Montana Employment Rises While Lower Labor Force Declines

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“Although employment in Montana has rebounded, lower labor force participation and a tight job market complicate the recovery.”

The real reason for labor shortages is because they labor cannot find affordable housing. Northwest Montana is experiencing an horrendous labor shortage due to outrageous housing costs.

“When it comes to employment and labor markets, Montana is both a leader and a laggard, according to a variety of measures found on the Minneapolis Fed’s Regional Economic Indicators dashboard.

For example, among Ninth District states, Montana has seen a strong employment rebound during the recovery, along with South Dakota (chart 1). Although the state is not quite back to pre-pandemic levels, its rising employment is likely because the state saw stronger job growth leading into the pandemic than other district states.

The state has also seen its unemployment go from the Ninth District’s highest pre-pandemic rate to the second lowest. At 3.1 percent, it is one of the lowest jobless rates nationwide and lags only South Dakota among district states.

In contrast to those strong employment trends, labor force participation in Montana remains substantially lower than in other states in the District. While this has historically been the case in Montana, the state’s rate is still a full percentage point below pre-pandemic levels, as many Montanans have stopped looking for work (chart 2). This phenomenon of lower labor force participation is also common among states nationwide, but Montana’s labor force participation rate remains nearly 5 percentage points below Wisconsin, which has the second lowest labor force participation rate out of Ninth District states.

Given the comparatively low labor force participation rate, how has employment managed to rise at all in Montana? The answer likely lies in population growth. While 2021 data on population growth are not available, the long-term trend through 2020 suggests that the state has likely seen stronger population growth than other district states.

Over the past 10 years, Montana’s population has grown nearly 10 percent, resulting in a new seat in the U.S. House of Representatives. In 2020, the state’s annual population grew by 1 percent, compared to 0.3 percent for Minnesota. The state has reportedly seen an influx of remote workers and others looking to relocate from more expensive regions or toward more amenity-rich areas like western Montana. In fact, Montana experienced a higher rate of inbound moves in 2020 than most other Ninth District states, according to U-Haul’s annual migration study.

Montana’s employment growth could be even stronger given robust job openings, which have accelerated faster than the population and labor force. The resulting labor tightness has been exacerbated by a rising rate of voluntary quits among existing workers in recent months. While the quit rate in Montana has often been higher than the rest of the region, quits increased over 30 percent in September, leading the state to have one of the highest rates of people leaving their jobs in the nation.

Prior to 2020, job openings and hires were often closely aligned in Montana. Rising quits, falling unemployment, and lower labor force participation have led to a persistent gap between job openings and hires in the state.

You can read the full article here written by Haley Chinander Research Assistant.




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3 COMMENTS

  1. There is plenty of labor, just not at the wages Montana has to offer. Amazing how many people you can find when wages are decent.

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