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Montana is adding jobs, but inflation is cutting into earnings

Montana Gov. Greg Gianforte says his administration has surpassed a major goal for economic growth during his first year in office. MTPR’s Shaylee Ragar reports the state met the goal but the administration faces the challenge of keeping up the pace this year.

Gianforte campaigned ahead of the 2020 election on a promise to lead what he called Montana’s comeback. The state, like most across the country, experienced an economic recession during the COVID-19 pandemic.

After his election, Gianforte brought a list of priorities, including cutting taxes for residents and businesses, that he said would fulfill that promise. Most of those policies passed with the help of a Republican-majority Legislature.

To measure his success, he set a goal for Montana to add 10,000 jobs that pay $50,000 a year in 2021. He announced last week he exceeded that benchmark by nearly 3,000 jobs.

“We got here by cutting taxes and red tape, attracting new businesses and investing in our workforce to ensure that Montanans have the skills they need," he said.

Gianforte told MTPR he hasn’t yet analyzed data showing where in Montana these new jobs are located.

Along with the policies that Gianforte attributes to the state's job growth, other forces were also at work in the state’s economy.

Montana last year got a windfall of cash from the federal government not seen in recent history. The state received roughly $3 billion in pandemic-related stimulus funds, which it spent on major infrastructure improvements and workforce training, among a variety of other economic initiatives.

Montana State University economics professor Christiana Stoddard said it’s not possible to tease out what specifically led to the increase in jobs in Montana last year – there was a lot going on.

However, she says the increase in 10,000 new jobs is consistent with what the state was experiencing leading up to 2021.

"That’s absolutely something that was right in line with historical patterns of job growth in Montana," she said.

She says it’s clear Gianforte’s goal isn’t only about adding jobs.

“The $50,000 is really targeting, kind of, quote, 'good jobs' and jobs that historically have been kind of more about, you know, a quarter of the workforce of Montana," she said.

Stoddard noted the $50,000 per year benchmark was above Montana’s individual median wage of $38,000 in 2021. The national median wage last year was higher at about $48,000.

Gianforte did not raise the goal in 2022. In January of this year, he set the same goal to add another 10,000 new jobs paying $50,000 in 2022.

Gianforte says he expects to again surpass it, but says reaching the goal this time could be more challenging.

“We are running into some headwinds related to increasing costs," he said. "People are facing higher prices at the pumps and the grocery store, in housing.”

Gianforte blames those economic headwinds on inflation spurred by federal government spending, including the trillion dollar pandemic-era stimulus package that poured money into Montana.

Rising inflation changes the economic frame for how Gianforte's new goal for 2022 should be considered.

Economist Stoddard says a $50,000 salary doesn't go as far in 2022 as it did in 2021 and that wages nationwide have grown by 6% in the last year.

“If we were expecting to see the same kind of wage growth, if we’re trying to keep a quote 'constant wage target' in Montana, instead of saying how many people are making more than $50,000, now we’d be saying how many are making more than $53,000," she explained.

And if Montana were trying to keep wages at pace with the 9% inflation rate over the last year that has increased costs of goods and services, "it would be more like $54-, $55-, $56,000," Stoddard said.

Stoddard says rising costs are compounding previously present economic hardships for Montana families like affordable housing and the cost of child care.

Heather O’Loughlin is director of the Montana Budget and Policy Center, an organization that often advocates for government policies that help low-income residents. She says the 10,000 good-paying jobs goal is a helpful benchmark, but is too broad to tell the whole story of Montana’s economic health.

“It is helpful to really think about, what are the communities and populations that were hit hardest by COVID and the economic recession, and then start to really think about what do we do," she said.

She suggests the state’s job data should be broken down to a more granular level, like by race and ethnicity, and to look at the number of families living in poverty.

Gianforte has created a task force to come up with ideas to address affordable housing issues and he directed one-time-only federal stimulus dollars to aid child care providers in the state. It’s not clear yet what solutions his office may propose during the next legislative session five months from now.

Gianforte said his successes and remaining challenges will inform his list of priorities for the next session.

“There won’t be a whole lot of surprises in there. It’s going to build on what we did in the Comeback Plan in 2021," he said. "You should expect to see lower tax rates for all Montanans, further regulatory relief, expanded investments in workforce training, and trades education in particular.”

The governor will release his priorities and proposed budget later this year ahead of the 68th Montana Legislature set to begin in January.

Copyright 2022 Montana Public Radio. To see more, visit Montana Public Radio.

Shaylee is a UM Journalism School student. She reports and helps produce Montana Evening News on MTPR.