Labor shortage still plaguing Flathead

Concerns over the possibility of a continued labor shortage and a lower-than-average real estate inventory took center stage during the Flathead Forecast at Flathead Valley Community College on Tuesday.

Joe Mahon, regional outreach director and Reserve economist at the Federal Reserve Bank of Minneapolis, which serves the 9th District of the Fed, spoke on the workforce outlook for Montana.

“We’ve had pretty good job growth and unemployment is stable,” Mahon said, noting that Montana’s unemployment is back to prerecession levels, at 4.09 percent, while the U.S. unemployment rate is 4.7 percent.

“This number doesn’t show people who are potentially employable but out of the workforce,” Mahon said.

He noted that employment gains were seen in most sectors, but at a rate slower than U.S. gains. The 9th District continues to see a reduction in natural resources and mining, he added, but all other industries have seen growth.

In manufacturing, most companies reported that their outlook for 2017 was strong despite having just been through a bad year, Mahon said.

Businesses that were surveyed reported expected expansion in all areas of the survey, which includes business investment, consumer spending, employment, inflation, economic growth and corporate profits. More than half of manufacturers stated they expected employment to remain the same, with 34 percent stating that they expected to be hiring this year and 11 percent expecting layoffs, according to the Manufacturing Business Conditions Survey.

“One of the big themes we hear, year after year … is that the biggest challenge is finding workers,” Mahon said, adding that where labor shortages were previously more industry-specific, impacting higher-skills jobs, they are now being seen throughout the labor industry impacting lower-skilled jobs in addition to showing a need for a higher-skilled workforce.

“One of the indicators of the market is the labor-force participation is down,” Mahon said.

He added that this is due to a number of reasons, but demographics are the primary component, with an aging population that has left a greater need for workers. Although, he said, even the participation rate among prime-age working males has failed to recover after it fell during the recession.

“Numbers tell us there are still a lot of people sitting on the sidelines,” Mahon said.

DESPITE THE shortage of workers, which Mahon says should encourage an increase in wage growth due to supply-and-demand, less than a percentage increase was seen in wage growth last year.

Jason Spring, chief executive of provider network integration at Kalispell Regional Medical Center, noted in his opening remarks during the Flathead Forecast that even if labor is available, the question of “where will they live?” is also a concern for the year.

The inventory of real estate properties for the year is at an all-time low, said Jim Kelley, owner of Kelley Appraisal in Kalispell, during his presentation, adding “[It] kind of concerns me because there’s not much out there.”

Kelley also stated that affordability has started to drop below the median price again. Last year the overall median price was $255,000, with the majority of properties listed being priced at or below that price, Kelley said, but this year, the median price is starting out at $250,000 and only 16 percent of homes are at or below the median home price.

“It’s a seller’s market, with more buyers competing for fewer properties,” he said, which will likely to result in “bidding wars.” He estimates a decline in the number of sales for the year. Not due to a lack of interested buyers, he added, but simply due to a lack of inventory.

Gregg Davis, an economics professor at FVCC, briefly spoke at the event regarding the new Flathead County Business Confidence Survey that he is in the process of implementing.

Davis stated that he now has 24 businesses participating in the survey, which excludes government organizations and looks only at the private sector to forecast labor income, revenues and employment and records the level of optimism or pessimism that businesses have about the year moving forward. Data for the survey will be collected every six months, and Davis notes that he hopes to launch the index next year to give a better outlook of what to expect.

Reporter Alyssa Gray can be reached at 758-4433 or agray@dailyinterlake.com.