1. 2015 Labor Day Report: Annual Report on the State of Montana’s Economy Barbara Wagner Chief Economist Labor Arbitration Conference October 8, 2015 Fairmont, MT

2. Today’s Agenda 1.Overview of Montana’s Economic Performance 2.Worker Shortage Ahead 3.Some Stats on Unions 4.Potentially Helpful Tools

3. Montana’s Economic Growth Continues U.S. and Montana Personal Income Growth Source: Bureau of Economic Analysis 3 9 th fastest growth over five years

4. Personal Income by Quarter Source: Bureau of Economic Analysis

5. Personal Income by Quarter Source: Bureau of Economic Analysis

6. Personal Income by Quarter Source: Bureau of Economic Analysis

7. Oil Price Decline Slowed Employment Growth, but Not Wage Growth Source: Quarterly Census of Employment and Wages, BLS and MT DLI

8. Employment and Labor Force Expanding

9. Job growth of over 2,000 jobs per month in 2015

10. Annual Total Employment Growth in Montana and U.S. Since 2004 U.S. MT Source: Local Area Unemployment Statistics, BLS and MT DLI, Current Population Statistics, BLS 10 14 th among states for total employment growth over 10 years

11. Unemployment Rate at Ideal Levels Source: Local Area Unemployment Statistics 5.3% 4.0% 13 th lowest unemployment rate among states in 2014

12. Unemployment Rate at Ideal Levels Source: Local Area Unemployment Statistics 4.0% Normal Unemployment Range

13. Strong Wage Growth Montana Average Annual Wages Source: Quarterly Census of Employment and Wages

15. Real Wage Growth Higher Than Inflation Montana Average Annual Wages Source: Quarterly Census of Employment and Wages

16. Real Wage Growth Higher Than Inflation Montana Average Annual Wages Source: Quarterly Census of Employment and Wages

17. Montana Wages and Income Low Compared to Nation Montana Income and Compensation as Percent of U.S. (2005 Dollars) Source: Bureau of Economic Analysis, Bureau of Labor Statistics, analysis by MT DLI Per Capita Income Compensation Wages

18. Real Montana Wage Growth by Ownership

19. Strong Wage Growth in All Regions of State Source: Quarterly Census of Employment and Wages, MT Dept. of Labor and Industry

20. Take Away Points Montana’s economy is doing pretty awesome. – 5 th fastest wage growth over five years Wage growth driven by private sector – 5 th fastest GDP growth over five years – 7 th fastest personal income growth over five years – 13 th lowest unemployment rate last year

21. Job Growth Over Last Year By Industry Source: Quarterly Census of Employment and Wages, MT Dept. of Labor and Industry

22. Industry Performance GDP Growth and Employment

23. Unemployment Rates for Regions and Reservations

24. Job Growth by Region Source: Local Area Unemployment Statistics, Montana Dept. of Labor and Industry

25. Reservation Areas Percent Employment Change over Prior Year Source: Local Area Unemployment Statistics for Reservation Areas, Montana Dept. of Labor and Industry

26. South Central Region and Cascade County Employment Change over Prior Year Source: Local Area Unemployment Statistics, Montana Dept. of Labor and Industry

27. Industry Performance Jobs Added in Cascade County over Last Five Years Source: Quarterly Census of Employment and Wages, MT Dept. of Labor and Industry

28. Upcoming Challenges 1.Strengthening dollar 2.Low oil and commodity prices 3.Worker shortage

29. World GDP Growth Source: World Bank Global Outlook, June 2014

30. U.S. Economy Doing Better Than Rest of World Dollar strengthens against other currencies – Harms exporting industries – Imports less expensive Reduced global demand for commodities

31. Montana Foreign Exports in 2012 Including Nontangible Services Source: Exports including services from the Brookings-Rockefeller Project on State and Metropolitan Innovation. Mining, Metals, and Chemical Manufacturing 16%

32. Impacts of Lower Commodity Prices Low oil prices slowed personal income and employment growth in 2 nd half of 2014. – Job losses in Eastern region have stabilized – Related job losses in temporary employment services Mining lost 311 jobs in 2014, but not in oil and gas mining. Petroleum refining expected to remain stable. – Refining comprises over half of manufacturing output. – 3.9% of GDP in 2014 (compared to 1.2% for oil and gas extraction)

33. Labor Force Participation Recovering from Recession in Montana 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 and U.S. Labor Force Participation Rates Since 1976

34. U.S. Labor Force Participation by Age Group Fewer Working in Younger Generations Source: Current Population Statistics, U.S. Bureau of Labor Statistics

35. Montana’s Aging Population Source: Census and Economic Information Center, MT Dept. of Commerce, April 2013 Under 2020 to 64Over 65

36. Worker Shortages Expected Assumes labor force participation will increase in response to more jobs and higher wages. Source: Montana Dept. of Labor and Industry Employment Forecasts

37. Job Forecasts Expect Slightly Slower Growth Due to Worker Shortage Expect per year: 6,500 more jobs 4,100 new workers

39. Solutions to a Worker Shortage 1.Recruit more people into Montana. – Other states also have aging populations. – Wages are higher in other states. 2.Recruit more workers into the labor force. Source: Current Population Survey and 2011-2013 American Community Survey

40. Solutions to a Worker Shortage 3.More full-time employment. – 6 th highest percent of part time work in the nation. – Shortest work week in the nation.

41. Addressing the Gender Wage Gap 41 Pay Gap Ratio Percent Female Source: ACS, 2013 3-Year Estimates. Some small industries removed for simplicity.

42. Solutions to a Worker Shortage 4.Reduce time out of labor force for retraining. – More on-the-job training like internships and apprenticeships. – More business-paid training for specific skills. 5.Improve labor productivity to produce more with fewer workers. – Technology improvements – Better job matching – More training for professionals

43. Take Away Points U.S. and Montana economies have momentum to weather international troubles. Tight labor markets expected. – Workplaces may have different culture in the future as businesses work to recruit atypical workers. – Creativity in hiring and retention practices

44. Today’s Agenda 1.Overview of Montana’s Economic Performance 2.Worker Shortage Ahead 3.Some Stats on Unions 4.Potentially Helpful Tools

45. Union Coverage by State Percent of Employment who are Members in a Union or Covered by a Union Source: Current Population Survey, compiled by Union Membership and Coverage Database at www.unionstats.com.

46. Median Usual Weekly Earnings for U.S. Union and Non-Union Workers Source: Bureau of Labor Statistics, Median usual weekly earnings, employed full-time, Wage and Salary Workers

47. Number of Work Stoppages in U.S. Source: Work Stoppages Data, Bureau of Labor Statistics

48. Wage Information www.lmi.mt.gov Wages by Occupation by Region

49. Wage Rates by Region

50. Cost of Living Increases www.bls.gov/bls/escalation.htm

51. Regional Price Changes U.S. and Metro prices only. Wage growth and price increases similar in most circumstances. – But not necessarily in E. Montana. New data being released soon to provide more county price information.

52. MORE INFORMATION AVAILABLE: WWW.LMI.MT.GOV WWW.LMI.MT.GOV