Montanans' Personal Income Is Growing Faster Than Most Of The U.S.
A decade out from the Great Recession, personal incomes and wages are growing in Montana faster than most other places in the United States.
“It’s one of the top ten states with the strongest growth in total personal income, both over the ten years since the start of the Great Recession and over the past year,” says Barb Rosewicz, a project director with The Pew Charitable Trusts State Fiscal Health research team.
Pew released its latest comparison for state personal income growth earlier this month. Western states fill out the majority of the top ten and Montana ranks 9th.
“Montana’s personal income has grown the equivalent of 2.3 percent a year," Rosewicz says. "Over the U.S. broadly, that growth has been 1.9 percent a year. So you can see that Montana is doing better than the country at large.”
Rosewicz says this kind of tracking of personal income growth has more to say about a state’s economy as a whole rather than the changes individual Montanans might be seeing in their paychecks or other sources of income.
It’s one way to gauge the health of the state economy, which Montana lawmakers have paid close attention to in recent weeks as they’ve started building the next state budget.
“The more dollars that residents are earning or collecting in a state, the more of a base there is to generate tax revenue to cover all of those essential services provided by a state,” Rosewicz says.
When Montana lawmakers meet for the 2019 session they’ll debate how to fund that government activity, which, broadly speaking, is divided up into three main piles: healthcare, education and incarceration.
Montana’s economic output is one of the major indicators used by forecasters in predicting how much money the state will earn.
And they say state revenues are also on an upward track.
“You can see what we’re calling modest growth,” says Montana Legislative Fiscal Division Director Amy Carlson. She gave lawmakers that projection in mid-November.
Personal income in Montana has been insulated from some of the larger economic sways seen in other parts of the country since the Great Recession.
That’s according to Barbara Wagner, the chief economist at the Montana Department of Labor and Industry.
“And a lot of that is because Montana hasn’t had the same slow down during the recession and we had a faster recovery out of the recession than almost every other state.”
Montana families and businesses did take a hit during the recession. But Wagner says the state’s economic hardships and successes happened at different times and in different places.
“The western portion of the state was hit very hard by the recession, particularly the construction industries and the timber industries. However, we also had the agriculture industry and the energy industry in the eastern portion of the state that had very strong years during and exiting the recession. And that helped balance out our state as a whole.”
When viewing personal income growth within the timeframe since the Great Recession, Montana is beating the national pace. However, a 20-year frame shows Montana is just keeping up with the U.S. historic pace, according to Pew research.
When looking at another measuring stick of the economy, the value of all goods and services in the state, researchers in the Legislative Fiscal Division don’t expect Montana’s Gross State Product to grow any faster than the long-term average in the coming years.
Looking at the economy is generally a good start for understanding or projecting the health of the state’s pocketbook, which lawmakers will continue to keep tabs on when they meet in January.
Although there are other factors, such as policy changes like the new federal tax law, it’s still unclear how that will change some aspects of taxpayer behavior and, in turn, state revenues.