What’s Happening onMain Street Montana

Adapted from the Main Street Montana Project PresentationHelena, Montana

June 27, 2013

Montana and U.S. Personal Income Growth

Source: Quarterly Personal Income, Bureau of Economic Analysis, U.S. Dept. of Commerce. 37 th using 2012 data.

2007

.120

07.2

2007

.320

07.4

2008

.120

08.2

2008

.320

08.4

2009

.120

09.2

2009

.320

09.4

2010

.120

10.2

2010

.320

10.4

2011

.120

11.2

2011

.320

11.4

2012

.120

12.2

2012

.320

12.4

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

U.S.Montana

14th Fastest Personal Income Growth since Depth

of Recession

5th Fastest in Last Year

37th Highest Personal Income Per Capita

Stock Market Crash

Euro Debt Crisis

Debt Ceiling Debate

Jan-07

Apr-07Jul-0

7

Oct-07

Jan-08

Apr-08Jul-0

8

Oct-08

Jan-09

Apr-09Jul-0

9

Oct-09

Jan-10

Apr-10Jul-1

0

Oct-10

Jan-11

Apr-11Jul-1

1

Oct-11

Jan-12

Apr-12Jul-1

2

Oct-12

Jan-1390.0%

92.0%

94.0%

96.0%

98.0%

100.0%

102.0%

Payroll Employment Nearly Recovered(Indexed to Peak Employment)

Source: Current Employment Statistics, May 2013 preliminary. Peak employment for Montana occurred in March 2008. U.S. indexed to Jan. 2008 peak. Bozeman to Montana’s March 2008 peak.

Montana

U.S.

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0

2

4

6

8

10

12

0

1

Une

mpl

oym

ent R

ate

7.6%

5.4%

Montana and U.S. Unemployment Rate

Source: Local Area Unemployment Statistics from MT DLI and the Current Population Survey from BLS. 14 th lowest from 2012 annual.

Montana

U.S.• Montana has the 14th lowest

unemployment rate in the U.S.

Regional and Reservation Unemployment 2012

Source: Montana Dept. of Labor and Industry Reservation Unemployment Rates, 2012, and Local Area Unemployment Statistics, BLS and MTDLI.

2007 2008 2009 2010 2011 2012 2013*

-10,000

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

Job Growth by Region

Source: Local Area Unemployment Statistics, Bureau of Labor Statistics and MT Dept of Labor and Industry. 2013 data is estimate based on four months of data.

Projected

NorthwestSouthwest

North CentralSouth Central

Eastern

2006 2007 2008 2009 2010 2011 2012 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000 $37,100

Montana Average Annual Wages

Source: Quarterly Census of Employment and Wages, BLS, and MT DLI

2006 2007 2008 2009 2010 2011 2012 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

-1%

0%

1%

2%

3%

4%

5%

6%

Wag

es

Wag

e G

row

th a

nd In

flatio

n

Montana Average Annual Wages

Source: Quarterly Census of Employment and Wages, BLS, and MT DLI

INFLATION WAGE GROWTH

2006 2007 2008 2009 2010 2011 2012 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

0%

1%

2%

3%

4%

5%

6%

Wag

es

Wag

e G

row

th a

nd In

flatio

n

Montana Average Annual Wages

Source: Quarterly Census of Employment and Wages, BLS, and MT DLI. 48 th determined by 2011 ranking.

WAGE GROWTH

2nd

Fastest Wage

Growth Last Year

Yet, 44th Highest Average Annual Wage

41st Hourly

Take Away Points

• Montana’s economy is growing quickly,• Faster income growth,• Faster job growth,• Faster wage growth, and• Lower unemployment than the nation.

• But we have a long way to go.• What are we doing right?• What do we need to work on?

• Let’s focus on wages.

