BOZEMAN – Working for wages or a salary in the Big Sky country?
There’s a good chance you’re earning less than most of the country — at least on average, according to a recent analysis of 2013 tax return data by Transactional Records Access Clearinghouse.
In the group’s most recent report on tax return data by state and county, Montana ranked 49th — just above Mississippi and right below New Mexico — for wages and salaries reported in tax returns, with Montanans earning an average of $33,180 annually.
That’s more than $10,000 below the national average and almost $27,000 below the state with the highest average income: Connecticut.
But Montana’s place at the bottom of average wages isn’t news. In fact, Montana has been the lowest for average wages and salaries for every year since 1991 except 2012 (when the state was also second to last) and 2008 (when it moved up to 47th place), according to data from TRAC.
The numbers from TRAC vary slightly from state Department of Labor and Industry numbers (based on surveys of employers) reported last month, but both tell an overall story that Montana’s average wages are lower than most, if not all other states, the Bozeman Daily Chronicle reported.
Looking at adjusted gross income, the numbers vary slightly, placing Montana at 41st nationally, with an average of $51,979 in 2013.
Adjusted gross income could include interest and dividend payments and other forms of income that don’t come from wages or salary.
Montanans’ low earnings could be attributed to the state’s rural setting, said Brit Fontenot, director of economic development and community relations for Bozeman.
“The rural nature of where Montana sits geographically has tended to have an impact on the wages and the growth,” Fontenot said.
The growth of wages across the state has been stunted because the economy has only recently become more diverse, he said, and transportation challenges make it difficult to move products in and out of the area.
Another factor possibly contributing to lower average wages — particularly outside more populous, growing areas like Bozeman or Missoula — is a lower cost of living, said Isaac Swensen, an economist at Montana State University.
What’s more, people looking to move to Montana for jobs — particularly in white-collar trades — will often take less pay, Swensen added.
He called it a “compensating differential” — essentially, those with equal experience and education often make less here than elsewhere — but others have simply said people are willing to pay for the quality of life they get in Montana, particularly in the Bozeman area.
Gallatin County ranked higher than the state average for wages — and ninth overall in Montana — at $36,146, and moved higher up the list for adjusted gross income with an average of $59,644.
But those numbers look like chump change compared to neighboring Teton County, Wyoming, where 2013 average adjusted gross income was the highest in the nation at almost $297,000.
Teton County — home of Jackson Hole Mountain Resort and plenty of upscale living in the surrounding community — is home to a little more than 22,000 people. And while the adjusted gross income may be exceptionally high, it’s clear that number isn’t driven up by wages, as average wages and salaries in Teton come in at $47,715.
Wyoming’s statewide average for wages in 2013 — $40,343 — was below the national average of $43,463 but still significantly above Montana.
Fontenot wants to see wages and income across Montana increase — and particularly in Bozeman — but the challenge is to do that without losing the qualities that make the area attractive to begin with, he said.
“Our challenge is to grow in a way that is in line with the values of the community,” he said.
Swensen said while the structure of Montana’s economy is changing, the state is still very reliant on agriculture and tourism.
“We have large agriculture and tourism sectors that rely heavily on low-wage labor,” Swensen said. “It may be that the labor we need for our key sectors requires relatively low skills and that translates to low average (wages).”
The state as a whole has weathered past downturns relatively well, according to the TRAC reports.
Wages and salaries reported in tax returns dipped from 2009 to 2011, but began rebounding in 2012 and continue to climb. Estimates for 2014 from the U.S Department of Labor Bureau of Labor Statistics show another uptick for the state. County-level estimates aren’t yet available for 2014.
While wages and salaries grew fairly consistently from 1991 to 2013, adjusted gross income showed more fluctuation in the TRAC reports, flattening out near the beginning of the last three decades.