Missoula labor shortage plays in workers’ favor, pushes up low-end wages
By Martin Kidston
Five years ago, hundreds of people passed through the doors of the Missoula Job Service each day looking for work. It was a tough time for workers and a good time for employers, who had the luxury of choosing from a large and highly motivated employment pool.
With the recession now in the rear-view mirror, the tables have turned and it’s employers who are scrambling to fill their rosters.
And with the Baby Boomer generation on the verge of retirement and fewer high-school-aged workers coming up behind them, the challenge may only get worse.
“We’re running 3 percent unemployment, which is really full employment, and you have labor shortages popping up everywhere,” said Wolf Ametsbichler with the Missoula Job Service. “Five years ago, it was the other way around. No one was hiring and we had hundreds of people come through every day. Now the traffic of job seekers is way down and the employers are calling, saying, ‘Find me some people.’”
Figures released last week by the Montana Department of Labor and Industry pointed to a tightening job market in Missoula, with unemployment falling 0.1 percent over last year. The state reported 167 new jobs this year in Missoula County and more than 60,300 employed workers.
Barb Wagner, chief economist with the Montana Department of Labor and Industry, said the current labor shortage is driven by demographics, and it’s expected to tighten over the next decade. Baby Boomers are retiring, and there are fewer workers in the younger generation who can take their place.
“That’s what’s driving this – it’s a demographic change,” said Wagner. “We are having people come in from out of state to help fill our worker shortage. We get about 4,000 new workers every year. It’s an important source for new workers, but we’re not going to be able to recruit enough new workers to fill any future job growth.”
The statewide unemployment rate stands at around 4.5 percent. Over the next 10 years, the state projects that unemployment will fall as low as 2 percent. The rate in Missoula will likely be on par with that, if not a little lower.
That trend is already taking shape, and Ametsbichler has had a front-row seat as the job market continues to shift in workers’ favor. His phone rings daily with area employers looking for skilled workers in everything from software development to construction.
Among them, Ametsbichler said Bretz RV and Marine is looking for workers with electrical and plumbing experience. Direct TV needs nearly 100 workers at its call center. Construction firms need workers to keep up with Missoula’s building boom.
“Jackson Construction started a new apprenticeship program with high school juniors – that’s how deep they’re going,” said Ametsbichler. “There are apprenticeship programs popping up for companies that can’t find people otherwise.”
Retail outlets like Walmart and JC Penney are struggling to land workers. Holiday hiring has already begun, but the current labor shortage has made it hard for companies that offer lower wages to fill their rosters.
In that sense, Ametsbichler said, the labor shortage has started driving up local wages.
“Those who are on the low end of the wage scale that don’t pay enough, they’re the ones who are hurting the most,” Ametsbichler said. “Wages are coming up and it’s competitive out there. They say if you come work for me, I’ll pay you a buck more.”
While that’s good for the city’s workers, it can pose challenges to Missoula – and the state’s – economic growth. The effect is especially acute at the lower end of the wage spectrum, where pay increases driven by the labor shortage will likely be the most pronounced.
“You’re going to see more wage growth at the low end of the spectrum in a labor shortage,” Wagner said. “The high wage jobs, they’ll find someone below that wage point and work them up. You should be able to find those employees for high wage jobs. But down at the bottom, there isn’t anybody to move up, so they have to raise wages.”
While a shortage of workers could hinder the state’s ability to recruit new businesses or retain those already here, Wagner believes Montana will remain competitive on that front. While the wages will likely increase, they’ll remain below those offered in surrounding states, which may also face a labor shortage.
“Increasing labor costs are something that a business would consider,” said Wagner. “But if a business is looking at Washington or Montana, our wages are still lower.”
“That being said, we do expect to have faster wage growth in Montana than the national average because labor markets are tighter,” Wagner added. “But this is a national problem – in fact it’s a global problem. We think our labor force will grow slightly, but it will remain tight.”
Contact reporter Martin Kidston at firstname.lastname@example.org