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Montana’s economy better than U.S. average

Montana’s economy appears to be doing well. Unemployment is relatively low. About 4,000 new jobs have been created since 2001. And job growth here is above the national average.

By ALLISON FARRELL
Gazette State Bureau

But Montana’s economy only looks good in comparison to a nation in recession.

Montana’s job market is growing at a rate of 1 percent a year while the nation is losing jobs at a rate of 1 percent a year.

"That’s why detail is important," said Phil Brooks, chief economist for the state’s Department of Labor and Industry in Helena.

Nationally, the economy is still recovering from the combined effects of the Sept. 11 terror attacks, the recession of 2001 and the Enron-style accounting scandals of 2002.

But since Montana’s economy revolves around agriculture, mining, wood products and nonresident travel, the state was relatively unscathed by those events, said Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana.

Health care jobs are growing faster than any other field in the state, with 2,000 added last year. The state’s service sector, which includes health care workers, lawyers, waitresses and others, is the fastest-growing sector.

"We’re doing much better than the U.S. average in the short term," Polzin said. "But as the U.S. economy recovers, we’ll lag behind."
Low wages

Low pay is a big factor in Montana’s economic problem. Economists say Montana’s per capita wages lag, and fall further behind, the nation’s average wages every year. In 1980, Montana’s workers earned about 90 percent of the nation’s average pay.

Now it’s about 75 percent.

The state’s average income ranks 50th in the nation, Brooks said, and the average Montana worker takes home about $26,000 a year. Other economic scales place Montana about 45th in the nation.

"No matter how you slice it, average income in Montana is low compared to other states," Brooks said.

Polzin said low wages are one of the state’s continuing problems.

"It’s probably the major problem that permeates the Montana economy," Polzin said. "That is something that’s not going to be solved quickly."

Polzin said the problem can’t be fixed simply with raises. Economists don’t even know why pay in Montana lags so far behind other states. One theory is that Montana is a rural state with rural industries, such as mining, and pay is lower in rural areas.
The state’s private businesses with the most employees

Alphabetical list of the 20 largest private employers in Montana (government jobs excluded)

Statewide:

* Albertson’s
* Benefis Healthcare
* Better Business Systems
* Blue Cross/Blue Shield of Montana
* Cenex Harvest States Cooperatives
* Deaconess Billings Clinic Health System
* First Interstate Bank
* Kalispell Regional Hospital
* Kmart
* Lantis Enterprises
* Lee Enterprises
* Missoula Community Medical Center
* Northwestern Energy (formerly Montana Power)
* St. Patrick Hospital
* St. Vincent Healthcare
* Stillwater Mining Co.
* Stimson Lumber Co.
* Stream Services
* Town Pump
* Wal-Mart

Compete and innovate

One official calls the state’s sluggish economy a result of "missed opportunity."

"We gotta keep up, compete, continue to innovate and if we don’t, we’re dead," said Dave Gibson, the state’s chief business officer and head of governor’s Office of Economic Opportunity.

Gibson said Montana needs to continue its job growth and then keep pace with the nation once it pulls out of the recession. He said recently adopted tax revision as well as job skills and education would help Montana keep up with the nation’s eventual economic turnaround.

The tax changes embedded in House Bill 407, passed in the recent legislative session, is a tremendous boon to the small business sector, Gibson said. That bill will reduce the state’s capital gains tax, which is one of the nation’s highest at 9 percent, to about 4.9 percent by 2006.

That tax change let Montana jump from 38th place on the nation’s small business index to 30th.

"We’re in the middle of the pack now," Gibson said. "We’re competitive."

He also said innovation of the state’s major industries will reward those with education and job skills while the same changes will leave unskilled workers behind.

For example, green chains in sawmills are being phased out. Instead of arming a bunch of employees with markers and instructing them to grade lumber as it passes by on a conveyer, one person with a computer will, and already is, evaluating the same amount of wood faster, more easily and with less cost.

"If you don’t get additional skills, your real wages are going to stay flat or go down," Gibson warned.

To help Montanans keep up with industry changes, Gibson said he wants to see the state’s industry gurus working with the state’s University System. Not only does higher education need more help tailoring academic programs to fit the state’s economic plans, the rift between educators and legislators need to be bridged, he said.
Growing up

Despite its agricultural heritage, the state’s economy is evolving, Brooks said. The 2,000 new jobs in health care, the innovations and the continuing mechanization of agriculture and industry are signs of the state’s developing economic picture.

Agriculture isn’t as dominant as it once was, while jobs in the service sector are growing faster than in any other area of employment. Such change should be embraced, Gibson said.

"Montana’s economy has grown up as part of a natural process," Brooks said. "This is a natural development."

http://www.billingsgazette.com/index.php?tts=1&display=rednews/2003/05/25/build/local/30-economy.inc

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