Government

Barkey on Dealing with Montana’s Labor Shortage

5 November 2021
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The current labor shortage in Montana carries with it some surprises that haven’t been seen before, but reaction to them should be much the same as it has been for any labor shortage, according to Patrick Barkey, Director of the Bureau of Labor and Industry.

“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,” writes Barkey in the most recent issue of the Montana Business Quarterly.

“In past recessions, employment growth lags economic growth, as employers hire back laid-off workers only after all other measures to boost output” …but … “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.”

Barkey reminds that prior to the COVID-19 mandated business closures there were already concerns about a shrinking labor market.

At the same time, employers and employees alike, expected the shutdowns to be longer, which prompted different responses by both than what might have happened had the realized the short duration.

Many employees used the time to look around for new options and different career opportunities, which because it was a strong market there were many. And, many employers deeply regretted breaking ties with experienced and trained employees.

While some of the circumstances impacting this labor shortage are not unique, some are:

—The reopening was strongest in industries previously hurt the most, notably the highly seasonal and labor-intensive accommodations, restaurant and personal services industries.

—With a new interest in domestic travel – “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.”

—Many former workers withdrew from the labor market permanently for “a variety of reasons, including financial security from stock market and housing wealth increases, government support payments, spousal income and COVID-related concerns.”

Also, “One last factor contributing to pressure on Montana labor markets is the seasonal nature of our economy. During the summer months of any year, employment generally surges by 25,000 jobs or more as tourist volume ramps up and labor-intensive industries that serve that demand expand. The timing of the reopening of the state economy in 2021 coincided almost exactly with that seasonal peak.”

All these events contributed to tightening an already tight labor market.

“By almost any measure, the scarcity of labor is apparent, particularly for entry level jobs, where increases in starting wages have been the strongest. There has been a marked increase in voluntary quits by workers, a sign of their confidence in future job availability. And speaking of availability, the 62% increase in job openings experienced in Montana since before the pandemic began was higher than any state.”

Despite the pandemic, the factors contributing to an already tight labor market in Montana have not changed.  Things like: “Demographic events like falling birth rates and the retirement of baby boomers, coupled with huge disruptions in international migration, are stagnating the growth of the working-age population. And the shift in the interests and desires of Generation Z workers just entering the labor market continues to work against the needs of employers in less desired trades and construction occupations.”

Since these factors existed prior to the COVID shutdowns, the recommended responses remain the same:

— Raising wages. …which is already being done, but its impacts on growing the entire labor force have been limited.

—Searching more broadly for workers, relaxing requirements, looking at nontraditional workers. Looking outside local areas for a broader category of jobs.

—Investing more in training, hiring less qualified workers and training them up to acceptable skill levels.

—Reconfiguring job roles to find ways to make existing staff more productive, covering needed functions with the existing workforce.

—Recruiting future workers by connecting with middle- school-aged students to give them exposure to the nature of jobs they may otherwise know nothing about.

“Other actions, such as automation and outsourcing of work, has been underway when feasible for decades, but recent shortages have pushed the envelope further. The lack of available workers, while not a pleasant challenge for employers, nonetheless may prod them to take steps to eliminate the “bad jobs” in their workplaces. These may be jobs with high physical burdens, long or inconvenient working hours and other aspects that make them less competitive in a seller’s market for labor services.”

Policy makers could also make changes, notes Barkey – which although unpopular would improve the situation.

—Boosting the retirement age, which effectively means resetting the age at which individuals become eligible for Social Security and Medicare.

—Increasing female labor force participation by helping to increase child care availability.

— Fixing immigration policy. This traditional strength of the U.S. labor market has foundered on the rocks of political storms for almost a decade.

— Raising teenage labor force participation, currently at rates that are 20 percentage points lower than 40 years ago.

— Rethinking drug testing policies. Legalized cannabis is just one of many factors that are causing attitudes and policies to change.

—Reconsider occupational licensing requirements, which limit the ability of two-earner couples to relocate to Montana.

