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Dispelling
the myths of a declining economy and a deprived citizenry in the
Mountain West
By
Thomas Power
and Richard Barret
for Headwaters News
The economy of the Mountain West confounds most
observers.
Some economic statistics indicate that this is one of the nation’s
poorest regions. Judged by average incomes, Idaho, Montana, New
Mexico and Utah are among the poorest 10 states in the nation, and
Arizona just missed being part of that undistinguished group, coming
in 14th from the bottom.
Wyoming, too, was in the poorest half of states and was sixth from
the bottom in terms of pay per job. Only Colorado and Nevada were
in the top half. Obviously the Mountain West’s economies are
failing miserably.
At the same time, the Mountain West continues to be the fastest-growing
region in the nation, a pattern established in the 1970s. It is
generating new jobs and income, and attracting new residents and
businesses at a rate that makes most other states envious. Obviously
the region’s economies are amazingly successful.
Which is it?
We wrote Post-Cowboy Economics: Pay and Prosperity in the New
American West to explain this Western economic puzzle. Here,
in very summary form, we present some our major conclusions.
Average pay and income
During the 1980s, pay per job fell all across
the Mountain West, and although there was some recovery during the
1990s, by 1998, real pay per job was still less than it had been
in 1978. In some cases, notably Montana, the decline over the period
was large.
Although that obviously signals an erosion of earning opportunities,
it overstates how badly workers and their families are doing. This
is true for a variety of reasons.
One is a growing preference among workers for part-time employment.
Another is that by holding more than one job, workers can increase
their earnings as individuals, even if each job pays less. In fact,
pay per worker has outperformed pay per job over the past two decades.
And finally, income per capita has risen steadily, despite the decline
in pay per job, both because non-employment income has risen and
a larger part of the population is working.
The increase in the number of part-time workers over the past two
decades should not be seen as a sign of a deteriorating job market.
About nine of every 10 workers working part-time say they do so
by choice. Part-time jobs allow people with family responsibilities
to work outside the home, students to partially or fully support
themselves while they attend school, and farm families to stay in
agriculture by diversifying the family economy with off-farm work.
Multiple jobs also are not always a sign of a poorly functioning
economy. Although moonlighting is often seen as the default strategy
of workers struggling to make ends meet, workers at all income levels,
both high and low, practice it with about the same frequency and
for a variety of reasons.
Change in industrial structure and
declining pay
The distinguishing feature of the Mountain West
economy over the past quarter-century was a decline in natural resource
production and processing. Contrary to dire predictions, these changes
in the industrial structure of the Mountain West did not lead to
economic collapse.
Rather, during the period in which natural resource industries were
contracting sharply, the region showed impressive economic vitality,
leading the rest of the nation in population and job growth.
Changes in the industrial structure also did not cause the fall
in pay that occurred across the Mountain West during the 1980s and
continued in some of the states, notably Montana, during the 1990s.
If, after 1978, the share of jobs in natural resource industries
had never declined (which would have required these industries to
grow at the same brisk pace as the economy as a whole), 90 percent
or more of the decline in average pay would have taken place anyway.
Changes in industrial structure, in general, did not lead to painful
economic disruptions in workers’ lives. Our study of the wage
histories of hundreds of thousands of workers in Montana indicates
that during a period of ongoing change in industrial structure,
workers found stable employment relatively quickly.
The minority that interrupted a long history of employment in one
industry to move to another tended to see their pay rise, not fall.
Highly paid natural-resource workers who changed industries were
not forced into relatively low-paid tourist and trade jobs; rather,
they typically were able to find new, relatively well-paid work
in construction and other manufacturing.
Are we poorer in the Mountain West?
Although in real terms, per capita income in
the Mountain West grew steadily following the 1982 recession, and
pay per job, after falling for a decade, recovered significantly
during the 1990s, relative to the rest of the country, both pay
and income fell between 1978 and 1998.
By 1998, there appeared to be a looming gap in both pay and income
between the region and the rest of the country. But this gap largely
disappears under closer examination.
We looked closely at which workers suffered the most from the pay
gap. Focusing on Montana workers, we found that it was upper-income
and more highly educated workers who had the largest pay gap relative
to the rest of the nation.
Lower-income and less-educated workers, although their pay was low,
were being paid about as much as they could earn elsewhere in the
nation.
Nationally, pay levels reflect community size: high in the biggest
cities and low in smaller cities, towns and rural areas. This means
that in calculating and comparing average pay for the Mountain West
and the nation as a whole, it is important to take into account
where people live.
Residents of the Mountain West, on average, live in much smaller
places than other Americans, and it is this difference that accounts
for the entire gap in pay between the region and the nation.
When the pay received by residents of the Mountain West’s cities
and rural areas is compared to that of residents in cities of similar
size and other rural areas across the country, there is no gap.
