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Friday, May 29, 2020

Shutdown Job Losses: Idaho and Montana

Continuing to review Western states and their impact from the coronavirus shutdown, today we visit Idaho and Montana.

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As I explained yesterday, South Dakota has handled the crisis fairly well, suffering less severely from private-sector job losses. They have also mitigated the fiscal impact from these losses by reducing government employment. This has kept their government workforce on par with the private sector, significantly reducing the need for future tax hikes.

Wyoming, on the other hand, has done nothing of the sort. Our state government has not touched its payroll, and local governments have made only marginal adjustments. This is setting us up for drastic tax increases - in a state that for the past ten years has had the worst jobs record in the country.

And no, that is not because of the minerals industry. Our poor job growth has cut across every industry, hurting not just the less-than-ten percent of the workforce that is employed in minerals. We have had a poor jobs record in private services, from transportation and professional services to leisure and hospitality (sometimes crudely referred to as "tourism") and private health care. Our financial sector has been stagnant, as has the information industry.

As I explained in my review of the labor market in Colorado, the combination of big losses of private-sector jobs and a push among legislators to raise taxes, is a particularly bad recipe for the future. Colorado, at least, has its TABOR which keeps somewhat of a leash on the tax hikers; there is no such measure in place in Wyoming. 

Other states, again pointing to South Dakota, do not need such measures. Their elected officials have acted more responsibly by taking steps to moderate the impact from this crisis. We see a little bit of the same happening in Montana and Idaho: on the one hand,

  • Montana lost 52,800 private-sector jobs, or 13.7 percent, from March to April, and
  • Idaho lost 69,200 private-sector jobs, or eleven percent.

On the other hand,

  • The Montana state government reduced its payroll by 3.1 percent or 900 jobs, and local governments laid off 3,300 workers, a 6.5-percent cut;
  • In Idaho, the state had 1,700 fewer employees in April compared to May, a decline by 5.2 percent; local governments made a 3,700-employee cut, equal to -4.3 percent.

Both these states went in the same direction as South Dakota, though not as far. Their Government Employment Ratios went up: from 205 to 225 in Montana, and from 188 to 202 in Idaho. While these are ostensibly temporary increases, if the GER stays high over time it means, simply, that every private-sector worker has to set aside a larger portion of his day to bring in money that can fund the government workforce. 

In other words, higher taxes.

As for the coronavirus downturn itself, here is an industry rundown for Idaho and Montana, with the Wyoming numbers for reference:

Job losses March to April
IDMTWY
Private education-19.8%-9.3%-15.6%
Health care-11.2%-7.6%-5.4%
Private hospitals-5.0%-1.9%-2.9%
Saocial assistance-10.5%-18.2%-6.6%
Information-19.8%-11.5%-3.0%
Financial services0.0%-2.9%-2.7%
Prof. services-5.2%-4.9%-1.1%
Wholesale-4.2%-0.6%-3.7%
Retail-6.6%-12.4%-5.3%
Manufacturing-1.6%-10.1%-2.0%
Minerals0.0%-4.3%-8.1%
Infrastructure-1.9%-0.5%-2.7%
Leisure, hospitality-42.0%-49.7%-41.1%
Other services-23.3%-13.3%-10.0%

All this looks reasonable for Wyoming, does it not? After all, we "only" lost ten percent of all private-sector jobs in April. The problem is that this loss set us back 15 years: we haven't had this few people employed in the private sector since 2005. 

Montana, by contrast, has been set back to 2011, in other words losing nine years' worth of private-sector employment growth. That is the same loss as South Dakota suffered. 

Colorado, currently with almost exactly two million employed in the private sector, has lost all the jobs they gained in the past seven years. Idaho is even better off: their 559,000 private-sector jobs in April are still more than the 543,200 in April of 2015.

While Wyoming has not lost as many jobs as some neighboring states, we could not afford to lose jobs like they could. Our track record for many years has been abysmal, and it is not being helped by the unending push to raise taxes.

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