When the pandemic triggered statewide migration two years ago and brought an influx of residents to Montana, Flathead County’s population grew 3.5%, more than any other county in the state, and added between 2020 and 2020, according to the Montana Department of 2021 3,700 residents added Labor and Industry (DLI) 2022 Labor Day Report.
Population growth has created high demand for housing, leading to rising housing costs, and home prices have increased 90% from August 2020 to August 2022 in Flathead County, compared to 44% statewide, affecting the affordability of Housing impacts, DLI Public Information Officer Jessica Nelson said in an email to the Beacon.
But as house prices rise, economists say wages are not keeping pace with growth, and private-sector hourly wages are up just 8.5%, holding back labor supply as baby boomers continue to retire.
“Housing costs are rising faster than incomes, which is putting strains on household budgets and can affect workers’ ability to live close to where they work,” Nelson said.
Additionally, home values in Montana are above the national average, while average wages in Montana are lower compared to the rest of the country, making it difficult for workers to buy homes.
While wages have risen significantly amid a statewide labor shortage, immigration to Montana has strengthened the job market. Although the labor force has grown at a slower pace than population growth, economists say baby boomer retirements are the main cause of labor shortages.
Of a nationwide population of more than 1 million, only 63.5% of that population is employed or available for work, the report says.
More than 200,000 Montanans are currently retired, according to a population survey, and economists speculate that the pandemic has prompted early retirement. However, the data also suggest that a larger proportion of those over 65 are remaining in the labor force compared to 20 years ago, which economists attribute to employers offering more flexible working hours.
“The baby boomer population, reaching retirement age and exiting the workforce, is the primary driver of slow labor force growth in Montana and the US,” Nelson said.
Despite a labor shortage, Montana’s corporate economy continues to grow, with construction and real estate dominating Flathead County’s growth from 2019 through 2021, reflecting a demand for housing and lending services as demand exceeds supply. The hospitality and healthcare sectors have also created more jobs compared to recent years.
As Montana experienced significant economic growth in 2021, many new businesses were also added to the state, with 27% of workers being self-employed, which has also resulted in new job creation. The state added a record 4,697 new business startups in 2021, surpassing the 2020 record by 1,200. New businesses were mostly in the professional and business services sectors, likely reflecting an influx of teleworkers, the report said.
Economists predict that labor shortages will continue to challenge Montana’s growth, and the data suggests that there is a very limited available workforce that is not yet tied to an employer. Entrepreneurs adapt to the limited labor supply and invest in better training and labour-saving technologies, and productivity continues to rise.