The common lament, faithfully repeated by newspapers and politicians across the state, is that Montana ranks toward the bottom, if not dead last, in many key economic indicators, like per capita income. After reading these accounts, one can’t help but feel depressed and want to blame someone.
But let’s be fair. Montana is for the most part a rural state. Our biggest county, Yellowstone County (Billings) has a population of less than 140,000. Yet every time we hear a lament abut how poorly we’re doing, we rank ourselves with the rest of the country. It means we’re stacking our rural numbers up against states like Colorado with Denver, Arizona with Phoenix and Tucson, and Utah with Salt Lake City.
From 1990 to 2005, our rate of job growth was the same as the rest of the (small-sized) West (2.3 percent per year). The same is true for the rate of growth in real personal income (5 percent per year). Where we really excelled was in per capita income growth. While in the rest of the rural West, per capita income grew by 1.3 percent per year from 1990 to 2005, in Montana ours grew by 5.7 percent per year.
Why is that? A big part of the reason is Montana’s ability to attract investment and retirement income, which today represents more than one-third of all personal income in the state. To put this into perspective, age-related income (retirement, disability and Medicare payments) in Montana is now twice the personal income from people employed in farming, ranching, mining, oil and gas development, and the wood products industry n combined.
While this doesn’t mean that we’ve become a retirement destination, it does beg the question: Why Montana? What are we doing to attract so much retirement and investment income?
Another important fact for Montana is our growth in wages. From 1990 to 2005, the average annual wage in Montana grew by
3.4 percent per year. In our similarly sized peers in the West, the average annual growth was only 0.4 percent per year. Again, why Montana? What are we doing right?
Our high growth in knowledge-based industries has a lot to do with this. Today there are 4.5 times more people employed in service industries than in goods-producing industries, and fortunately, service industries today no longer means only low-wage tourism jobs. Places like Bozeman, Missoula, Kalispell, Helena, Butte and Billings excel in their ability to attract high-wage service workers in finance, medicine, technology and information, with wages at least $10,000 per year above the state average.
With our high quality of life and pristine environment, our universities and regional airports, we excel in our ability to attract and retain people who want to live and do business in Montana. Our quality attracts those who came here to retire. It also keeps longtime residents from leaving. It attracts investment income, and entrepreneurs who create well-paying jobs.
This fall, as we head for the polls, lets keep these facts in mind. Montana as a whole is doing quite well and the reason is no fluke. Our free-flowing rivers, national parks and wilderness areas, our wide-open ranchlands and friendly communities n these are the qualities that are rapidly disappearing throughout the West. Montana is doing well because we’ve worked hard to protect them.
Ray Rasker, executive director of Headwaters Economics in Bozeman, holds a doctorate in economics along with a master’s degree in agriculture and a bachelor’s in wildlife biology, and has been studying/researching Montana’s economy for 20 years.
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