NFIB Resists “Slew” of Tax Increases on Business

25 October 2021
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NFIB President Brad Close wrote a new op-ed in USA Today explaining why the latest tax plan from lawmakers would be detrimental to small businesses.

Close notes that small businesses aren’t looking at one or two tax hikes under the proposed plan – they’re looking at a slew of tax increases that would hit them from every angle including raising small business income taxes, capping the small business deduction, and raising capital gains and estate taxes.

“As usual, the White House offered platitudes this month at the start of Small Business Week. Small businesses are the ‘engines of our economic progress.’ The ‘pillars of their neighborhoods.’ And so on. But a few days later, the House of Representatives, with the White House’s backing, announced one of the most dramatic assaults on small business in decades. Lawmakers unveiled a massive tax-hike package that would jam those ‘engines of our economic progress’ and topple many of those ‘pillars of their neighborhoods.’”

“These tax hikes are bad enough, promising job losses and shuttered stores across the nation. But the White House and Congress also want to raise costs on small businesses in other painful ways. Case in point: The $3.5 trillion House bill would mandate that all businesses with five or more employees auto-enroll them in a retirement plan. A third of small employers offer a retirement plan.”

EPA Funds Global Warming Programs

25 October 2021
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The US Environmental Protection Agency (EPA) has announced up to $3 million in funding available for local programs aimed at educating the public about global warming.

Funds for the 2021 Environmental Education (EE) Local Grant Program are now available. Funds will be provided to each of EPA’s 10 Regions, of no less than $50,000 and no more than $100,000 each. The federal agency will provide a total of 30-40 grants nationwide. Applications for acquiring some of the funds are due Dec. 6, 2021.

The 2021 EE Local Grant Program includes support for projects that focus on adapting for climate change and strategies to mitigate its impacts to prevent future problems relating to water quality and “human health issues.”

Each of the ten EPA Regions will issue more specific details about what they hope to achieve.

EPA intends to provide financial support for projects in which activists will be provided information and methods on how to enlighten the public with information the agency believes will “increase environmental literacy and encourage behavior that will benefit the environment.” They will especially target poor communities and people of color or indigenous populations and Title 1 schools – entities  that may be the least informed.

This program has been in place since 1992, EPA has distributed between $2 and $3.5 million in grant funding per year under this program, supporting more than 3,800 grants.

City Reviews Annexation

25 October 2021
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The City Annexation Committee is preparing for its annual review of the City’s Annexation Policy and Limits of Annexation Map. This process occurs annually in coordination with the City’s review of its Capital Improvement Program (CIP). The Annexation Map and Policy review process this year will run from November 2021 through approximately April 2022.

More information on the latest CIP schedule will soon be available at https:// www.ci.billings. mt.us /2662/ Capital- Improvement-Plan-CIP.

The Annexation Committee includes representation from City Administration, Fire, Police, Parks, Planning, Airport and Transit. The Committee makes recommendations to the City Council on amendments to the City’s Limits of Annexation Map, which may be viewed on-line along with the Annexation Policy. The Map was last amended in August 2021 by the City Council.

The Committee reviews requests from property owners to amend the City’s Limits of Annexation Map.

 The deadline for map amendment requests from property owners is November 19, 2021. There is a fee of $817.00 associated with Map Amendment Requests

Survey Scrutinizes Public Views of Education

24 September 2021
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In a survey of public opinion about the state of education in the country conducted by EdChoice reports that only about two out of five Americans believe that K-12 education is headed in the right direction, which is actually an improvement over a 2016 survey of about 18 points. Over half say it is on the wrong track, a 10-pont decrease since the fall of 2020.

However, the opinion of parents differed from that of the general public. Their opinion that school’s are headed in the right direction (44%)   has remained steady while the opinion of the general public that it is on the wrong track declined by 10 points.

Current school parents are more pessimistic about the K-12 education than is the general public.