Industry Composition of U.S. and MT Economies (by GDP)

US MT0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Government Government

Leisure ActivitiesLeisure ActivitiesAll Other

All Other

Health Care and Ed-ucation

Health Care and Ed-ucation

Business Services Business Services

Financial ServicesFinancial Services

Retail and Wholesale Trade

Retail and Wholesale Trade

ManufacturingManufacturing

Construction

Construction

MiningMining

Agriculture Agriculture

Transportation and Utili-ties

Transportation and Utilities

Source: Bureau of Economic Analysis, Gross Domestic Product 2011.

Utilities

Agriculture

Mining

Transportation

Manufacturing

Admin and Waste Services

Professional Services

Finance and Real Estate

Construction

Other

Public Affairs

Education

Leisure Activities

Health Care

Trade

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000

Comparative Industry Employment

Source: Quarterly Census of Employment and Wages, 2012.

Federal – 3%State – 5%

Local – 11%Private – 81%

Utilties

Education

Ag

Mining

Transportation

Manufacturing

Professional Services

Admin and Waste Services

Financial Activities

Construction

Other

Leisure Activities

Health Care

Trade

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Comparative Industry Private Employment: US, MT, and Southwestern MT

Source: Quarterly Census of Employment and Wages, 2011 Private Employers only.

MTUS

Montana Personal Income by Industry Since 1930

1930 1940 1950 1960 1970 1980 1990 2000 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mining

Wholesale And Retail Trade

Government

Services

Health Services

Professional and Technical ServicesFarm Earnings and Agriculture

Manufacturing

Construction

Transportation and Utilities

Finance and Real Es-tate

Leisure Activities

Other Services

Source: Bureau of Economic Analysis, Personal Income from 1930, SICs to NAICS conversion compiled by the Montana Department of Labor and Industry Research and Analysis Bureau.

Industry Mix Compared to U.S.

• Roughly equal in good-producing industries, but less manufacturing.

• Larger government, health care, and tourism.

• Smaller financial and business services.

• Industry mix doesn’t explain lower wages.

Wages and Productivity

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

10

20

30

40

50

60

70

New

Yor

kCo

nnec

ticut

Mas

sach

usett

sN

ew Je

rsey

Calif

orni

aIll

inoi

sM

aryl

and

Del

awar

eVi

rgin

iaW

ashi

ngto

nTe

xas

Colo

rado

Ala

ska

Min

neso

taN

ew H

amps

hire

Penn

sylv

ania

Geo

rgia

Mic

higa

nA

rizo

naRh

ode

Isla

ndW

yom

ing

Tenn

esse

eLo

uisi

ana

Ore

gon

Ohi

oN

orth

Dak

ota

Nor

th C

arol

ina

Mis

sour

iN

evad

aFl

orid

aW

isco

nsin

Kans

asIn

dian

aO

klah

oma

Ala

bam

aU

tah

Haw

aii

Verm

ont

Kent

ucky

New

Mex

ico

Wes

t Vi

rgin

iaIo

wa

Sout

h Ca

rolin

aN

ebra

ska

Mai

neA

rkan

sas

Idah

oSo

uth

Dak

ota

Mon

tana

Mis

siss

ippi

Ave

rage

Wag

e

Labo

r Pro

ducti

vity

(GSP

per

wor

ker h

our)

Source: Wages from Quarterly Census of Employment and Wages, 2011 annual. GSP and employment from the Bureau of Economic Analysis and average hours from the Current Employment Statistics. Calculated by MT DLI R&A.

Wages

Labor Productivity

Montana’s Aging Population

Source: Census and Economic Information Center, MT Dept. of Commerce, April 2013

2000 2005 2010 2015 2020 2025 2030 -

100,000

200,000

300,000

400,000

500,000

600,000

700,000 Under 20 20 to 64 Over 65

Working-age population levels out after

2015.

Workers must become more productive to

maintain economic growth.

Output (GDP)

PhysicalInputs

LaborCapital

Productivity Defined

Productivity: the “recipe” used to combine labor, capital (equipment), and inputs together to make output.

