Low wages, costly housing threaten city’s future
By Martin Kidston
A University of Montana economist pointed beyond the windows of the University Center on Tuesday while describing Mount Sentinel as both an attraction and a problem.
While the city’s surrounding landscape helps contribute to Missoula’s high quality of living, it also constrains the ability to grow, making it one of the most expensive places in the nation to live.
The outlying factor, Bryce Ward added, are local wages.
“You can expand housing and work to try and mitigate that, but because of Missoula’s quality of life, it’s going to bring a lot of money here just as second homes,” he said. “It’s also constrained geographically. It’s why it’s important to figure out this college wage issue.”
Ward, an economist with the Bureau of Business and Economic Research at UM, served as the keynote speaker at an investors’ meeting of the Missoula Economic Partnership on Tuesday, where he presented a long list of statistics aimed at affordability and wages.
Both are challenges locally; each is capable of stunting economic growth and making the city too expensive for workers to live. The question facing local leaders becomes philosophical – what type of city does Missoula want to be?
“The easier problem to solve is probably the wage issue,” said Ward. “Missoula is always going to be at the upper end of costs, but the question is will it be at the same level as Seattle, or can we bring it down a little bit through some combination of wage growth and housing prices.”
Since 1990, Missoula’s population has grown 142 percent, or 1.5 times the U.S. population growth rate. To Ward, that proves that Missoula provides a high quality of living, one that’s been noted in many national studies and magazine articles.
Using 1990 as a benchmark, Ward said housing prices in Missoula have risen 114 percent when adjusted for inflation. That makes the city the third fastest growing metro area in the nation when it comes housing costs, outpacing the likes of Seattle, Portland and San Francisco.
Back in 1990, Ward added, the city’s ratio of median home values compared to its median household income was 2.83 percent. It was considered high at the time, though it has since risen to more than 5 percent.
“Missoula is more expensive in terms of the simple matrix of affordability than 96 percent of all counties,” said Ward. “If your housing prices are growing and your wages are stagnant, the affordability of the place is going down.”
While rising home values are good for those who own property, they are not so good for those looking to move to Missoula for a job, or those looking to acquire a home in hopes of building equity.
It also hurts the city’s ability to recruit businesses and keep college graduates. That leads Ward to the wage issue. While the cost of housing may always be a problem given the city’s geographical constraints, wages can be solved, he said.
“This is Missoula’s big challenge,” said Ward. “If we want our children’s future to be here in Missoula, the work of MEP is very important in terms of trying to figure out how to provide a more expansive set of opportunities, particularly for our college-educated workers.”
Nearly 40 percent of the city’s population over the age of 25 holds a bachelor’s degree, making it one of the most educated places in the nation, per capita. Ward described it as a common phenomena in a college town, though Missoula continues to struggle with finding ways to employ its graduates at a competitive wage.
According to data presented Tuesday, a Missoula resident holding a bachelor’s degree makes on average $31,189 a year. The national average is $50,515.
“If you have a bachelor’s degree only in Missoula, you earn 63 percent of the U.S. level,” Ward said. “In the average metro area, someone with a bachelor’s degree earns 60 percent more than someone with a high school degree. In Missoula, you earn 23 percent more.”
If the problem goes unresolved, Ward cautioned, the city will continue to see its college graduates leave for opportunities elsewhere. That has implications for economic growth, hurting the city in terms of business recruitment and retention.
“You just end up as a recreation community – a place where people come who already have money, and there’s a bunch of people who do service industry jobs to serve them,” Ward said. “That has implications for what it is we’re trying to do in our community, or what we can do in our community.”
James Grunke, president and CEO of the Missoula Economic Partnership, has sounded the same alarm twice in the past two weeks, once before the City Council and again on Tuesday before an audience of several hundred.
“I have employers tell me every day their biggest barrier to growth is access to workforce,” Grunke said. “Past that, I don’t really know what that means. We need to understand what the skill sets are that are missing, where are the gaps.”
On the housing front, Grunke added, “It’s one thing to attract workers here, but we have to have a place where they can actually live.”
To explore the issue further, Grunke said, MEP will launch two major studies in the coming months, one to look at the city’s available workforce and another to look at housing. BBER also plans to follow with a more in-depth report in January that includes possible solutions to the city’s lagging wages.
Contact reporter Martin Kidston at email@example.com