The type of schools children attended appeared to have an effect on parents’ perception of K-12 education. Charter school parents were more likely to be optimistic than school district and homeschooling parents.

Homeschoolers had the most negative view of the state of education. About 56 percent of Homeschoolers said that the public education was headed in the wrong direction.

The survey stated that the pandemic disrupted school enrollments and expectations. Some public schools lost large numbers of students and home schooling rates soared to new heights. 

Eighty-three percent of children were enrolled in public district schools in school year 2018–19. Less than half of that share of parents said public schools were their preferred school type. Eight percent of students were enrolled in private schools; 6 percent in public charter schools; and 3 percent were homeschooled. In comparison, 36 percent of parents ideally preferred private schooling for their children; 14 percent preferred charter schools; and 12 percent preferred homeschooling.

Homeschooling was most likely to be preferred by a lower-income parent. Middle-income parents favored private schooling notably more than other school types, and higher-income parents preferred district schools and private schools almost equally.

Parents were also asked what grade they would give their local schools. Parents were most praiseworthy of their local private schools, with 74 percent of applicable parents giving an “A” or “B.” Fifty-nine percent of applicable parents gave the same grades to charter schools, a significant jump from their 2020 results. Less than half of district or public schools received an “A” or “B,” substantially lower than last year.

The survey asked parents what was important to them in selecting a school. Parents with children in public district schools were most likely to mention location as a top priority for selecting a school, nearly twice the rate of private school parents. Socialization was the second most-cited reason parents select district schools, followed closely by noting that the school was assigned to their family.

Private school parents and charter school parents signaled that academic reputation was the most important aspect, followed by a safe environment and morals/character/values instruction. Homeschooling parents heavily valued a safe environment, with more than half of them placing it in their top three. Individualized attention was a clear second for homeschooling parents, while location and moral instruction were a tight third and fourth.

The vast majority of Americans underestimate how much money public schools spend.

The median person guessed $7,000 per student per year, while the median parent guessed $5,000. Taking into account the state where each respondent resides, 77 percent of Americans and 81 percent of school parents underestimated how much public schools actually spend, which on average approaches about $25,000 per student.

Learning loss concerns are prevalent after a school year full of disruptions and shifts back-and-forth between remote, hybrid and in-person learning. So we wanted to know how much parents were interested in supplemental or alternative education this year.

Two-fifths of parents said they were at least somewhat likely to seek tutoring for their children this year, though charter and private school parents were noticeably more likely to say they may seek tutoring.

SIA respondents were asked their opinion on school choice generally, without providing a definition. The majority of parents and the general population (60%) said they supported school choice. Seventeen percent of the general public and 13 percent of parents said they oppose it. A fifth of the general population and a quarter of parents said they had never heard of school choice.

Montana Gets Glowing Report from Labor Department

23 September 2021
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“Montana is enjoying one of the strongest economic recoveries in the nation,” announced Laurie Esau, Commissioner of the Montana Department of Labor & Industry with the release of a state of the state’s economy report.

The report shows that Montana has had the third highest recovery in payroll jobs since the start of the pandemic . Total employment is more than 99.5 percent recovered from the pandemic, and since January the number of Montanans receiving unemployment benefits has plummeted 87 percent.

The state has also had strong wage growth, growing at 7.9 percent in 2020, and the fastest personal income gains of any state in the nation.

As Labor Day rolled around in Montana, vaccinations had became available and business restrictions lifted, Montanans returned to normal business activity, and were celebrating the ability to attend restaurants, concerts, and social activities. The release of this pent-up demand, augmented by  economic stimulus, and higher income, have contributed to surging consumer demand, leaving businesses scrambling to bring on enough workers to meet customer needs. Tight labor markets, already evident prior to COVID-19, once again became the largest challenge to the state’s economic growth.

Highlights include:

•The rate of new businesses skyrocketed to the fastest rate in ten years, with over 3,500 new businesses created in 2020

.•Montana’s startups are more successful than the national average, and the pandemic had little impact on the rate of business closure for firms created within the last ten years.

