EDA study: Ravalli County’s economy dependent on its beauty

"This is an area that for every problem it has, there’s an opportunity," said Larry
Swanson, opening Wednesday’s public presentation of findings from the Ravalli
County Economic Needs Assessment.

By JAMIE OGDEN Staff Reporter

Among those findings, there were some familiar facts as well as statistical
surprises for the nearly 50 people that gathered in the County Administration
Building to hear Swanson talk.

Swanson serves as associate director of the O’Connor Center for the Rocky
Mountain West, and was commissioned by the county’s Economic Development
Authority to conduct the comprehensive economic study, which was paid for
through a $22,000 grant to the EDA from the U.S. Forest Service.

Dealing first with population trends, Swanson said Ravalli County sits at the
intersection of a nationwide change in migration. After experiencing little
population growth during the 1980s, coinciding with some difficult economic
restructuring, the West steadily gained residents in the 1990s.

Ravalli County, too, gained permanent residents in large numbers during the
1990s, more than doubling in size since 1970.

Adding about 1,500 residents each year and currently at about 38,000, the
county’s population is not expected to slow down much in the next decade
either. By 2010, Swanson said, the population of the Bitterroot is likely to
approach 54,000 people.

Analyzing broader trends, Swanson said it’s clear that "forest lands are
magnets," and counties situated near forest lands and wilderness areas are in
the throes of a population explosion.

And the most frequent reason for heading west given by newcomers: Improved
quality-of-life, according to Swanson. It’s a choice made available in the "new"
economy, he said.

"In the new economy, jobs are increasingly following people, whereas in the past
people followed jobs," said Swanson, noting that in the 1980s the nation’s fastest
growing areas were around large urban centers.

But, contrary to popular belief, the Bitterroot’s newcomers aren’t retirees. In fact,
the area has actually seen a slight decline in the growth of its 65 and older
population, Swanson said.

Pre-retirees, people in their 40s and 50s, account for the greatest influx to Ravalli
County, according to Swanson. What’s more, they are bringing older children
with them.

Ravalli County’s high school population is an all-time high, while the number of
children in lower grades is growing much more slowly – creating a problematic
bottle neck when it comes to school resources, Swanson said.

Between 1990 and 1999, the Bitterroot’s population of kids age 5 and younger
grew by 14 percent, the number of elementary school-age children grew by 17
percent, and the middle school population grew by 36 percent. The county’s high
school population, however, grew by 61 percent.

Pointing to Missoula as an example, where school districts are having to close
elementary schools and open new high schools in response to the trend,
Swanson said the challenge is to make resources more seamless – by turning
elementary schools into adult workforce training centers, for example.

While the county gained high schoolers and pre-retirees in the 1990s, it lost
people in their 30s – a statistic that’s worrisome, according to Swanson, because
the young workforce is an important part of an area economy.

As baby boomers make up more of the county’s population, according to
Swanson, they are more likely to bring other sources of income, besides labor
earnings, with them. Because personal income is also derived from investment
earnings and "transfer payments," such as social security and other income
supplements, it is important to develop an economic development strategy for the
area that takes the changing composition of personal income into account,
Swanson said. In short, the county must account for where its residents’
personal income is derived in order to work to increase area income.

Currently, the personal income received in Ravalli County is split almost evenly
between dollars derived from work and those derived from both investment
earnings and transfers.

A shift away from labor sources, Swanson said, began in the 1980s. He
predicted that area income, as pre-retirees move into retirement will continue to
shift away from labor earnings in the next decade.

While a heavy reliance on investment earnings and transfer payments can
insulate the county from some employment shocks, Swanson said it isn’t
necessarily sustainable – for it’s labor earnings, in particular, that pull another
economic indicator, per capita income, up or down.

Annual percentage changes in Ravalli County’s per capita income show that the
its labor sector is volatile and vulnerable, according to Swanson, though per
capita income overall has risen steadily since the late 1970s.

Ranked against 24 "peer" counties nationwide, Ravalli County ranks second in
total personal income and first in employment growth, but 23rd in per capita
income and dead last in per capita income from labor.

"We don’t need a quantitative labor strategy, we need a qualitative strategy," said
Swanson. "You don’t need just job growth."

In fact, among Swanson’s recommendations for economic development
programming in Ravalli County is the creation of a strategy that can increase
jobs that pay high-end wages, as well as those that serve as "ladders" for
elevating workers to higher-paying employment by offering benefits, training and
opportunities for advancement.

Through a target industry analysis, Swanson said the county can identify sectors
where it may have competitive advantage.

"You can’t make competitive advantage, but you can assist it," he offered.

Swanson said the area’s log home industry is a good example of a sector that
adapts well to an evolving economy, making Ravalli County one of only a handful
of counties in the West that were able to hold on to the wood products industry
through the 1980s.

Innovative wood products development and manufacturing may be a target
industry for future growth here, Swanson said.

In addition, Swanson said future economic development and population growth
will hinge on how well the county manages its population growth. Well-planned
growth will enhance property values, Swanson said, which make up a significant
portion of the personal income received from investment earnings in the area
economy.

Preserving and building property values through planning, rather than degrading
values through haphazard growth, "will be a long-term and enduring economic
benefit" to the county, according to Swanson.

"The area’s beauty is like an economic asset," he said "The county’s economy is
so dependent on the area’s attractiveness."

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