By Fenix Suriel
When soaring rents and home prices made already-expensive coastal cities even more unaffordable in the wake of the pandemic, many Americans sought refuge in an unlikely place: Montana.
The population in Montana and other rural states have surged in recent years as young adults have moved therein search of cheaper housing. For states that have long struggled with aging populations and shrinking workforces, the influx has represented an economic opportunity.
But it has also brought problems of its own as housing prices have climbed. Blue-collar workers, in particular, are feeling the pinch.
“This pace of this growth has introduced some challenges,” said Derek Sheehan, an Economist with the Bureau of Business and Economic Research (BBER).
Montana has been one of the fastest growing states since the pandemic. Its population grew by 4.5 percent from 2020 to 2023, according to Census data, more than four times the national growth rate.
The increase comes as a result of rising prices on the coasts, as well as the increased availability of remote work, which makes it easier for people to move without leaving their jobs behind.
As demand grew in cities like Bozeman, many Montanans moved from rural areas to the urban cities because as the population increased, so did demand for blue-collar workers.
But blue-collar jobs tend to be lower wage jobs and after realizing they wouldn’t make enough money to afford living there, these new workers had to move out.
Put simply, workers can’t move from parts of the state to where the demand is growing because they simply can’t afford it.
“The bigger story is insufficient workers in the right industries and finding housing for those workers,” said Sheehan.
The trend hasn’t only left a sour taste in the mouth of the locals but it has also created a gap. Workers in service industries such as education are hurting the most.
“We do have some challenges recruiting teaching staff because the cost of living and housing costs have increased,” said Mischelle Y. Thomas, a Human Resource Supervisor at Missoula County Public Schools.
Part of Thomas’s job to recruit new teachers has been made difficult by the rising prices.
“Sometimes we have individuals who accept a teaching position here in Missoula in our district but then discover the housing costs and later have to resign because they cannot find an affordable place to live,” she added.
The average rent for all bedrooms and all property types has risen throughout Montana. For example, rent in Big Sky has risen 38% from a year ago, according to Zillow.com. In Bozeman, rent has increased 21% in the same period.
While median adjusted income for the state of Montana has grown since 2019, those numbers don’t paint the full picture.
The median rent in Montana is $1,745, while median household income is $45,690. Making the medium rent-to-income ratio 32%, on pace with the US average.
Roughly 30% of Montana households earn less than $30,000 per year, according to a study done by the Chief Economist at the Montana Department of Labor & Industry, Barbara Wagner.
Residents moving into Montana from out of state tend to move from cities with higher incomes, and typically earn more than existing residents, according to a study from the Montana Legislative fiscal division in 2020, on average.
California has a median annual income of $54,030 and Washington $59,920 according to the U.S. Bureau of Labor Statistics. These are the two states with the highest numbers of migration entering Montana.
Montana for comparison has a median annual income of $45,690.
But it’s not all bad for Montana.
An increase in demand brings in revenue from tourism and opens the labor market up in sectors like construction.
Peter Bower, owner of Bridger Construction, moved to Bozeman before Covid. He says his business is thriving as the population grows. He feels that he got a chance at a new beginning there. Since he grew up in San Diego, moving to Montana was a smoother transition financially.
“Prices are high now but they are higher where I come from,” said Bower.
Bower is an example of someone who moved in from out of state and benefited from it. Although he is a contributing factor to why prices are up now, he also helps to build the economy of the future.
“New residents have undoubtedly increased the demand for goods and services, thus creating a larger economy,” said Sheehan.
Sheehan is optimistic that the growth coming in from out of town will translate to local success as eventually wages catch up to prices and lower wage workers can afford to move where they are needed.
“Over time, low-income wages should rise in these communities, but real wages have not grown substantially enough to offset the rising living costs yet,” Sheehan.