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By Larry Swanson
Montana's Agenda
December 2004

Many Montanas

Map of Montana's Three Regions and surrounding states Map of Montana's Three Regions and surrounding states. Click for enlarged view

Montana is a single state. But, in reality, there are many Montanas—some defined by variations in terrain and vegetation, climate, land use, and population density. Others defined, importantly, by variations in area economies. Some differences split the state, east and west—two vastly different regions, one mountainous and forested and the other rolling grass-covered plains. And while many Montanans think of the state as being almost entirely "rural" in character—a region without "cities"—most Montanans live in or nearby one of the state's seven largest cities. It is in these cities where much of the state's recent economic growth and advancement are concentrated. Montana is a single state. But in many more meaningful ways, there are many Montanas. This diversity can be the state's biggest obstacle to progress or it can serve as a source of strength. It can tear us apart or be embraced and used to move the state forward, community by community and region by region. The choice is ours.

Most of what Montanans understand or think they understand about "their" economy comes from what they read in the newspaper or hear on the nightly news about the "Montana economy." The difficulty with this is that there is no Montana economy.

Montana is a large state with widely varying geographic features and widely varying population patterns and underlying demographics. It is a place with widely varying local or area economies. There is no one "state" economy. There are many.

Montana's "Three Regions"

Population Net Migration Population Net Migration. Click for enlarged view

A bold line is drawn along the eastern edge of the Rockies, following the principal front of the mountains down along the Big Belt range east of Helena and further south and east around the Absaroka range and into Wyoming. Areas west of this line are part of the "Western Mountain" region. The thin region nestled up against these mountains is the "Central Front"—a region extending from northwest of Great Falls to southeast of Billings. East of this front where the terrain settles into long-stretching plains is the "Eastern Plains."

The recent "sea change" in U.S. population migration patterns played out very differently in Montana's three regions. The 21 Western Mountain counties saw almost all of the increase with net migration shooting to nearly 58,000 in the '90s. The Central Front saw some of the increase. But the 21 Eastern Plains counties had even greater net out-migration than in the previous decade. Population counts through 2003 indicate these trends are continuing.

The "Big Change"

Migration Patterns Migration Patterns. Click for enlarged view
Population Change 1990-2003 Population Change 1990-2003. Click for enlarged view

No state or region is an island when it comes to major shifts in the larger economy and in larger population trends. One of the biggest changes in recent years reshaping Montana is a massive shift in population migration. More and more people are moving to the Interior West, making the Rocky Mountain West—the larger mountainous region encompassing much of Colorado, Utah, Idaho, and Wyoming, and portions of Montana—one of the nation's fastest-growing regions. This larger regional shift in migration brought renewed growth to the western third of Montana - Montana's Western Mountain region. However, out-migration continues in Montana's Eastern Plains region, consistent with trends in the larger northern Plains.

Lop-sided Population Growth

Population by Age Group Population by Age Group. Click for enlarged view

Montana's population grew by almost 120,000 people between 1990 and 2003, after very little growth in the '80s. Over 85 percent of this population growth was the result of net migration. However, most of this growth is in the Western Mountain region (green bars), mainly in Gallatin, Flathead, Missoula, Ravalli, Lewis & Clark, and Lake Counties. Some of the growth is in the Central Front (purple bars), mainly in Yellowstone County. In the Eastern Plains (yellow bars), every county except one lost population.

Largely as a result of these migration shifts, population growth returned to Montana in the ' 90s, after stagnating in the '80s. However, this growth is very "lop-sided" and is essentially focused in a handful of Montana counties. Aside from Billings and Yellowstone County and a few others nearby Billings, nearly all of this growth is focused in Montana's Western Mountain region. This pattern of growth is consistent with change in the larger region, as shown in the maps below. Perhaps more than anything else, these highly variable rates and directions in population growth are sharpening regional differences in Montana.

Lop-sided Growth by Age

Between 1980 and 2000, the population of the Western Mountain counties grew by over 110,000 people, but most of this growth was by persons at ages between their early 40s and early 60s (classic "baby boomers"). Population in the Central Front grew by over 21,000. But here numbers swelled among persons in the 40s and 50s, while shrinking among younger segments of the population. Population fell by nearly 19,000 in the Eastern Plains, with much of the decline focused across younger ages. The median age of the population statewide rose from 29 to 38 during this period.

The shift in population migration patterns coinciding with fairly aggressive "aging" of the U.S. population over the course of the last ten to twenty years. This occurred largely because of the continued aging of the disproportionately large "baby boom" population—persons in the U.S. born between 1947 and 1964. These baby boomers are now in their early 40s and 50s. They are older adults, with dwindling families as their children grow and move on, and persons with greater economic wherewithal than younger adults. Most are well-established in their work and careers. They are more "footloose" in where they can live and migration patterns are more heavily reflecting where they want to live. So, much of Montana's growth is focused among these middle-aged and older adults. As these people relocate, so do their incomes. And businesses and jobs follow. In that population growth focused in the west, so have income and employment growth.

