. The expansion in these relatively well-paid sectors represented 20 jobs added for each of the natural resource jobs lost.

If we are interested in promoting job and income growth in Montana, it almost certainly would be more productive to focus on those sectors of the economy that are growing both across the state and the nation rather than focusing on those industries that have been bleeding jobs not only in Montana but also across most of America. Fighting labor-displacing technologies and international market forces to try to create significantly more jobs in these industries is not a very promising job-creation strategy.

Even if we were spectacularly successful in a public policy aimed at creating more of these natural resource jobs and were able to double the number of these jobs, we would still be adding only 3 percent to our total jobs. During the 1990s that would represent the number of jobs created in the Montana economy every 16 months. It would represent only about a quarter of the relatively well-paid blue-collar and service jobs created in the Montana economy that I just detailed.

This, of course, is not to say that we should ignore the employment and income opportunities that forest products and mining represent to the Montana economy. That’s not the point. The point is that many sectors of the Montana economy are adding good jobs largely without the support of state economic policy. It is likely to make more sense to focus state economic policy strategically on those sectors where the policy is likely to be most productive in job creation rather than being guided by the rear-view mirror and focusing on those sectors where at best one can only slow the decline in employment.

Our past has many lessons to teach us. The source of future jobs, however, is not among them.