Update on Montanas Economy Presented to the Revenue and - PowerPoint PPT Presentation

Update on Montana’s Economy Presented to the Revenue and Transportation Barbara Wagner Interim Committee, Chief Economist Helena, Montana MT Dept. of Labor and Industry September 4, 2014

Montana’s Unemployment Rate Much Lower than the Nation 12 1 6.2% U.S. 10 Montana Unemployment Rate 8 6 4 4.6% 2 0 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Local Area Unemployment Statistics for Montana and Current Population Survey for U.S., Bureau of Labor Statistics and MT Dept of Labor and Industry (MT DLI)

Montana’s Labor Force Above Pre-Recession Peak Montana and U.S. Labor Force Indexed to 2008 Peak 103% 102% 101% 100% 99% 98% 97% 96% U.S. 95% Montana 94% 2007 2008 2009 2010 2011 2012 2013 2014 Source: Local Area Unemployment Statistics for Montana and Current Population Survey for U.S., Bureau of Labor Statistics and MT Dept of Labor and Industry (MT DLI)

Montana’s Aging Population 700,000 Under 20 20 to 64 Over 65 600,000 500,000 400,000 300,000 200,000 100,000 - 2000 2005 2010 2015 2020 2025 2030 Source: Census and Economic Information Center, MT Dept. of Commerce, April 2013

Labor Force Participation Recovering from Recession in Montana Montana and U.S. Labor Force Participation Rates Since 1976 Source: Local Area Unemployment Statistics for Montana and Current Population Survey for U.S., Bureau of Labor Statistics and MT Dept of Labor and Industry (MT DLI)

U.S. Labor Force Participation by Age Group Fewer Working in Younger Generations 90 25 to 29 30 to 34 80 35 to 44 45 to 54 20 to 24 70 55 to 64 U.S. Labor Force Participation 60 50 16 to 19 40 30 20 10 65 and Older 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Take Away Points • Montana’s unemployment now at ideal levels. • Ideally, rate stays at this level with both job growth and labor force growth. – More workers = greater potential GDP – Also need increased productivity and worker training • Montana labor force levels are recovering better than the U.S. from recession change. • Aging population and lower participation rates will be an ongoing concern.

Montana Annual Employment Growth Compared to Average, 1993 - 2013 5.0% Average Annual Growth Past 20 Years Payroll 4.0% Employment = 1.7% 2013 Growth: Total = 1.7% 3.0% Payroll = 1.9% 2.0% 1.0% 0.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -1.0% Average Annual Growth -2.0% Past 20 Years for Total Payroll Employment Employment = 1% -3.0% -4.0% Total Employment -5.0% Source: Local Area Unemployment Statistics and Current Employment Statistics, Bureau of Labor Statistics and MT DLI.

Employment Growth Slowed in 2013, but Recovered in 2014

2013 Federal Shutdown and Sequester - Closure of National Parks - 500 Fewer Federal Jobs - $8.0 B in 2010 to $5.2 B in 2014

Employment Growth Slowed in 2013, but Recovered in 2014

Claims Data Suggest Improving 2014 Source: Unemployed Claims from Unemployment Insurance Division, MT DLI, unemployed people from Local Area Unemployment Statistics.

Montana and U.S. Personal Income Growth Recovered in First Quarter 4% 3% 2% 1% 0% 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 -1% 2008 2009 2010 2011 2012 2013 2014 U.S. -2% Montana -3% -4% Source: Bureau of Economic Analysis

Take Away Points - Employment • Job growth in 2012 and 2013 has been above average and faster than the nation. – 5 th fastest state in the nation for employment growth. • Not at pre-recession pace, but should it be? • Preliminary employment data suggests record-breaking employment gains in 2014. • Personal income and claims data suggest economy speeding up from slow end of 2013.

Montana Continues High Rates of Entrepreneurialism • #4 among states for Percent of Households owning a Business (20%) • #12 among states for Net Employer Startups • Business started in last five years have added 60,000 net jobs to the economy • Entrepreneurialism likely driven by low wages but high quality of life Source: Employer statistics from Business Employment Dynamics, Bureau of Labor Statistics. Percent of Households from Current Population Survey, two-years of data ending May 2014. Analysis by MT DLI.