Economic Change: West-to-East in Montana

Total Employment Change
Total Employment Change. Click for enlarged view
Total Personal Income Change Total Personal Income Change. Click for enlarged view

Economic conditions improved considerably in moving from the decade of the '80s to the decade of the '90s. In the Western Mountain region, total personal income adjusted for inflation grew by nearly $3.6 billion (up over 44%) in the '90s versus a gain of >less than $1.2 billion in the ' 80s(+17%)—a more than three-fold increase in growth. The Central Front region also saw a more than three-fold increase in income growth. The Plains region went from negative growth to a small gain. Employment growth followed a similar pattern.

Montana Trends: Urban versus Rural

While trends in population, income, and employment growth in Montana are clearly differentiated west-to-east by region, how these trends are playing out among more "urban" and more "rural" areas is not as readily understood. This is largely because many people in Montana view the state as almost entirely rural in character. However, while Montana has no truly large cities by national standards, it has many small and medium size cities. These regional centers use to be too small to participate in many facets of more urban-based economic growth and diversification. However, with changes in the economy and technology—including revolutionary improvements in information technology and communications infrastructure—and most growth in employment now focused in smaller firms, cities like those in Montana are no longer too small for more urban-based and more services based economies. Most who live in Montana live in or nearby the state's seven largest population centers. In fact, today, more than 60 percent of the state's population lives in the seven counties where its major population centers are located. Another quarter of the population live in counties surrounding these regional centers and are closely-linked to these centers economically and socially. This means that less than 14 percent of the state's population lives in relatively isolated areas with small populations.

Economic Regions

Economic Regions. Click for enlarged view
Population Change: Urban vs. Rural 1990-2003
Population Change: Urban vs. Rural 1990-2003. Click for enlarged view
Montana: Urban vs. Rural
Montana: Urban vs. Rural. Click for enlarged view

Population Growth focused in and around Montana's Cities

Besides being heavily focused in the state's Western Mountain region, the state's population is increasingly focused in and around Montana's major cities. The bars in the chart above are color-coded to reflect how Montana's counties are classified as both regional population centers (dark blue, green, yellow) and counties closely-linked to these seven regional centers (light blue, green, yellow). Isolated rural counties are shown in white. Of the seven regional center counties, all but two are seeing increased growth. Of the 27 counties closely-linked to these regional centers, all but six are seeing growth. And of the 23 isolated rural counties, all but three are losing population.

While most Montanan's believe the state economy—assuming there is a state economy, which there isn't—is languishing and losing strength, in reality, in areas where most Montanans live (in or nearby regional population centers), personal income growth in inflation-adjusted terms increased more than three-fold in comparing the '90s with the '80s. And in surrounding, closely-linked counties, personal income growth more than doubled. This is not economic decline. It is economic growth and from all indications this trend should continue. Montana's cities are not only centers of population, they are centers of business and commerce, trade, health care, finance, education, and arts and entertainment. They are the centers of many different regions—city regions—with the complexion and pace of change varying from one to the next.

Economic Change: Urban-to-Rural in Montana

Total Employment Change

Total Employment Change. Click on enlarged view.
Total Personal Income Change Total Personal Income Change. Click for enlarged view

As the economy has changed and shifted, its has increasingly focused income growth and employment growth in the state's largest cities and their surrounding areas. Personal income in the seven regional center counties, which grew by less than $1.2 billion during the 80s, expanded by over $3.8 billion in the '90s—a more than three-fold increase in growth. The pace of income growth in closely-linked counties surrounding these centers more than doubled. Around 96% of all income growth and employment growth in Montana during the last decade occurred in and around its seven regional centers.

Fast-Growing and Declining Sub-Sectors in Montana

Industry Shifts in Montana Population Net Migration. Click for enlarged view

The one constant in the economy, as in life, is change. And change in the economy seems to be accelerating. Different segments of the economy seems to be accelerating. Different segments of the economy are affected differently by these changes. Some are expanding rapidly, while others decline. There are over 75 individual sub-sectors of the economy. The chart above shows which of these are fast-growing or declining during the decade of the '90s—a period of accelerated growth and fairly dramatic economic restructuring. Growth is most heavily focused in a wide range of service sub-sectors particularly health care, business services, engineering and management services, and social services.

Areas of finance, insurance, and real estate, as well as construction are also fast-growing. Only sixteen of the more than 75 sub-sectors of the economy, listed in the top portion of the chart above, accounted for two-thirds of all growth in the labor earnings in Montana during the '09s. Conversely, decline in the economy is concentrated in an even smaller number of sub-sectors and most are longstanding industries. These include the natural resource industries of mining, logging, and wood products, and agriculture. Also included is railroads and the U.S. military, which has been consolidated throughout the west.

