Cautious Optimism for Flathead’s Shifting Job Market

By Beacon Staff

Analysts are optimistic Flathead County’s economic fortunes are finally turning around following last year’s uptick in jobs and wages. Also, the real estate market is beginning to stabilize.

“It’s hard for an economist to be optimistic – it’s not in our nature – but I think we’re actually starting to grow again,” Dr. Brad Eldredge said Wednesday at the 10th annual “Economic Future of the Flathead” breakfast seminar hosted by Montana West Economic Development at Flathead Valley Community College.

“It’s hard not to draw that conclusion from this recent data. That’s good news.”

The tone at this year’s seminar was noticeably upbeat compared to previous years, when analysts wondered when the plummeting real estate and labor markets would hit rock bottom. That may have happened and an upswing may follow, according to both Eldredge and Jim Kelley, a local real estate appraiser.

Kelley, who tracks data related to real estate and construction, highlighted two specific points in his latest report that are reason for optimism: the affordability of available housing and the fewer number of foreclosure notices. Although some pockets in the valley, specifically Columbia Falls, still have languishing housing markets, there appears to be more positives than negatives for the first time in years.

“I think we’re starting to see that turnaround,” Kelley said.

The worst of the economic recession appears to be over, but Eldredge, director of institutional research, assessment and planning at FVCC, contained his optimism. The local economy is closely tied to the national economy, he said. A recent Federal Reserve report emphasized that a complete recovery remains years away.

“You can predict a lot of what’s going on in the Flathead by what’s going on nationally,” he said.

Nevertheless, “I’m hoping that today’s presentation will give us some hope,” he added.

Though the county’s latest unemployment rate remains one of the worst in the state, the local labor force has grown at a higher rate than the rest of the state, according to preliminary third quarter figures for 2011. The latest data shows a 2.2 percent job growth rate in Flathead County compared to the previous year, the highest increase since the end of 2007.

For the same time period, real wage growth exceeded 1 percent, “which is pretty good because inflation was running over 3 percent at the time,” Eldredge said. “We’re seeing strong wage growth in the Flathead.”

The growth in both jobs and wages is helping improve the valley’s economic health, but it’s far from a cure. The latest overall employment numbers are close to being the same as they were in 2005, Eldredge said.

And although the figures are nearly identical, the types of jobs being occupied are much different today than they were seven years ago. Eldredge said the shifting labor landscape in the Flathead has had to respond to the job market’s reorganization.

The construction sector has shrunk considerably and has continued its annual decline that began in 2007. In 2011, there were 212 fewer construction jobs than in 2010. Those numbers could drop further, Eldredge said, because the housing market already has a large inventory.

“I don’t know when we’ll ever get to the bottom for construction employment,” he said, adding, “It’s hard to foresee a big turnaround in construction employment anytime soon.”

The next largest decline in jobs was in the public sector, or employment in government and public administration and education. Eldredge, a member of the local school board, used the high number of teacher layoffs in School District 5 in recent years as an example.

“While the private sector is now starting to grow, the recession is catching up to the public sector,” Eldredge said.

After taking a dive in recent years, manufacturing appears to be rebounding. There were 169 new manufacturing jobs created last year, the second most for a single industry.

The valley’s top growing industry last year was “accommodation and food service” jobs, which Eldredge correlated to tourism. In 2011, the county added 486 food service or accommodation jobs. The third-largest spike came in “health care and social assistance,” with 145 new jobs. The medical industry has been “a bright spot throughout the recession,” Eldredge said. “Health care just seems to chug along and add jobs.”

Comparing the similar employment compositions from 2005 and 2010, Eldredge gave a more tangible description of how the identity of the workforce has drastically changed. Comparing the two years, which had similar sized workforces, Eldredge said the valley lost 1,100 construction workers, 700 manufacturing workers and 114 employees involved in real estate. It added 1,000 health care workers and 500 food service and accommodation workers.

As a result of this new job market make-up, education requirements have increased and the area needs more college graduates. According to the state’s Department of Labor and Industry, in 2005, 17.4 percent of Flathead County jobs required a bachelor’s degree. In 2010 that number had increased to 18.6 percent.

“These numbers don’t move dramatically,” Eldredge noted. “What you see, in my mind, is somewhat dramatic.”

“That shift away from construction and manufacturing is changing what’s needed in our workforce in terms of educational achievement,” he added. “That might have something to do with our high and persistent unemployment rate. That’s why I think educational retraining is really important.”

Eldredge also talked about the reverberations being felt from the North Dakota oil boom, saying it could end up being a positive for the valley as long as people traveling east for work end up returning home.

Over the long term, the Flathead has experienced rapid growth, he said. Since 1969, the county’s overall “total personal income” level has grown by 400 percent. In comparison, the state’s overall growth has only been 250 percent.

“This is just to remind us that while we’ve corrected, we’ve come a long way,” he said.