•Montana has the 4th highest rate of business ownership in the nation, with 6.3% of Montana households reporting income from a business or farm.

•Montana posted the 3rd best payroll employment recovery among states since the start of the pandemic recession, and the 8th best recovery in total employment.

•The pandemic recession averaged job gains over 2,700 per month since the trough, a much faster recovery than the average of 500 jobs gained per month during the recovery from the 2008 recession.

•Both payroll and total employment levels are within 1% of the pre-recession peak.

•Montana’s real GDP growth from 2019 to 2020 ranked 20th among states, and likely made a full recovery in the 2nd quarter of 2021.

•Montana ranked 1st among states for personal income growth in 2020, growing 8.4% to $57.6 billion.

•Business owner income increased by 10%, or $506 million, bolstered by the Paycheck Protection Program and the Coronavirus Food Assistance Program.

•Wages paid to Montana workers surged, posting a 7.2% increase ($1.7 billion) for the year ending 2021Q1. Increased wage earnings are an important component needed to drive future business demand and are vital to increasing the standard of living for most Montanans.

•Montana ranks 8th among states for the fastest average annual wage growth over the last 10 years.

•Average annual wages in payroll jobs increased by 7.9% in 2020 (up to $48,400), over double the wage growth rates posted in prior years.

Real wage growth, or the amount of wage growth that exceeds inflation, was 6.6% in 2020

•The unemployment rate dropped quickly after the pandemic recession, reaching 3.6% in July 2021.  Prior recessions took much longer for unemployment to return to normal levels.

Labor productivity soared as workers moved into remote work, increasing by 3.9% for the year ending 2021Q1.

Despite the strong economic recovery, challenges remain, particularly labor shortages and the impacts of rising prices on businesses and workers:

Inflation has spiked, with prices increasing over 5% during the summer of 2021, leaving consumers paying more for housing and gasoline, among other goods. Over the two years ending June 2021, hourly wages have increased by 8.7% while the price level has increased by 6.1%, resulting in a 2.6% increase in the real hourly wage.

Housing prices have also risen, with Montanan’s typical home price up 10.3% to $327,000 for the year ending June 2021, leaving many communities concerned about affordable housing.

Thousands of workers left the labor force during the last year due to fears of contracting COVID-19 and a lack of childcare. These workers must be reengaged in our economy to help fill unmet worker demand. Many of these workers have already come back into the economy as of July, with the labor force only 0.5% lower than its pre-recession peak.

If Montana’s labor force participation rate was the same now as before the pandemic, 11,331 more workers would be available to fill openings.

The average work week in Montana fell during the pandemic, moving from 33.4 hours per week in 2019 to 32.8 hours per week in 2020. Moving more part-time employees to full-time could address many workforce shortages.

Over 20% of the workforce is 60 years or older and preparing for retirement. Among those not retired, family care is the main reason for not participating in the labor force.

 The report suggested, there are several solutions to the worker shortage, including increasing worker productivity through training and automation, tapping into underutilized labor sources (such as those living in rural areas or reservations, disabled, or facing barriers to work), and ensuring that workers have the incentive to move out of unemployment to work. With the resiliency and determination Montanans have shown throughout the last year, there can be no doubt that these future challenges will also be resolved, moving Montana’s economy into a more profitable future.

ARPA Funds Directed at Developing Montana’s Workforce

23 September 2021
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Some of the funds from the American Rescue Plan Act (ARPA) are being directed to strengthening Montana’s workforce and providing job training to Montanans.

Governor Greg Gianforte approved directing $6 million for job training programs, particularly to individuals with disabilities and those who have become unemployed since the onset of the COVID-19 pandemic.

“Helping Montanans acquire the in-demand skills needed to fill good-paying jobs is a top priority,” Gov. Gianforte said. “These investments will help more Montana workers access skills training programs, helping them enter or reenter the workforce or boost their careers to the next level while alleviating our workforce shortage in critical industries.”

