Attracting a more educated and younger labor force to Montana is necessary to shore up the state's economy, but to do so is more complicated than it may seem. And, is Montana sure that that's what it wants? quizzed Bryce Ward, an economist with the Bureau of Business and Economic Research (BBER) during the BBER's 42 Annual Montana Economic Outlook for 2017.

Jobs of the future will tend to be more knowledge - based, and while Montana has a proportional share of those kinds of jobs, its low population and open spaces is not the kind of place that sustains strong development of the kinds of businesses that develop high- wage and high- skill knowledge jobs. Areas that attract the college - educated and the young tend to be faster growing in population, housing prices and wage growth. They have higher wages and a high level of quality of life.

Entrepreneurs are more successful and the economies of those regions are more resilient to economic downturns. Montana's status is not well posed for the future. Most of the kinds of jobs available are jobs in categories that are projected to shrink over the next decade, except for low-wage service jobs. "We need a vibrant culture of entrepreneurship," said Ward, who then asked, "How do we encourage that?" But then he cautioned, "Be careful what you wish for, because if you succeed it could change other things that cause other problems." Better job opportunities would make Montana more attractive. As a result, population would increase and/or the cost of living would increase. A higher cost of living would make Montana less attractive, especially to people whose incomes do not rise proportionally. More people would increase congestion and may affect Montana's quality of life.

There are three things that people look for when they chose where they want to live. People want to live in a place because it offers great jobs, has an affordable cost of living, and an amazing quality of life, explained Ward, adding, "No place can offer all three." Historically, economic prosperity has been tied to natural resource development, but that link has weakened in the more recent era. "A region's success is increasingly tied to human creativity," said Ward - or a knowledge -based economy. It's not that natural resources are not important, but technology has allowed those industries to produce more with less employment. Montana is hampered in being able to address the problems of needing high-paying and more knowledge-based job opportunities, by the fact that "Montanans live in relatively small places that are isolated from large metro areas," said Ward, which creates two problems that reinforce each other - a small pool of skilled workers makes it difficult to build successful firms, which means fewer high paying jobs for skilled workers, which means more of those workers leave the state, maintaining that small pool of skilled workers. Looking at net migration numbers, it appears that people do want to live in Montana.

Montana ranks 14th among states as a good place to live. As to quality of life, it ranked sixth, exceeded only by Hawaii, California, Vermont, Colorado and Oregon. The state's population is growing by about 5 people per 1000 over the last 15 years and in Yellowstone County it has grown 38 percent. The average annual rate of growth for Yellowstone has been 1.38 percent over the past 20 years. While Yellowstone County has the highest population, Gallatin County has grown at a faster rate of 1.98 percent, and Flathead at 1.61, Missoula at 1.44 percent and Lewis and County at 1.40. Montana has the fewest people in the country who would like to move elsewhere. When asked if they could move would they, only 13 percent said they would - the lowest response in the country. The cost of living is below the national average... at about 97.7 percent of the national average - -2.3 percent below. Missoula is 95.8 percent the national average, and Great Falls 93.8 percent.

Much of the costs of living is driven by the cost of housing. The median Montana household pays $750 less in housing costs than the national average. Yellowstone County's cost of housing, at $9600 annually, is slightly above the statewide average and below the national average of $10,000. It is $2500 less than Bozeman and Gallatin County. But housing prices in Billings and Montana may not be as cheap as they used to be. Housing prices over the past 25 years appreciated at a rate that is the third fastest in the nation, and they have increased faster than the increase in income. "That creates challenges for new people." Income levels in Montana are a problem, even though wages have been growing at a rate faster than the national average. Income is low in Montana. Personal income per capita and median household income is about 87 percent the U.S. level. Median earnings for workers over age 24 are essentially tied for last among the states. There is, however, wide variation in income levels across the state. Income levels in Yellowstone County are about equal to the national average.

The disparity between the cost of housing and income levels in Montana, plummets the state to 41st in affordability. The ratio between the two measurements has changed from 2.46 in 1990 to 4.10 in 2015. Since most Montanans live in counties with very high price-income ratios, 58 percent say that living in Montana is unaffordable. Ward noted, however, that people continue to come to the state more so than leave - which he attributed to the quality of life. But not everyone is equally impressed. It turns out that quality of life and community amenities are not enough to keep young people and the college educated here.

They leave mostly because of a lack of opportunity and income. Most families have adult children who have left the state in search of something better. Montana experiences a net outmigration of people with college degrees. While in total Montana has more people moving in than out; among people with high education, Montana loses 35 people per 1000 population, annually - that amounts to two-thirds of native Montanans with a degree. If people with college degrees did not leave the state there would be 17,000 more people here, said Ward. The income gap between Montana and the rest of the country is much larger for college educated workers. Median earnings in Yellowstone County as a percent of US level by education is 82 percent. For the state as a whole it is 77 percent. It is 90 percent in Silver Bow County, 84 percent in Lewis and Clark County, and 85 percent in Cascade County. Gallatin County is 79 percent and Missoula, 76 percent.


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