Montana Jones

Free trade and the Flathead

Employment in the Flathead Valley is making some waves these days. The Missoulian has a take on it. Left in the West has a take on it, even David Sirota has a take on it. I think most of them have it wrong on one detail or another.

Left in the West and David Sirota are trying to spin this as some big free trade issue. Reading the comments on the Sirota blog has my head spinning over how out of touch some people really are. There are arguments about the minimum wage and securing our borders against immigrants and free trade agreements and about THE MAN putting the worker down. What a bunch of hookum.

The one tiny little detail that everyone is missing here is why the Flathead labor market is so weird. The Flathead Valley is a retirement destination. Retirees with no jobs and no need for jobs are arriving in droves. They are brining with them retirement money and a demand for services but they are not bringing with them any young people or working class families to provide the services. Demand for services and service workers is outpacing the supply.

To make it worse, the influx of retirees has wacked out the real estate market. Even though wages are above average high in the Flathead, prices of homes are still out of reach for the working stiff. In other words, even with the above average wages there is no incentive for working class persons to move here because there is no place to live and no way to build up a nest egg.

So now we have a supply and demand problem in the labor market. Employers are fighting a difficult fight to simply keep their businesses staffed. Some of the things they are doing includes raising wages and benefits but that does not solve anything when there are not enough workers to go around. So employers have to hire from outside the area. The novelty here is that some employers are looking outside the country.

There are those who call this a free trade issue and think that employers are trying to screw over the American worker by using foreign labor to keep wages down. They say all this is an international free trade problem and an illegal immigrant problem and a higher minimum wages will solve it and border control will solve it and if corporations simply cared more for their workers that would solve it. What a bunch of hookum. This might be true if there was any significant amount of unemployment. Or it might be true if wages for the Montanan workers here were not well above average, above the minimum, and in many cases well above the recently voted raised minimum.

Hypothetically even if we perfectly sealed the borders and totally denied work visas to foreigners and raised minimum wages to the point just shy of shopkeepers going bankrupt trying to meet their payroll, none of that, at least in the Flathead Valley, would make the problem go away. That is because there are not enough workers to go around. There is not enough affordable housing and non-wage incentive to bring more workers in. And the labor demand is still increasing faster than the supply.

In other words it is not a big international free trade issue, it is not a problem with THE MAN keeping the little guy down. It is simply supply and demand doing its thing. Theoretically if things keep going like they are, incoming retirees will eventually decide that the Flathead is too expensive to live in with not enough services and amenities and stop coming or even move out. I think they call this a supply and demand correction. Unfortunately waiting for it to happen is still painful for all the people on the short end of the supply/demand stick.

Sure, if we were to regulate or change some of the free trade labor laws, or use side agreements or whatever there would be some small affect on local labor conditions. But it will not solve the problem or do much to make the world a better place. If we want to improve the standard of living for the working class everyman in the Flathead Valley, don't go looking to regulate the supply and demand of international labor. Wages are already pretty high here, what needs to change is the non-wage incentives for workers to live here. Perhaps some working class tax breaks, insurance breaks, or here is a radical idea. Lets improve on the supply of affordable housing.

To accomplish this I think we need to lower the demand for the Flathead as a retirement destination. One good way would be if Mother Nature gave us a good long, hard, cold, old school, weeks of bitter cold, bursting pipes, car wont start, nasty winter. That would help drive some retirees out. But then again that would make this a global warming issue instead of a free trade issue. How about we just put up some 'Californian go home' billboards. That worked pretty well at solving the meth problem.

Labels: economy, Employment, Flathead, free trade, Labor, opinion, wages, workers

Posted by: Montana Jones / 9:44 AM