Two million dollars of ARPA will be directed to fund the Individuals with Disabilities Employment Engagement Program, which augments the Department of Public Health and Human Services’ (DPHHS) Vocational Rehabilitation (VR) services.

DPPHS VR provides services to individuals with disabilities to obtain, regain, maintain, and advance in employment. The funding approved will supplement existing VR staff by temporarily adding 10 additional full-time rehabilitation counselors, opening the door to approximately 1,000 additional individuals with disabilities to participate in the program. Approximately 1,300 individuals are on the program’s waitlist.

“This funding is going to have a tremendous impact on the people our agency serves,” DPHHS Director Adam Meier said. “The opportunity to add additional rehabilitation counselors will allow us to work with our clients who are currently on the waiting list. These individuals are ready and willing to work, and just need the opportunity. We’re excited to increase these efforts across the state to connect our clients with training, assisted technology and other tools that will help set them up to successfully enter the work force.”

The governor also approved an additional $4 million in ARPA funds for the Department of Labor & Industry (DLI) to provide “rapid retraining” services and enroll Montanans in workforce training programs.

The funds will allow the department to utilize an existing state network of contracted workforce program providers to provide critical training, primarily for those who lost their jobs during the pandemic and need new skills to reenter the workforce. The funds will be used to conduct and support short-term skills training for Montanans including displaced workers such as those in Colstrip or St. Regis.

“This funding will enable the department to strengthen our already-robust network of workforce service providers and help more Montanans benefit from the training programs they provide. The end result will be more Montana workers with the skills they need to succeed,” DLI Commissioner Laurie Esau said.

The governor accepted the $6 million funding recommendations from the ARPA Economic Transformation and Stabilization and Workforce Development Programs and Advisory Commission. ARPA advisory commissions comprise state legislators, agency leaders, and administration officials. More information about the advisory commissions may be found at arpa.mt.gov.

Consumer Confidence Drops

11 September 2021
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US consumer confidence has plunged to its lowest point in over a decade according to the University of Michigan confidence survey. Americans are worried about personal finances, unemployment and inflation.

The decline is attributed to a combination of things including the resurgence of the virus but most especially rising inflation rates. The spike in prices for consumers in July were 5.4 percent higher than in June and the highest 12-month spike since 2008. But rising costs for producers are even more dramatic.  The inflation rate increase of production costs is the biggest on record, at 7.8 percent, year over year.

The survey released on August 13 showed that the consumer index was down from July’s reading of 81.2 to 70.2, a level not seen since 2011. The 13 percent slide was one of the sharpest in the past 50 years, exceeded only by an 18.1 percent drop in 2008 and a 19.4 percent fall in April 2020, when economic constraints imposed because of the virus threw the economy into a tailspin.

The decline in confidence was broad and impacted almost every aspect of the population (age, income, education) and in all regions, according to survey director, Richard Curtin.

A concern of economists is that the consumers’ lack of confidence could mean a drop in how much they spend. Consumer spending is considered by some as a major driver of the economy.

Policies that are flooding the economy with extra cash is in large part the reason for inflation and it has thwarted what had been an unprecedented economic recovery, erasing increased benefits and wages for workers. Inflation is putting pressure on the federal government but the response has been to increase the flood of easy money, with the belief of officials that “the current bout of inflation is transitory” and will improve once the labor market has recovered and become more solid.

Governor Urges President to Manage Forests

20 August 2021
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Following their meeting in late July on wildfire, Governor Greg Gianforte urged President Joe Biden to support the bipartisan Resilient Federal Forests Act.

“Introduced by 70 members of Congress in July with the backing of 90 organizations, this bill will support proactive, science-based forest management at a pace and scale that match the urgency of the forest health crisis we face,” the governor wrote in a letter to the President.