• Measured by labor in states.• Does NOT mean workers are lazy.• Recently, it is a factor of

technology.• Work smarter, not harder.

Output (GDP)

PhysicalInputs

LaborCapital

Productivity Defined

Output (GDP)

PhysicalInputs

Labor

Capital

High Productivity Low Productivity

Factors Influencing Productivity

• Education

Productivity and Education

Source: Education attainment from 2009-2011 ACS, U.S. Census. GSP and employment from the Bureau of Economic Analysis and average hours from the Current Employment Statistics. Calculated by MT DLI R&A.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Mas

sach

usett

sCo

lora

doM

aryl

and

Conn

ectic

utN

ew Je

rsey

Virg

inia

Verm

ont

New

Ham

pshi

reN

ew Y

ork

Min

neso

taW

ashi

ngto

nIll

inoi

sRh

ode

Isla

ndCa

lifor

nia

Kans

asU

tah

Haw

aii

Ore

gon

Del

awar

eM

onta

naN

ebra

ska

Mai

neG

eorg

iaA

lask

aPe

nnsy

lvan

iaN

orth

Dak

ota

Nor

th C

arol

ina

Ari

zona

Wis

cons

inTe

xas

Sout

h D

akot

aFl

orid

aM

isso

uri

New

Mex

ico

Iow

aO

hio

Idah

oW

yom

ing

Sout

h Ca

rolin

aTe

nnes

see

Okl

ahom

aIn

dian

aN

evad

aA

laba

ma

Loui

sian

aKe

ntuc

kyM

issi

ssip

piA

rkan

sas

Mic

higa

nW

est

Virg

iniaPo

pula

tion

25 a

nd O

lder

wit

h Ba

chel

or's

Educational Attainment

Productivity and Education

Source: Education attainment from 2009-2011 ACS, U.S. Census. GSP and employment from the Bureau of Economic Analysis and average hours from the Current Employment Statistics. Calculated by MT DLI R&A.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

10

20

30

40

50

60

70

Mas

sach

usett

sCo

lora

doM

aryl

and

Conn

ectic

utN

ew Je

rsey

Virg

inia

Verm

ont

New

Ham

pshi

reN

ew Y

ork

Min

neso

taW

ashi

ngto

nIll

inoi

sRh

ode

Isla

ndCa

lifor

nia

Kans

asU

tah

Haw

aii

Ore

gon

Del

awar

eM

onta

naN

ebra

ska

Mai

neG

eorg

iaA

lask

aPe

nnsy

lvan

iaN

orth

Dak

ota

Nor

th C

arol

ina

Ari

zona

Wis

cons

inTe

xas

Sout

h D

akot

aFl

orid

aM

isso

uri

New

Mex

ico

Iow

aO

hio

Idah

oW

yom

ing

Sout

h Ca

rolin

aTe

nnes

see

Okl

ahom

aIn

dian

aN

evad

aA

laba

ma

Loui

sian

aKe

ntuc

kyM

issi

ssip

piA

rkan

sas

Mic

higa

nW

est

Virg

iniaPo

pula

tion

25 a

nd O

lder

wit

h Ba

chel

or's

Labo

r Pro

ducti

vity

(GSP

per

wor

ker h

our)

Educational Attainment

Labor Productivity

Montana’s labor productivity is lower than expected given education levels.

Factors Influencing Productivity

• Education

• Experience in job

• Job Matching

• Industry Mix

• Urban concentration

• Use of technology

• Spread of best practices and innovative methods

• Business Size

Use of Technology(measured in percent of workers in IT fields)

Source: Occupational Employment Statistics, 2012. Employment in 11-3021 and 15-0000 as percent of total employment.

