1. 2015 Labor Day Report: Annual Report on the State of Montana’s Economy Barbara Wagner Chief Economist State Workforce Investment Board Meeting September 17, 2015 Helena, MT

2. Montana’s Economic Growth Continues U.S. and Montana Personal Income Growth Source: Bureau of Economic Analysis 2 9 th fastest growth over five years

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

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

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

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

7. Employment and Labor Force Expanding

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

9. 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 9 14 th among states for total employment growth over 10 years

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

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

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

14. Real Wage Growth Higher Than Inflation 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. 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

17. Real Montana Wage Growth by Ownership

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

19. 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

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

21. Industry Performance GDP Growth and Employment

22. Unemployment Rates for Regions and Reservations

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

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

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

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

27. 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

28. 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%

29. 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)

30. 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

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

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

33. 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

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

35. 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

36. 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.

37. 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

38. 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

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