Shifts in the Economy and Restructuring

Changes in Montana and in the larger economy are favoring growth in health care; business, engineering, and management services; finance, insurance, and real estate; and construction. Their share of all labor earnings in Montana rose from 12% in the early '80s to over 23% by 2000. Industry decline or consolidation is occurring in mining, logging and wood products, and agriculture. These natural resource industries' share of statewide labor earnings fell from over 13% in the early '80s to 6% by 2000.

Service Sector Growth focused in Cities

Service Sector Expansion Service Sector Expansion. Click for enlarged view

With the service sector dominating all other sectors in employment growth, most of this growth is concentrating in Montana's major cities, just as in other regions. Services growth oftentimes requires "market mass" (enough area customers and clients) afforded by cities and their surrounding populations.

Cities as "Employment Centers"

Labor Income Transfers Labor IncomeTransfers. Click for enlarged view

While employment growth is focusing in cities, those working in these jobs live both in the cities and outside of them in surrounding communities. In 2001 $222 million in labor income, earned by persons residing outside of regional center counties but working at jobs located in them, was transferred into the personal income bases of surrounding, closely-linked counties in Montana.

Urban-Rural Differences in Economic Well-being

Per Capita Income Levels Per Capita Income levels. Click for enlarged view

While Montana ranks very low in comparisons of "state" per capita incomes, income levels for most of Montana's regional population centers compare favorably to levels of other comparable size cities throughout the West. The average per capita income for the seven regional center counties has risen steadily from less than $20,000 in the late '80s to just under $26,000. Levels in outlying and isolated rural areas lag behind. However, these gaps between urban and rural income levels are common throughout the West.

The Future

One of the most important things state leaders and decision makers can do to advance Montana economically is to recognize and fully embrace the state's wide economic diversity. There is no Montana economy. And, because of this, there can be no single state strategy for economic development. That is, unless it is a state strategy derived from many different sub-state strategies that provides common needs and important "tools" required in local strategies that can only be provided at the state-level.

However, the state must serve as an enabler of local area aspirations. It must put into place a framework that will permit all of Montana's communities, businesses, and families to be more successful economically. The requirements for area economic improvement today are much different than yesterday. A different state "investment port folio" is needed—one that recognizes the increasing importance of "human resources" in the economy and fully comprehends what it will takes to continually enhance work force skills and educational achievement levels. One that recognizes the growing importance of Montana's cities as the centers of economic diversification and advancement in the state and what it will take to sustain and build cities of quality. One thatrecognizes the role of the state's high quality environment and natural amenities in the growth of Montana's fastest-growing communities and what it will take to protect and enhance these qualities.

To understand "what it will take," Montanans must catch up with change and adapt to it. They must look to the future with confidence, rather than with consternation and fear. To do this, Montana's cities and regions must become "learning communities," engaged in ongoing examinations and conversations about economic change and opportunity. New and better leadership will emerge in the course of these conversations, focused on the needs and opportunities of particular places and regions of Montana. And as promising strategies are pursued region by region, Montana itself will advance, stronger and better positioned for the future.

Lessons to Learn in Planning for Montana's Economic Future

  1. Think about Positioning—More than anything else, area economic development is becoming a matter of community and regional positioning . Community leaders cannot remake their economy. What they can do is find ways to better position themselves—their businesses, schools, families, work forces, governments, etc.—for future change. Anticipate future change and attempt to better position yourself for change.
  2. Become "Learning Communities"—Successful businesses are adaptive ones. Successful organizations are adaptive ones. To be successful, communities must be adaptive, learning from and adjusting to change. Adaptive communities must be learning communities, with systematic learning instituted and sustained at the community level elevating community decision making, civil discourse, and leadership development.
  3. Look Forward—Catch up with and stay abreast of change in the larger economy. The future can't be grasped by attempting to view it through the rear-view mirror. Promising strategies for economic improvement must reflect where the economy is going, not where it has been.
  4. Customize Strategies—Needs and opportunities vary widely across Montana. Goals and strategies must likewise vary. Sub-state areas must develop leadership and intelligence to both develop and further well-grounded strategies for area economic improvement.
  5. Cities Matter—Recognizing that most growth is focusing in and around "city regions," greater attention needs to be focused on the needs of cities as the "settings" if not "engines" of economic growth, diversification, and advancement. In Montana, we need to assist our cities, rather than deny we have any.
  6. Urban-Rural Relations Matter—Pursuing economic development town-by-town or county-by-county is difficult. Influencing local economies sub-region by sub-region through healthy urban-rural and broad regional partnerships has great potential.
  7. Human-resource Based Economy—In Montana the economy is less and less "natural resource based" and more and more "human resource based." Well-designed, well-funded, adaptive systems for education (all levels) and work force development (lifelong) are essential for economic advancement and prosperity.
  8. Environment as a "Key Economic Asset"—People are increasingly seeking out high quality places to live and work. For most growing areas in Montana, a quality natural environment has become their chief economic asset. Protecting and enhancing environmental qualities is not the enemy of economic improvement. It is essential for sustained economic prosperity.

This report was completed in 2004.

Montana's Agenda , The University of Montana, Missoula, December 2004