This is even true of Montana, which has the lowest pay in the nation,
but also some of the smallest cities and one of the most rural populations.
Residents of the Mountain West earn relatively low incomes because,
disproportionately, they live in small communities. But this does
not mean that they, and the millions of other Americans living in
communities much like theirs, are economically deprived. On the
contrary, as do other Americans, they find life outside the nation’s
large metropolitan areas offers important compensations for low
earnings and income.
(more)
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Oil
and gas light up Western economy
By
Greg Lakes, editor
Headwaters News
Jan. 23, 2001
The region's economy
continued its dive in the past few months, reflecting the national
recession with a few regional twists.
Urban centers, such as Denver, Phoenix and Boise, watched high-tech
and financial jobs disappear in the national malaise, and rural areas
with less-obvious benchmarks noted increases in welfare and Medicaid
caseloads and a rise in the number of poor families.
The bright spots were in energy-producing states still riding last
winter's deregulation scare and the Bush push for more domestic production,
although the boom mostly just eased the bust.
Perhaps the clearest picture is showing up in state and provincial
legislatures, where most of the region's lawmakers that are meeting
this winter are swimming in red ink. A quick scorecard:
- Utah is $200 million short in
this year's budget.
- Colorado lawmakers will wrestle
a half-billion-dollar billion deficit.
- Idaho's governor announced $100
million in cuts before December figures showed an even wider gap.
- New Mexico, one of the energy
states, has only about $8 million in so-called new money to spend
this year, compared with $500 million last year.
- Alberta is facing $1.3 billion
in spending cuts without some major tax changes, and experts predict
worse next year.
- British Columbia laid off about
one-third of government workers in a plan to trim spending that
predates the current recession.
The private-sector indicators were dropping
fast. Colorado, one of the region's hottest high-tech spots, teetered
on the edge through much of last summer, but has slipped badly since.
The latest events were exemplary: Merrill Lynch announced earlier
this month that it was eliminating 1,000 jobs in the Denver area,
and a merger between two high-tech firms closed a call center and
moved 1,000 jobs out of state.
In sum, Colorado companies laid off 31,500 people last year.
In Arizona, the tally was 33,000 jobs lost, the most in any year
since the 1982-'83 recession, mostly due to cutbacks in the construction,
manufacturing and tourism industries.
The events of Sept. 11 undercut the airline industries and slowed
travel-dependent Salt Lake City's hopes for revival. Wyoming's commercial
aviation dropped more than 6 percent and tourist-related businesses
suffered as a result. Las Vegas lost 5 percent of its total jobs
as a result of the attacks, and Colorado ranked 22nd of 315 cities
studied, with 17,000 jobs lost as a direct result.
The number of empty offices in Utah, and the number of empty downtown
storefronts, continued to climb, and not even the once-in-a-lifetime
megapromotion of the Winter Olympics was expected to boost much
more than the state's service sector and for not much longer than
the duration of the games.
(more)
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By
Ed Marston
Reprinted
with permission of Writers on the Range
What makes states like Wyoming and Montana,
or parts of states like southern Utah or northern Idaho poor?
Why are they either uniformly poor, like Indian reservations
or much of the High Plains, or divided among seasonal residents
and the many who get by on several part-time jobs or by pulling
in their belts another notch?
Part of the answer is in a recent book
by two University of Montana economists, Thomas Michael Power
and Richard Barrett. The book, "Post-Cowboy Economics,"
proves that if you live far from a city, your job will, on
average, pay poorly. The country mouse -- whether a brain
surgeon or a waitress -- will make substantially less than
a city mouse with the same skills and job.
Power and Barrett argue that low pay does not mean life is
unfair. Far from it.
They write that when "combined with a higher quality
of life, lower incomes are a sign not of failure but of strength;
they are an indication the people understand their own needs,
that they share those needs with their neighbors, and that
together they have provided for them."
It's a heartfelt plea. But it's not working. It is especially
not working in the economists' home state of Montana, which
is poor even compared to other non-metro areas.
Montanans' real pay per job has had a sickening drop in the
last 20 years, from about $30,000 per job to about $22,000
per job.
Meanwhile, the average wage per job nationally has held steady
at $32,500.
Montana now vies with Mississippi for low state on the wage
scale.
Montana's high-wage days occurred when copper was king in
Butte, and logging, milling, and ranching and farming were
kings elsewhere in the state.
That is why some Montanans, economically nauseated from their
sickening decline in job income, are attempting to re-create
the good old days.
Former Gov. Marc Racicot, and now Gov. Judy Martz, who is
proud to be a "lapdog of industry," have helped
repeal Montana's progressive environmental protection laws,
and have laid out a brown carpet for coal mines, power plants,
gold mines and anything else the global economy may want to
place in Montana.
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