Outlining the benefits of the bill, the governor continued, “It gives the U.S. Forest Service additional tools to manage millions of acres of federal forest and reduce wildfire risk. It also addresses a concern raised in our conversation by Minnesota Governor Tim Walz, which I was encouraged to hear you share, by helping to end frivolous lawsuits that delay essential forest management projects from moving forward.” 

In his meeting with President Biden and other governors last month, the governor called for meaningful forest management to improve forest health and reduce the risk of wildfire. Several other governors joined him in that call.

At the state level, the governor has set out to more than double the number of acres treated this year as compared to last year in Montana.

In late July, the governor announced signed project agreements for 14 cross-boundary, active management projects associated with the Montana Forest Action Plan.

Companies Request Tax Abatement

20 August 2021
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Two companies are applying for tax abatements from the county and city.

Montana Sun LLC is seeking abatements for its $100 million, 80 megawatt solar generated power facility that will begin construction in October on Alkali Creek Road. The project is that of Greenbacker Renewable Energy Company, which will sell power to NorthWestern Energy.

Coca-Cola Bottling Co. High Country is also seeking tax relief for a $50 million investment in a bottling plant on Harnish Road.

There are two programs under which the county and city have historically encouraged economic growth and development by reducing property taxes for a period of time on an investment a company makes to expand or establish itself. Dianne Lehm, Director of Community Development for Big Sky Economic Development, explained that the county commissioners will decide under which of two available options to make the abatement decision.

The 10-year program, called the New & Expanding Industry Tax Incentive Program, allows the taxable value of the real property to be reduced by 50 percent in the first 5 years. In years 6-10, the tax obligation incrementally increases by 10 percent a year and the savings decreases until the full 100% liability is required and the abatement expires in year 10. The state legislature recently allowed local government the discretion to reduce taxes by 50 percent or by 75 percent with an incremental 15 percent increase over the last five years.

Another available option of the program is a five abatement which allows tax reductions on remodeling, reconstruction, and/or expansion of existing real property when a project makes improvements exceeding $500,000 to the property.  Property taxes on the value of improvements may be reduced by 100 percent for the first five years, after which property returns to its full taxable value.

Coca-Cola Bottling Co. High Country hopes to expand its operations in Billings in a facility to be built on 10.5 acres south of I-90 near the Zoo Drive Exit, the Harnish Trade Center. They have requested that the City of Billings annex the area and to help pay for 4,300 feet of extended utilities to the site. Big Sky Economic Development has offered a grant of up to $250,000 from its Opportunity Fund to help pay for the extension of lines, which would also assist other future development.

The City Council will take up the issue, in a few weeks, of spending another $250,000 to help support the project, while most of the $1.5 million cost for the installation of water and sewer will fall to the company.

The project proposal is for a 110,000-square-foot distribution center with a 30,000 square-foot manufacturing facility. Joe Easton, director of property development for Coca-Cola Bottling Co. High Country, explained that the expansion would mean that Billings would become a bottling plant from which their products will be distributed to the region they serve which besides Montana includes Minnesota, Colorado, North and South Dakota, Wyoming and Utah. Currently their 450 products are bottled elsewhere and distributed to Billings.

Coca-Cola High Country is a Rapid City -based company, owned by the third generation of the Messenger Family. The company acquired the Billings center in 2014, which has had a warehouse on 1st Avenue South in Billings since 1959.

Right now, the Billings center employees 60 full-time workers, but with the expansion, the number of employees is expected to increase by 50, including 40 manufacturing jobs, paying $24/hour, and other management jobs paying $100,000-plus benefits.

Montana Sun expects to start construction in October with the aim of being completed in about a year. The company believes the construction will create about 200 temporary jobs.

The project is one of many throughout the country owned by Greenbacker Renewable Energy Company, a company launched in by Robert Hokin, in 2011. Greenbacker Renewable Energy Company is a publicly reporting, non-traded limited liability company that acquires and manages income-generating renewable energy and other energy-related businesses. The company has over a billion dollars invested in solar facilities in a number of states.