0%

1%

2%

3%

4%

5%

6%

7%

0

10

20

30

40

50

60

70

Virg

inia

Was

hing

ton

Mas

sach

usett

sM

aryl

and

Colo

rado

Del

awar

eN

ew Je

rsey

Calif

orni

aM

inne

sota

New

Ham

pshi

reCo

nnec

ticut

Ari

zona

Mis

sour

iU

tah

Geo

rgia

Texa

sRh

ode

Isla

ndN

orth

Car

olin

aN

ebra

ska

New

Yor

kO

rego

nIll

inoi

sO

hio

Mic

higa

nPe

nnsy

lvan

iaVe

rmon

tW

isco

nsin

Kans

asFl

orid

aA

laba

ma

Iow

aId

aho

New

Mex

ico

Nor

th D

akot

aIn

dian

aSo

uth

Caro

lina

Tenn

esse

eA

lask

aA

rkan

sas

Kent

ucky

Mai

neO

klah

oma

Haw

aii

Mon

tana

Sout

h D

akot

aW

est

Virg

inia

Nev

ada

Loui

sian

aW

yom

ing

Mis

siss

ippi

Perc

ent o

f Wor

kfor

ce in

IT o

ccup

ation

s

Labo

r Pro

ducti

vity

(GSP

/Wor

ker H

our)

Factors Influencing Productivity

• Education

• Experience in job

• Job Matching

• Industry Mix

• Urban concentration

• Use of technology

• Spread of best practices and innovative methods

• Business Size

Montana has High Rates of Entrepreneurialism

Source: Kaufman Foundation, 2012. Employer statistics from Business Employment Dynamics, 2010Q2 - 2012Q3, Bureau of Labor Statistics. Percent of Households from Current Population Survey, 2009-2012. Analysis by MT Dept of Labor and Industry

• #3 for Percent of Households owning a Business

• #6 for Employer Startups

• #15 for Net Employer Startups

Montana Ranks Among States

Business Startups by County 2007-2010(as percent of existing establishments)

Source: Research and Analysis Bureau, MT Dept of Labor and Industry

Job Performance of New Firms Started Since 2007 by Size

2007 2008 2009 2010 2011 2012 (3 Quarters)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jobs

Add

ed

New Firms of50 or More Employees

20 to 50 Employees10 to 19 Employees

5 to 9 EmployeesFewer than 5 Employees

Source: Research and Analysis Bureau, MT Dept of Labor, using QCEW micro data.

Fewer than 5

5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 250 and over

0%

10%

20%

30%

40%

50%

60%

70%

Perc

ent o

f Mon

tana

Em

ploy

ers

Smaller Business Larger Business

Montana has Lots of Small Businesses, but Large Business Provide the Jobs and Wages

ESTABLISHMENTS

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2012

Fewer than 5

5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 250 and over

0%

10%

20%

30%

40%

50%

60%

70%

Perc

ent o

f Mon

tana

Em

ploy

ers

Smaller Business Larger Business

Montana has Lots of Small Businesses, but Large Business Provide the Jobs and Wages

EMPLOYMENTWAGES

ESTABLISHMENTS

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2012

Large Businesses Provide Higher Pay and Benefits

Source: Quarterly Census and Employment and Wages and Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. 2011 Medical Expenditure Panel Survey-Insurance Component.

Fewer than 5

5 to 9 10 to 19 20 to 49 50 to 99 100 to 249 250 to 4990

10,000

20,000

30,000

40,000

50,000

60,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ave

rage

Wag

e

Perc

ent

of F

irm

s O

ffer

ing

Insu

ranc

e

Average WageProviding Insurance

Factors Influencing Productivity

• Education

• Experience in job

• Job Matching

• Industry Mix

• Urban concentration

• Use of technology

• Spread of best practices and innovative methods

• Business Size

Economic Development Concept Map

Full Report Available atwww.lmi.mt.gov

Barbara Wagner,Chief Economist

Montana Department of Labor and Industry406-444-5474

bwagner@mt.gov