Western Montana economy continues to see strong growth

Flathead County has the second highest rate of wage growth in the last decade as Western Montana continues to see strong economic progress.

Members of the Bureau of Business and Economic Research at the University of Montana presented at the 2017 Economic Update at the Hilton Garden Inn in Kalispell on Thursday, the final stop for the Montana Chamber of Commerce’s seven-city tour to update community leaders on the state’s economy.

Speakers included Paul Polzin and Patrick Barkey. Polzin is the Director Emeritus and Barkey the Director of the bureau at the university.

Flathead County saw a 6.73 percent increase in wage growth between 2014 and 2016, second only to Gallatin County, which had a 9.22 percent increase. Over the last 10 years, Gallatin saw a 5.3 percent increase with Flathead again just behind at 3.18.

That wage growth did see a deceleration in 2016, however, growing still but at a slower rate than previous years.

As a state, Montana posted a 1.9 percent wage growth.

“This is what we will be looking at over time, to see whether this is just a one-year reaction to rapid growth in 2015 or if this really represents the change in the trend,” Barkey said.

Barkey noted that the healthcare sector and government earnings are also seeing recent growth.

Jobs are not a cause for concern in Montana, Barkey said.

“Whatever the problems are in Montana, they’re not about jobs,” he said. “One of the takeaways I get for what’s going on in the economy right now is that it’s really not been a bad period for wage and salary workers. There seems to be adding jobs, adding hours, growth in wage rates.”

Farm earnings, on the other hand, have seen the worst downturn in the entire country, he said.

Montana farm earnings declined by 71.2 percent in 2016.

“That was the worst of any state in the country,” Barkey said. “We know farmers have been hurting for the last couple years even before these weather-induced impacts that are happening right now.”

Democrat Rep. Dave Fern noted the absence of any mention of tourism or visitation during Barkey’s presentation, referring to events like the Model T show two weeks ago that brought hundreds of vintage car enthusiasts to Whitefish’s streets and into its businesses.

Barkey said while tourism is a big way to increase non-resident spending in Montana’s communities, at the moment he doubts it’s a big enough chunk of the bigger picture to boost the state’s overall earning numbers.

“Tourism is an industry which brings a lot of folks to Montana and from the point of view of Montana, there’s an unlimited amount of growth. It’s not reducing the spending for our Montanans,” he said. “Possibly tourism is sky high and that’s offset by a big decline someplace else, but regardless, tourism has not been strong enough to push the overall [total earnings] number.”

Polzin also examined Montana’s performance against the state’s two western neighbors, Idaho and Washington. Both states showed better in total wage growth, with 4.4 percent in Idaho and 6.1 in Washington, as well as better wage growth in subsections of that total, such as construction and administrative services.

Montana’s 2.2 percent increase in retail trade wage growth was dominated by Washington’s 23.1 percent boom, which Polzin attributed to the rapid growth of Amazon.

Darryl James, Executive Director of Montana Infrastructure Coalition, also spoke on behalf of the need for better infrastructure investment projects in the state.

With a $1.1 billion shortfall in necessary infrastructure investments, James said the state needs to be creative in how to raise the funds for public works projects. Some of the options he presented included local-option infrastructure taxes, vehicle registration fees, public-private partnerships and fuel tax/user fees.

“The need is not going to go away, it’s only going to get bigger,” James said. “So we do feel there’s some pressing interest here in making sure we have good, long term sustainable solutions identified.”