Dear HCN,
My regular economic pen
pal, Ed Marston, interprets the economic data in the
Claiborne-Ortenberg Foundation’s report Montana: People and the
Economy as showing that Montanans live in “poverty,” are “hurting”
and “impoverished,” face a “failing” and “weak” economy, and do not
live in a “middle-class’ society (HCN,
6/21/99).
He concludes that we do not educate our
children; we do not travel; our libraries are under-stocked; and
our elections are more influenced by out-of-state money than
elsewhere in the nation. All these negative characterizations
Marston derives from the fact that workers’ earnings in Montana are
significantly lower than the national average and have fallen in
both absolute and relative terms over the last two
decades.
Average incomes nationally are dictated
by the 80 percent of the population that lives in larger urban
areas. When Montana or other nonmetropolitan areas are compared to
national averages, they are being compared to large cities. To
expect that Montanans would enjoy pay similar to the national
average is to assume that we can enjoy big-city pay while enjoying
a small-town lifestyle and rural landscape amenities. If we could
do that, we would clearly be better off than workers who live in
big cities and have to suffer with the negative characteristics of
those locations: high cost of living, congestion, crime, urban
grime and pollution, etc.
Our lower pay is the
entry fee we pay to gain access to a preferred set of local
qualities. Paying that price no more impoverishes us than paying
the bill at a good restaurant does. It is a good deal. If it were
not, we would not choose to live here and we would not be faced
with the constant influx of others making similar choices. Given
the substantial net movement of people from high-pay areas to
low-pay areas, Marston must assume we all (and he) are stupid. The
alternative interpretation is that such moves improve people’s
well-being rather than impoverishing them.
As to
whether this means that we cannot afford to educate our children
and are isolated from the outside world because we cannot afford to
travel, that is preposterous. Our dropout rate is well below that
of higher income states such as New York, New Jersey,
Massachusetts, or California. Similarly, the percentage of the
population with high school or more educational attainment is well
above those of the higher income states. The percentage of our
population with a bachelor’s degree or more is significantly above
the national average even as we reside at the bottom of the barrel
in terms of annual pay per job. As to whether we can afford to
travel, I do not know what database Marston used, but I know of no
empirical evidence that Montanans do not take to the interstate
highway system and to the sky just as frequently as residents of
higher wage states.
Marston’s error is to assume
that lower money incomes mean people are poorer and have to go
without important goods and services and slip out of the middle
class. But we all spend a lot of our income on things that are not
central to our well-being: meals at restaurants, entertainment,
designer clothes, larger houses, etc. If some of us trade less of
those non-essentials for more access to higher quality social and
natural environments, who’s to say we lost something in the bargain
rather than gained? Making choices does not usually leave us worse
off!
Finally, at the very least, we must make
some adjustment for differences in local cost of living. Just as it
would be silly to say that because wages today in nominal terms are
three times higher than they were in 1975 we are are doing three
times as well, it is silly to compare pay in Connecticut,
Washington, D.C., or California with pay in Montana, Wyoming or any
other nonmetropolitan region without first adjusting for regional
differences in cost of living. That is not easily done because the
federal government does not collect systematic data on local cost
of living, but it is still important to make some approximate
adjustment.
Thomas
Power
Missoula,
Montana
The writer is an
economist at the University of
Montana.
Reviewer Ed Marston
replies
I did not interpret
the Claiborne-Ortenberg Foundation’s report, Montana: People and
the Economy. I responded to its last page, which reads in
part:
“Understanding Montana’s circumstances does
not ease the distress that many families and communities feel. Even
if they are doing as well as can be expected, many surely want to
do better. What can be done?” That question appears under the
subtitle: “Can Public Policies Raise Private Wages?”
So I tried to answer the central question the
report raised: How to raise the wages of a Western state whose
residents are among the worst-paid people in the nation. The body
of the report convinced me that creating even well-paying jobs
won’t raise wages. It will simply attract more people who want to
live in Montana. If you want to raise wages, the only way I know of
to do it without creating a metropolitan area is to organize, which
means to unionize.
But your core argument is that
Montanans (and by implication the rest of the rural,
nonmetropolitan West) are pleased with the bargain they have
struck. If they weren’t, they would leave.
I
disagree. I believe the nonmetropolitan West, including Montana, is
unstable, and that that instability shows up in our politics. From
across the region, we send people to Washington, D.C., who are like
the politicians of the pre-1960s South: They hate the federal
government, they practice the politics of resentment, and they have
no vision of the future other than to continue to run for office by
being for guns and against environmental
protection.
If the nonmetropolitan West were
healthy, it would not be so reactive. We would think in terms of
the land, of education, of libraries and of conservation. If we
were satisfied with our lots, we would not be presiding over the
reckless transformation of the region.
What is
the answer? I see a middle-class society, with middle-class
aspirations, as the best way to protect and nurture the West. Such
a society requires good wages, on a par with national wages. What
we then do with those wages will become the next fight. But we need
the wages.
I would love to be proven wrong. If
Montana abolishes gambling as a way to support local government, if
it stops chasing jobs with $200 million handouts to businesses, if
it elects constructive people to public office, if it begins to
figure out how to protect its land, then I’ll gladly sign on to
your letter and say: “Long live low wages.” Until then, I’m going
to try to answer the question posed in the report: “What can be
done?”
*E.M.
This article appeared in the print edition of the magazine with the headline Do low incomes make Montana “poor’?.
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