Overall, Montanans have become more affluent as the influx of people moving into the state have tended to be more affluent than the average citizen. According to Bryce Ward, a Montana economist and consultant, between 2019 and 2021, the number of Montana households earning $200,000 or more per year increased by nearly 12,000, or 63%.
By far, Montana saw the largest percentage increase of wealthy households during the pandemic compared with all other states in the U.S. based upon American Community Survey data.
There were 18,918 such households before the pandemic in the state with incomes over $200,000. Now there are 30,784.
“Data confirm what many Montanans have already noticed,” Ward wrote on Twitter. “Lots more ‘rich’ people live in Montana.”
Ward said, that Montana in the last decade has gone from one of the states with the smallest slices of wealthy households to middle of the pack.
The next closest states to see such drastic increases were Rhode Island and Vermont at 50% and Utah at 44%. Several states, like North Dakota, Illinois and California, saw a decrease of wealthy households. In the U.S. overall it was about 20%.
The next closest states to see such drastic increases were Rhode Island and Vermont at 50% and Utah at 44%. Several states, like North Dakota, Illinois and California, saw a decrease of wealthy households. In the U.S. overall it was about 20%.
The surge in high-income households in Montana over that two-year period was the highest percentage increase for any state over any two-year period of the last decade. The previous record was Montana during 2011-2013 at 59% and Idaho between 2017-2019, also at 59%.
“There was inflation and wage growth kind of everywhere, but we got a lot more households earning over $200,000 than other places did,” Ward explained. “Given that wages generally weren’t rising here faster than nationally in that period, that suggests to me that some people that were earning a lot of money chose to move to Montana at disproportionally high rates during the pandemic. And that’s consistent with what a lot of people have observed with their own eyes.”
“In 2011, Montana’s share of households earning over $200,000 was like 2%,” he explained. “Now we’re at 6.5%. In 2011, Montana was fifth from the bottom, and now we’re basically the median state. We’ve disproportionately grown households at the top income level relative to other states and the nation as a whole.”
Ward said that the rise in wealthy households is “the thread that runs through a lot of conversations” in Montana.
“It’s the old Montana versus the new Montana,” he said. “There was always money floating around, but over the course of the last decade and particularly the last two years it has really ratcheted up. Money is powerful within a market society. Things get shaped by those people, and people notice those changes.”
Montana’s rise in high-income households also coincided with a drastic increase in housing prices. Between the last quarter of 2019 and the first quarter of 2022, the median home sales price in Montana rose 41%. In Missoula and Kalispell, that number was 51%.
Montana’s home construction did not keep up with demand during the last decade, and especially during the pandemic.
“If I’m a wealthy person or a person with a higher income coming in from out-of-state, competing for the same house with a local, the out-of-state person can win,” Ward said. “Then the person who’s local feels like they’re getting squeezed out. That’s why they’re all mad.”
The increase in housing prices will also lead to an increase in property values, he noted, and therefore an increase in property taxes.
Another indication that it was out-of-staters driving the increase was that that the share of people working from home in Montana more than doubled between 2019-2021 and nearly tripled in Missoula, Helena and Billings. More than 20% of workers in Missoula, Bozeman and Kalispell worked from home in 2021.
“I don’t think we created a bunch of jobs that paid more than $200,000 in Montana,” Ward said. “What changed was people’s ability to live in Montana and access a job that pays more.”
Along with that, however, was the ability of Montanans who were previously underpaid to live here and access jobs that paid more money but were based out-of-state. That may have driven up wages for incumbent Montanans, Ward explained.
Earlier this year, the Daily Inter Lake newspaper in Kalispell reported that Barb Wagner, the chief economist for the Montana Department of Labor and Industry, found that Montana’s GDP grew at the 7th fastest rate in the nation in 2021.
“Montana has the 10th fastest (wage) growth in the states in the last year … and is up 21% in the last two years,” according Wagner said.
And it’s not so much that more people are moving in, but that fewer people are leaving. Before the pandemic, about 40,000 people would move to Montana every year and slightly less than 40,000 would move out. But during the pandemic, census data shows, about 45,000 people moved in a year and only about 30,000 people left.
Ward said that Montana saw a slow, steady rise in the number of high-income households every year over the last decade, but it jumped sharply once COVID hit.
“The pandemic just lurched us forward and did so at the same time as some other changes that put enormous pressure on housing prices, like historically low interest rates and rising household formation rates,” he said. “And if we we’re also attracting people with money from elsewhere, and people aren’t leaving, that’s how you get a 63% increase in the share of high-income households.”