Business Openings and Closings As a Percent of Establishments • Business openings and closing rates have returned to pre-recession levels on average. • Increased seasonality related to construction industry. Source: Business Employment Dynamics

Share of Montana Employment, Establishments, and Average Wage by Size Class Source: Quarterly Census of Employment and Wages, MT DLI

Take Away Points -Entrepreneurialism • Montana pretty good at entrepreneurialism. – Has been important to job recovery. • Low wages likely a motivating factor. – Montana wages are 47 th in nation. – Montana per capita income is 36 th in nation. • We could do better at growing our businesses.

Montana Employment in Recession and Recovery by Industry Source: Quarterly Census of Employment and Wages, MT DLI.

2013 Unemployment Rates by Region and Reservation

Job Change by Montana Region Source: Local Area Unemployment Statistics, Bureau of Labor Statistics and the MT Dept. of Labor and Industry. Forecast by the MT Dept. of Labor and Industry.

Job Growth Based on Location of Business Shows Greater Growth in East vs. South Central 5,000 4,000 3,000 2,000 1,000 0 2007 2008 2009 2010 2011 2012 2013 -1,000 -2,000 -3,000 -4,000 -5,000 Northwest Southwest North Central South Central Eastern -6,000 Source: Quarterly Census of Employment and Wages

Reservation Employment Change • Federal cuts may have caused employment losses in education and health services, tourism on Blackfeet with the closure of the parks.

Take Away Points – Regions and Industries • All industries adding jobs except government. – Coding change in Business Services hides growth. – Most jobs added in Healthcare. • Eastern Montana has posted strong growth for last few years. • Western Montana posted good growth recently. • Reservation economies underperforming the state.

Are Recovery Jobs Good Quality Jobs? Source: Quarterly Census of Employment and Wages, MT DLI.

Average Weekly Hours of Payroll Jobs Recovered from Recession Lows

Average Annual Wage Growth by Sector • Montana has had the 5 th fastest wage growth among states over last ten years. Source: QCEW, MT DLI.

Montana Wage Growth, All Payroll Workers Nominal and Real $40,000 6% $37,576 Average Annual Wage Wage Growth Real Wage Inflation $35,000 5% $30,000 4% Average Annual Wage $25,000 Growth 3% $20,000 2% $15,000 1% $10,000 0% $5,000 $- -1% 2006 2007 2008 2009 2010 2011 2012 2013 Source: QCEW, BLS and MT DLI.

Separations and Hires Rate Still Below Pre-Recession Levels • Low separation and hire rates despite good unemployment suggests labor market frictions. (i.e. skills gap, geographical gap, wages not responding, etc.) Source: Quarterly Workforce Indicators, U.S. Census LEHD program.

Take Away Points - Job Quality • Job quality is of greater concern nationally than Montana. – Quality and wage growth improves with tighter labor markets. • Data suggests Montana adding more full-time jobs. • 5 th among states for wage growth over last 10 years – Wage growth in 2013 kept pace with inflation, with losses in the Southwest and North Central. Gains elsewhere. • Montana’s average annual wage still low, and 36% of part - time workers would like full-time work.

Projections for Payroll and Total Employment, Historic (2001-2013) and Projected (2014-2022) 17,000 12,000 7,000 2,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -3,000 -8,000 1.7% 1.4% -13,000 Total Employment -18,000 Payroll Employment -23,000 Source: MT DLI Employment Projections

Fastest Growing Industries 1. Health Care – 1,300 per year 2. Trade – 1,000 per year 3. Accommodation and Food – 950 per year 4. Construction – 700 per year Mining growth continues at slower pace. Slow growing industries include government, information, agriculture, and education.

Montana Jobs by Minimum Education Required, Current and Projected • Montana population needs to be more educated to fill job mix in the future.

MORE INFORMATION AVAILABLE: WWW.LMI.MT.GOV LABOR DAY REPORT LINK: HTTP://OURFACTSYOURFUTURE.ORG/ADMIN/UPLOADEDPUBLICATIONS/5686_ LDR14.PDF JOB PROJECTIONS REPORT LINK: HTTP://WWW.OURFACTSYOURFUTURE.ORG/ADMIN/UPLOADEDPUBLICATIONS /5621_EMPPROJ.PDF