State economist breaks down pros, cons of Montana’s low unemployment rate
The state's unemployment rate of 3.8 percent is projected to continue falling in future months, presenting a good market for workers and challenges for those who need them.
Montana's rate of unemployment remains below the national average of 4 percent. Missoula County is even lower at 3.1 percent.
Such low figures present pros and cons depending on which side of the equation one is on, according to Chris Bradley, a senior economist with the Montana Department of Labor and Industry.
“You start to lose the ability to find someone quickly to fill the jobs you need,” Bradley told the Missoula Current. “It causes what we call labor market friction, when you're slowing down the ease of which people leave and enter jobs. Businesses essentially may have to slow down their plans to expand, or when someone retires, they may temporarily have to decrease production or output.”
Missoula County currently claims a workforce of around 62,000 while the ranks of the unemployed have fallen below 1,930. Gallatin County's unemployment rate stands at 2.3 percent, with 66,000 people in the workforce and 1,522 unemployed.
The statewide labor force includes 523,000 workers with roughly 19,900 listed as unemployed. Bradley said current projections suggest the unemployment rate will continue to fall, a challenge compounded by retiring baby boomers.
“One of the big challenges we're facing are baby boomers retiring,” said Bradley. “The generation behind, the Echo Generation, isn't very big. We're going to see the labor force grow smaller.”
Bradley believes Montana's unemployment rate could dip to 3 percent in the future if the economy stays on track. That gives workers the opportunity to barter for higher wages and be more selective in their employment.
And that, Bradley added, can put employers at a disadvantage.
“Workers definitely have the ability to go to other firms and say, 'I have a job right now, but if you pay me more, I'll come and work for you.' Then they can do vice-versa for the person they work for, saying, 'I have an offer from someone else, so will you pay me more to stay here.' ”
Over the past two years, Montana has seen a modest increase in wages, increasing its national ranking. In 2016, the last year on file with the state, the median Montana income rose to $42,947, up from $40,347 the year before.
Bradley said the increase in wages parallels the low rate of unemployment. Employers are forced to raise wages to keep and attract talent, though that may have its limits. Employers could find other options as artificial intelligence, automation and robotics improve.
“If employers start seeing they can't afford the rates workers are demanding, they may start to lean toward production enhancements, like paying to train workers they already have so they get new skills and can do their jobs better, or they start looking to automated technology. It might be investing in software, or it can be by machine, those types of things.”
A labor shortage can have other impacts on local economies. Area developers have seen subcontractors import workers to meet construction demands, resulting in an increase in prices and labor costs.
The labor shortage also has hit Montana's farm and ranch country, leading one economist to suggest that “America will have to decide if we're going to import workers or import food.” The challenge was also the topic of the 2016 State of Missoula discussion hosted by the Missoula Chamber of Commerce.
Boiled down into hard numbers, 130,000 Montanans are expected to retire in the next decade, but only 123,000 workers between the ages of 16 to 24 are there to take their place, according to the state.
“We in Montana have a little bit of an advantage over other states,” Bradley said. “We have net in-migration and people do like to move here, so that can help ease some of the challenges. But migration isn't fast enough to keep up with what we see in demographics and population changes.”