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(While we commonly hear that increasing compensation is the most effective thing that Montana employers can do to aid in getting the workers a business needs, details as to what that means is not often addressed. This report from the Montana Manufacturing Extension Center offers more insight.)

What should our talented workforce focus on during their work hours? Ideally, we want everyone on our team to focus on the tasks at hand, and how to improve the work going forward. However, if private worries, including financial concerns, consume workers, how can we expect those on the shop-floor and in the office to focus on today’s work, let alone plan for tomorrow?

In Montana, employees face growing concerns about keeping up with the cost of living. In Billings, the overall cost of living index is 95% of the U.S. national average, in Bozeman it’s 122%, in Great Falls it’s 95%, and in Missoula it’s 105%.

In addition, Montana manufacturing wages are generally substantially lower than their corresponding U.S. averages (despite being higher than overall Montana wages). According to the annual manufacturing report of the Bureau of Business and Economic Research (BBER) at the University of Montana, the average earnings of Montana manufacturing workers in 2016 were $47,831, only about 72% of the national average in this sector. 

Other sources report even lower average earnings in Montana manufacturing. According to ZipRecruiter, “As of Jan 6, 2020, the average annual pay for the Manufacturing jobs category in Montana is $27,189 a year.” The job website Indeed reports similar data: “The average salary for a production worker is $13.32 per hour in Montana”, which equates to $26,640 for a 2,000 hour work year. Averaging the ZipRecruiter and Indeed data, the median income from these sources would be $26,915, or 86.5% of the 2016 U.S. annual median personal income of $31,099 (as reported by the U.S. Bureau of the Census).

Upon closer analysis, the data from ZipRecruiter and Indeed appear to better reflect the wages of entry-level, shop floor, and administrative positions in manufacturing, while the BBER data encompasses the average salaries of all manufacturing positions, including technical experts and upper management.  Nonetheless, in both cases, the data shows the significant disparity between Montana wages and national averages.

These are harsh facts about the gaps between the cost of living and manufacturing wages in Montana. Manufacturing workers, especially those in lower income production and office positions, must pay serious attention to personal budgets, in order to help reduce financial worries and related stress. Employers can also play a valuable role by providing financial and career development support.

I recommend manufacturing employers step in and step up, by adopting a two-pronged approach. First, they should provide financial literacy education and related support to their workforce, to help employees get the most from their employers’ compensation packages. Employees in entry level positions may benefit from this type of support the most, so it is important that these services are available early on and across all positions.

Secondly, employers should transparently connect workplace performance and skills acquisition to compensation, so that workers know the exact steps for moving toward increased wages and benefits.  This is particularly important for countering media reports that may dishearten employees, such as ZipRecruiter’s contention about manufacturing in Montana that “regardless of location, there are not many opportunities for increased pay or advancement, even with several years of experience.”

Manufacturing leaders must recognize the looming workforce challenges and address them with laser focus.  As part of this effort, it is critical to support your scarcest resource – the workers who make your products and delight customers.  If you provide them with clear paths to better personal prosperity, you will enjoy lower employee turnover, increased employee engagement, and stronger competitive advantage.