Montana Department of Labor touts economic rebound and challenges
(MTFP) Montana’s economy rebounds quickly from worst of COVID-19 pandemic, Department of Labor and Industry economists write in report released Wednesday – but between worker shortages, custody options limited children, rising housing costs and the lingering threat of coronavirus, the state still has its share of thunderstorm clouds above the horizon.
The document, the 2021 installment of the department’s annual Labor Day report, is written by staff economists and chief economist Barbara Wagner and compiles a wide range of statistics describing how Montana workers and businesses fared. behaved since COVID-19 threw a wrecking ball across the economic state last year.
The bottom line: The rebound is soaring, to the point that tight labor markets are once again the most significant economic challenge facing Montana businesses.
“Montana’s economy is in the midst of a strong recovery from the pandemic recession, reflecting the enthusiasm of Montanais keen to see the end of the global pandemic,” write the economists.
They add: “The release of this pent-up demand, relaxed COVID-19 protocols, economic stimulus and increased revenues have all helped increase customer demand this spring, leaving companies scrambling to recruit enough. of workers to meet customer needs. “
The 2020 slowdown, which saw the number of jobs in Montana drop 8.1% in just a few weeks last year, was the fastest and largest slowdown the state has seen since its inception. from the 1980s, according to the report. However, the recovery was also swift by historical norms, with employment falling 2% below its pre-pandemic level last September – a threshold that took more than two years to reach after the trough in the Great Recession of 2008.
The total wages bill paid to workers in Montana and the state’s total employment levels are now less than 1% of their pre-pandemic peaks, economists say.
Montana ranked first in the country for personal income growth in 2020, according to the report, with average state income increasing 8.4%. The report attributes this trend to both wage growth and federal coronavirus assistance programs, such as stimulus checks and the Paycheck Protection Program, the latter having increased reported income by homeowners. ‘business.
Economists attribute the notable wage growth in 2020 partly to remote working and partly to a tight labor market forcing employers to raise wages in a bid to attract and retain employees. They also say low-paying jobs were likely to be disproportionately lost during the pandemic than higher-paying jobs, a trend that could push up the reported average.
Overall, wages in Montana grew 6.6% faster than inflation in 2020, according to the study’s authors.
“Workers who have been able to keep their jobs throughout the pandemic have likely experienced a significant improvement in their standard of living with this extremely high real wage growth,” they write.
Economists also say the number of new businesses started in Montana increased during the pandemic recovery, with more than 3,500 new business entities opening in Montana in 2020, representing the fastest start-up rate in 10 years. They also say that the companies opened last year provide work for more than 10,000 Montanais.
Partly because of government assistance like the Paycheck Protection Program, economists say, relatively few businesses appear to have shut down due to the pandemic. The report says Montana’s business survival rate in 2020 was only 0.3% lower than the state’s long-term average.
On the other hand, the report notes that Montanais have had to contend with rising inflation, such as gas prices which are 20% higher in the summer of 2021 than in 2020. House prices have also increased in much of the state. Citing a price index compiled by real estate company Zillow, economists claim that the price of a typical Montana home was $ 327,000 in the year ending June 2021. That’s an increase of 10. 3% over the previous year, roughly on par with the typical nationwide increase.
Home prices are significantly higher in parts of Montana. In County Gallatin, which includes Bozeman, for example, the value of a typical house is now valued at over $ 500,000.
“The high value of homes in a state with one of the lowest average wages will be a major challenge for Montana employers and workers in the years to come,” the authors write.
And then there’s the labor shortage, which economists attribute to the state’s aging population, which means more residents at retirement age, as well as childcare shortages. children and continuing worker concerns about COVID-19.
“While vaccinations promise to minimize this disruption in the workforce, additional workers falling ill with COVID-19 are reducing the number of work hours available to the Montana economy and creating uncertainties in staffing. staff of many Montana companies, ”the economists write. “Keeping the number of cases low will benefit both the economy and the health of workers. “
Going forward, state economists say Montana’s economic policy may turn to automation as a way to make the most of a limited supply of workers. They say the state may also look for ways to make it easier for some people to work by providing more training options, improving access to child care and helping employers find ways to welcome disabled workers.
“The increased prevalence of remote work with flexible working hours offers great potential as a tool to exploit underutilized workers and rural areas,” write economists. “Finding solutions to engage more workers in the workforce will be a key part of Montana’s continued economic growth. “