MISSOULA -- A new report from economists at the University of Montana shows that high-tech companies in the state generated roughly $1.5 billion in revenue in 2016 and are growing at rates seven times faster than the statewide economy.
The study from the Bureau of Business and Economic Research found that Montana's high-tech sector expects to add more than 960 new jobs in the state in 2017 that pay average annual salaries of $60,000, more than twice the median annual earnings per Montana worker. The projection of new jobs is not unreasonable at all, considering high-tech and manufacturing firms added roughly 940 new jobs in 2016.
Christina Henderson, the executive director of the Montana High Tech Business Alliance in Missoula, said that her organization knows of roughly 540 high-tech and manufacturing companies in the state. Of those, 242 are members in the statewide organization, which commissioned the report for the third straight year to publicize the importance of high-tech businesses to Montana’s economy. The study found that MHTBA members were responsible for $1.09 billion in revenue, an increase from $867 million in 2015. Responding non-member firms generated an additional $487 million in revenue.
“Our third annual report shows once again the incredible opportunity for the high-tech industry to transform Montana’s economy by bringing high revenues and high-paying jobs into the state,” said Henderson. “But this year’s survey also showed that Montana’s positive business climate and extensive network of business resources – from our universities and nonprofits to mentor companies, banks and government – all play a crucial role in helping Montana entrepreneurs succeed.”
Henderson noted that the average wage paid by high-tech firms in the state is rising dramatically. The first survey three years ago showed the average wage was $50,000 per year, compared with the $60,000 this year.
This year’s survey examined perceptions of the business climate in Montana for entrepreneurs either starting or considering a new business, as well as various resources that have been helpful to growing businesses.
High-tech firms often sell their products and services to clients out of state, meaning that they can sell their products for higher prices and pay their employees a higher salary. Also, it means new money is being brought from out of state into the Montana economy, rather than just being re-circulated.
“By and large (high-tech companies) are selling their products and services globally, which is part of the reason why the companies are able to pay so competitively,” Henderson said. “The great thing for Montana’s economy is all of that money is coming back into the state. So a company headquartered here is using local vendors and spending on infrastructure, and all that money going into payroll is going to tech workers who are putting kids in local schools, eating at local restaurants and going to entertainment venues and all that spinoff economic activity.”
Compared to major tech hubs like Denver, Austin, Seattle or Silicon Valley in California, Montana has a much lower cost of living. Therefore, companies that do business here or are thinking of relocating here could see an opportunity for their employees to take advantage of relatively lower housing prices while still enjoying a pay-scale commensurate with a larger urban area.
“Montana is certainly more affordable compared to some of those urban hubs,” Henderson said. “The No. 1 benefit is Montana has a fantastic quality of life. We have fresh air, mountains and we don’t have commutes here. So along with a potential cost-of-living savings, you have an increase in work/life balance.”
Respondents to the survey specifically mentioned that recreational opportunities and natural beauty provided significant advantages to doing business here.
Overall, 77 percent of Alliance members and 63 percent of nonmembers would encourage someone to start a business in Montana, according to the survey.
“Overall, this is a strong endorsement of Montana’s business climate,” said John Baldridge, BBER director of survey research.
“This new industry survey confirms what we already know – that Montana's fast-growing technology sector and high quality of life benefit our employees," said Matt Rizai, chairman and CEO of Workiva, a tech company with offices in Missoula and Bozeman. "We have been very pleased with the high caliber of technology talent in Montana, particularly software developers from Montana State University and the University of Montana.”
As in previous years, respondents mentioned several barriers to faster growth, including attracting talent, hiring skilled technology workers, access to capital and finding new customers.
“The No. 1 barrier to growth for our member companies is finding enough high-tech talent,” Henderson said. “One of the challenges is a lot of folks don’t know about all these new companies that have sprung up and are growing. When I go to classrooms and talk about a dozen companies that are hiring, the kids have maybe heard of two or three.”
That’s because Montana hasn’t traditionally been a bastion of tech companies, but that’s rapidly changing.
“So we want to get the word out to professors and Montanans that you can get a great job in Montana that pays well doing interesting work for a high-tech company in an engaging field and still enjoy a great quality of life and have a great career here,” Henderson said. “That story hasn’t been told because five or 10 years ago it wasn’t true, but now it’s true.”