Economist: Low wages, costly housing limit Missoula’s economy

Bryce Ward, associate director of the Bureau of Business and Economic Research at the University of Montana, said Missoula’s high cost of housing and low wages has forced many college-educated workers to leave, making it hard for businesses to find skilled workers. (Martin Kidston/Missoula Current)

By Martin Kidston/Missoula Current

The state of Montana has lost an estimated 17,000 college-educated workers due to low wages and a lack of opportunity, making it hard for businesses to grow within the state, an economist said Friday.

The issue is particularly acute in Missoula, where a worker with a college degree earns just 63 percent of the nation’s median earnings and can’t afford the cost of housing.

“If you’re a college-educated Montanan, your median earnings are only 77 percent of the U.S. median,” said Bryce Ward, associate director of the Bureau of Business and Economic Research at the University of Montana. “In Missoula, it’s even worse. Our median here is only 63 percent of the U.S median.”

Ward and Patrick Barkey, the director of BBER, brought their economic outlook seminar to Missoula on Friday. Intermixed with the state’s annual economic outlook, they dedicated a portion of their presentation to the state’s wage problems, including those in Missoula.

Of the nation’s 917 metro areas, Ward said, Missoula ranks 910th for the median earnings paid to college-educated workers. Across the state, he added, 65 percent of those who have earned a bachelor’s degree in Montana have left.

It’s a figure that equates to roughly 17,000 educated workers, according to Ward.

“That’s nearly a 10 percent increase in the size of Montana’s college-educated population,” said Ward. “That’s an enormous loss of potential of productive capacity.”

Ward has given his presentation in Missoula twice before, once during the Missoula Economic Partnership’s investors’ breakfast back in October, and again in December before the Missoula City Council.

On all occasions, Ward touched on the pillars that contribute to regional success, including quality of life – a category in which Missoula performs well. The city’s cost of living is also reasonable, serving as another check in Missoula’s favor.

But where the city falls short is through its cost of housing and its low wages. Back in 1990, Ward said, Missoula’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.

That makes Missoula more expensive than 96 percent of all U.S. counties. Unable to earn a competitive wage and faced with the city’s steep housing prices, educated workers often look elsewhere for opportunity.

“Any loss of capital is a potential loss to your region,” said Ward. “Given the large changes that have occurred across the economy, the loss of young college-educated workers is an increasing problem for Montana and Montana’s economy.”

Several hundred people turned out Friday in Missoula for the annual economic outlook offered by the Bureau of Business and Economic Research at the University of Montana. (Martin Kidston/Missoula Current)

The scenario has created a challenging dilemma for city and state officials. Weak job opportunities for college-educated workers has forced them to leave the state, leaving behind a smaller pool of skilled employees. That, in turn, makes it difficult for existing businesses to grow, and without growth, they can’t offer higher wages.

“That’s the cycle,” Ward said. “There’s 17,000 of them that should be here but aren’t. We have to break out of this cycle.”

With the national economy shifting to knowledge-based employment, Ward said Montana – and Missoula – must do more to invest in its entrepreneurs.

It’s a subject that has played as a central theme over the past two months, including this week’s unveiling of Accelerate Montana – a new program housed at UM that will streamline seven unique programs designed to help entrepreneurs find their footing and help businesses grow.

In a knowledge-based economy, Ward said, it’s the entrepreneur’s job to make the economy work. It’s up to the city and the state whether it will support them.

“We have to be able to learn from our entrepreneurs systematically, both those who succeed and those who fail,” Ward said. “What are the boulders they keep running aground on? Is there something collective we can do to remove those boulders? We also have to support them so we can get more and more entrepreneurs into the process.”

Contact reporter Martin Kidston at info@missoulacurrent.com