RESOLVING MONTANA'S LABOR SHORTAGE: Is There Any End in Sight?

• Author: Barkey, Patrick M.
• Position: TRENDING

Demand in the economy in Montana and elsewhere has roared back with unexpected speed from the pandemic declines of 2020. When you combine that surprising growth surge with the reality that public health disruptions in schools, workplaces and logistics remain with us, albeit in different forms, you have an economy that is supply constrained in a significant number of sectors.

One of those sectors is the labor market. To say that the balance of power in the give and take between workers and employers has swung toward workers in recent months would be an understatement, and that is just one of many surprises. In past recessions, employment growth lags economic growth, as employers hire back laid-off workers only after all other measures to boost output--such as working the existing workforce more hours--have been taken.

The brief but severe 2020 pandemic recession has been a completely different animal. Not only did the resumption of job growth occur in April 2020, barely two months after the February 2020 date considered to be the pre-recession peak, but the growth was strong. As shown in Figure 1, this very rapid down-up pattern of employment stands in stark contrast to the two-year-long malaise in employment that occurred during the Great Recession of 2007-09.

Now as we move through the fall of 2021, we have a mixture of circumstances that are placing heavy demands on the labor market at a time when labor supply is challenged. Not all of these are unique to this recession, but many are. They include:

* The reopening of the economy as vaccination rates rose and anxiety levels over pandemic contagion eased. The reopening was strongest in industries previously hurt the most, notably the highly seasonal and labor-intensive accommodations, restaurant and personal services industries.

* The redirection of national visitor demand from international to domestic destinations, including Montana, as international travel continued to be challenged by COVID-related restrictions. The Bozeman Yellowstone International Airport enplanements were almost 90% higher in June than pre-pandemic, the second highest increase of any airport in the country.

* The withdrawal of many former workers from the labor market for a variety of reasons, including financial security from stock market and housing wealth increases, government support payments, spousal income and COVID-related concerns.

One last factor contributing to pressure on Montana labor markets is the...