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A 2024 report on labor in Montana said the economy is continuing to expand, unemployment remains low, and wage growth is increasing and has outpaced inflation.
“Montana ranks 2nd in the nation for fastest wage growth since 2020,” said the report.
It said the average wage earned by Montana workers hit $57,230 in 2023, growing by 5% in one year.
But Montanans earning median wages still can’t buy median-priced homes, and housing affordability isn’t expected to improve in short order.
The Montana Department of Labor and Industry released the 2024 Labor Day Report last month, and it marked both high and low points in the economy.
The high cost of housing and low availability of childcare workers are a couple of challenges for the economy.
“In 2023, licensed childcare capacity met only 44% of estimated demand,” the report said.
It also said nearly 60% of counties in the state are identified as “childcare deserts,” where supply meets less than one-third of estimated demand.
Additionally, the report said the typical home value in Montana averaged $470,000 in the first half of 2024, a 70% increase in values during the last five years.
Patrick Barkey, director of the University of Montana Bureau of Business and Economic Research, said Friday the report’s primary author, state economist Amy Watson, “does great work.”
He said the report is valuable in part because it is written by a team who actually collects the data.
“So they are extremely knowledgeable of what data are available,” Barkey said.
The report highlighted the following in part:
“The Montana labor force reached a record high of over 580,000 people midway through 2024. Strong wage growth and a significant uptick in in-migration has helped increase the available pool of workers for Montana businesses.”
Montana ranks eighth in the nation for fastest employment since 2020 — adding more than 30,000 in the first half of 2024. It said healthcare added the most jobs in 2023, more than 2,340.
The state had nearly two job openings for every unemployed person in 2023, the report said.
“Housing prices continue to be the primary driver of inflation,” the report said. “However, the pace of housing price growth is beginning to slow in Montana.” It said prices rose 4.7% in 2023 compared with 5% nationwide.
It said the labor force reached an all-time high and business formation also hit a record in 2023.
In a statement when the report was released, Gov. Greg Gianforte said the report’s positive results were expected.
“When you couple our strong Montana worth ethic with our pro-business, pro-jobs policies, it comes as no surprise to know that Montana’s economy is on the move,” Gianforte said. “As evidenced in the pages of this report, Montanans are better equipped to handle still-high inflation thanks to our steady job and wage growth.”
The report said Montana’s economy has shown “strong growth” during the last few years with “very strong” wage growth.
It said personal income has grown by 7.5% annually since 2020, “ranking Montana 4th in the nation.”
“Economic growth has been dispersed over a wide range of industries, allowing workers throughout Montana to prosper,” it said.
The report also said the state continues to face a workforce shortage, but “there are signs that the labor market is beginning to ease.”
It said unemployment rates ticked up “slightly” in every region, but all regions are expected to have job gains in the next 10 years.
The report also said the easing of the tight labor market and of inflationary pressure “brought some relief” to businesses and households.
“Through productivity improvements, investments in worker training, and tapping into underutilized labor sources, Montana’s economy will continue to flourish,” the report said.
This year, Montana experienced some high profile economic hits with the announced timber industry closures of Pyramid Mountain Lumber in Seeley Lake and Roseburg Forest Products in Missoula.
More recently, and after the release of the labor report, Sibanye-Stillwater announced plans to lay off 700 Montana mining workers.
Barkey said those negative developments are substantial and significant, but he said they are also more visible, and they don’t reflect the smaller, ongoing additions to the labor market.
“You can’t let that color your entire perception of what is going on with the economy, what is going on with the labor market,” Barkey said.
But he also pointed to effects in smaller geographic areas.
For example, manufacturing growth has been a factor in the Missoula County economy, especially with expansion at the former Bonner mill site, he said.
But because both of the timber and wood products closures were in Missoula County, he said, the most recent data show manufacturing in the county has taken a hit.
The report for the state said manufacturing production declined in general the last two years, and job losses took place in food and beverage, wood products, and transportation equipment manufacturing. However, it said the department “anticipates a return to growth over the next 10 years.”
In general in 2023, the report said the labor market continued a steady expansion and “a return to more sustainable growth” after “two years of rapid growth exiting the pandemic.”
It said total employment has grown by 5.9% since 2020, ranking Montana eighth fastest among all states.
Montana’s largest industries are driving much of the job gains in the last year, the report said, pointing to healthcare, trade and “leisure activities.”
It also said healthcare is projected to add the most jobs in the next decade.
The report said “professional services” grew fastest among the private sector for a growth rate of 4.1%.
“The shift towards remote work has made moving to Montana possible for many tech workers, resulting in significant growth of the professional services workforce,” the report said. “An increased share of people moving to the state are working in the professional services industry, translating to growth in the number of high-wage jobs in the state.”
The report talked about a decline in labor force participation as well, and it said participation has been declining due to demographic shifts and increased retirements. It said an aging population in Montana will “exert downward pressure on labor force participation” in the next decade.
It said 12% of young adults are out of the workforce due to caregiving responsibilities, most likely caring for an aging adult, and “work-life balance” policies could help.
Additionally, the report noted licensed childcare capacity “has been consistently undersupplied despite its essential role in supporting the state workforce.” It said the most significant unmet demand is in more rural areas, and four counties have no licensed provider at all.
“A lack of high-quality childcare in Montana has prevented many parents from fully participating in the labor force, thus further exacerbating the state’s workforce shortage,” the report said.
It noted approximately 66,000 Montana parents are “unable to fully engage” in the workforce due to the lack of sufficient childcare, either not working at all or working reduced hours.
On Montana’s Indian reservations, employment growth declined in four of the seven, the report said. But on the Blackfeet, Flathead and Rocky Boy’s reservations, growth matched or exceeded pre-pandemic levels of employment.
The report said tribal communities are “economically sensitive areas,” and specialized education and training opportunities on the reservations “is a critical aspect of the state’s continued economic growth.”
(From 2024 Montana labor report)
The report addressed in-migration in Montana and its effect on the economy as well. In the decade before the pandemic, about 6,300 more people came into Montana than left every year on average, the report said.
Although in-migration has cooled compared to its peak in 2021, when, 21,100 more people came into the state than left, it was still 10,000 in 2023, the report said.
“Montana ranks 4th in the nation for the highest rate of in-migration since 2020,” it said. “The state’s population grew 4.7% from 2020 to 2023 due to in-migration, translating to an additional 51,000 people.”
Most of those people work, and “net in-migration” is projected to continue due to “Montana’s business-friendly environment, quality of life, an emerging professional services industry, and opportunities for remote work.”
However, it is more concentrated in the western part of the state.
Also in the west, housing affordability concerns are “most acute,” the report said. It said rising home values and increases in the cost of borrowing have reduced affordability of both new mortgages and rent.
It said 45% of renters are considered “cost burdened,” meaning they spend more than 30% of their income on rent. It said mortgage rates are expected to decrease in late 2024 and 2025, but low affordability isn’t expected to reverse.
“Montana is just one of 29 states in the nation where a person earning the median income is unable to purchase a median-priced home,” the report said.