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Missoula currently ranks 32nd on Livability.com's Top 100 Best Places to Live list. Many university towns offer amenities that other places don't, such as college athletics, leafy streets and an eclectic mix of events and concerts. But there is a downside, because a new study from the University of Montana has found that college towns like Missoula and Bozeman have a high cost of living and low wages.


College towns across America routinely show up on “best places to live” lists because they offer an appealing mix of great restaurants, events, good schools and a highly educated, energetic vibe.

But these towns all have other things in common that aren’t so delightful: a high cost of living and low wages, especially for people with a college degree.

Montana’s two main college towns, Bozeman and Missoula, both fit this pattern.

Missoula ranks 107th out of 382 metro areas in the United States for its cost of living – the price people pay for housing, goods and services. Missoula’s cost of living resembles cities like Atlanta, Milwaukee or New Orleans. That is not matched by high wages here.

Median earnings for Missoulians over the age of 24 with a bachelor’s degree are less than $32,000, which ranks 907th out of 917 cities in the United States. In Missoula, college grads earn only 23 percent more than high school graduates, which is why everyone in the Garden City has heard an anecdote of someone with an advanced degree waiting tables or serving coffee.

Although low earnings disproportionately affect the college-educated in Missoula and Bozeman, both have a large percentage of college-educated residents. In Missoula, 40 percent of people over the age of 24 have a college degree, ranking the city at 39th out of 917 cities.

That’s according to Bryce Ward, an economist with the University of Montana’s Bureau of Business and Economic Research. He recently completed a study called “Curse of the College Town” that examined why affordability is such a struggle in these places. He found that income and housing costs in Missoula and Bozeman resemble places like Eugene, Oregon; Lawrence, Kansas; Gainesville, Florida, and State College, Pennsylvania – all cities like Missoula where the university plays a huge role in the economy and the culture.

“A similar pattern repeats in college towns across the country,” Ward said. “Relative to communities the same size, housing costs are 6 to 7 percent higher and median earnings for people with bachelor’s degrees are 8 to 10 percent lower in college towns.”

Ward found that there are two main reasons why incomes for college graduates are so low in college towns.

“First, college towns have more students and students frequently work low-wage, part-time jobs compatible with their school work,” he explained. "As such, part of lower median earnings for people with bachelor’s degrees may reflect a higher share of graduate students in the area.”

The second and more important reason, according to Ward, is that low wages reflect the basic laws of supply and demand.

“Many students fall for the city where they attend school and want to stay, while other college graduates enjoy living in college towns,” Ward said. “These forces help explain why college towns tend to have 40 percent more college graduates than similar-sized, non-college towns.” 


Ward said Missoula and Bozeman walk a fine line, because if they become too unaffordable, all the hip coffeeshops and river trails in the world won’t stop educated workers from leaving or not relocating here and going somewhere more affordable.

“A big part the battle for regional economic success in today’s world is attracting or retaining talent, so Missoula is doing well in that, but we are kind of teetering at the edge is what my fear is,” Ward explained. “As housing prices get more expensive and wages don’t keep up, it’s going to get harder for skilled people to make it work in Missoula. You don’t want to get on wrong side of this trend.”

He said that people that already own houses here are insulated from the rising cost of housing, but it’s the young college graduates or current students who are renting who may decide to leave en masse if wages don’t keep up.

“Attracting young, talented people is important to any economy because it’s an important engine of creativity,” Ward said. “Good workers are getting harder to find. With the net migration stuff, it’s a combination of low wages and high housing prices with quality of life that ultimately decides whether people can make it work. When things get too out of whack, that’s when you start getting into the dangerous territory of losing too much talent.”

The bottom line is that residents of college towns may not be able to consume the same set of goods and services that they might be able to consume elsewhere – either in a place with low cost of living and low wages or a place with a high cost of living but high relative wages.


Sara Curtin is a licensed clinical social worker in Missoula, who is in the process of becoming a licensed addiction counselor. She will be running her own private practice within a year. However, she worked in Missoula for about 10 years with just an undergraduate degree in psychology. She believes she "absolutely" could have made more money by working somewhere besides Missoula, but she couldn't give up the quality of life here.

"I grew up in Massachusetts, so when I would go visit family, it would often cross my mind," she said. "I would look at positions open there that paid at least double what I was making."

She said it's worth it for her to live here and make less, echoing what a lot of underpaid college graduates here most likely believe.

"I love this place," she said. "Social work is not a field you go into for the money and it's a career that requires a lot of self-care. My self-care mostly involves being outdoors. I knew if I moved to a city where I didn't have the wilderness at my back door, the fire I have in my belly for social work would burn out. When I decided to stay here, I created career goals involving starting my own practice, knowing this would enable me to live the life I wanted in the place I love."

Curtin believes Missoula has a problem retaining educated workers like her because of high housing costs.

"I know this town is saturated with college students who want to stay in Missoula and there aren't enough jobs," she said. "Plus the cost of living is too high. All my college friends had to move from Missoula in order to pursue their career goals."

There are, of course, places with a lot of college graduates that offer high median earnings for college-educated workers: Washington, D.C.; Boston, resort towns like Jackson Hole, Wyoming, and small state capitols like Juneau, Alaska. And there are plenty of cities with universities have a lot of college grads and high wages, such as San Francisco and Seattle.

“But these are places that have other large industries that help define the regional economy – such places have colleges, but are not college towns,” Ward explained.

The reason these places are different is because college towns like Missoula tend to have a lower share of workers in high-wage occupations and industries. College-town workers also tend to earn lower wages for the same job, Ward said.

“Entities that exist here in Missoula don’t produce as much value as they would if they were in a different place, like Denver,” Ward said. “It has to do with access to markets. We are isolated from a large metropolitan area. For professional service workers, it’s easier to make more money in a big city. That’s not denigrating the quality of workers here, it’s just that the surrounding environment is less fertile for being productive.”

If Missoula didn’t have such an attractive set of amenities that boosts its quality of life, such as access to outdoor recreation and a hometown college football team with a nice stadium, the lack of affordability here would drive people away, he said.

“The fact that wages are low relative to the cost of living speaks to the fact that college towns are nice places to live,” Ward said. “When identifying areas with a high quality of life, economists look for places where income is low relative to the cost of living. If people choose to live in a place with lower incomes and higher costs, that place must offer a desirable quality of life, otherwise people would move away.”

Bozeman’s cost of living is even higher than Missoula, resembling places like Salt Lake City, Houston or Tampa. However, that town’s college graduates earn a bit more – $36,000 in median wages.

Ward said that while some people in college towns may desire more high-wage jobs and an increasing population, others may fear the accompanying growth in housing costs or changes to the quality of life like increased traffic congestion.

“Thus, for college towns like Missoula and Bozeman, low income and high costs are only a problem to the extent they cannot achieve their desired mix of jobs, cost and quality of life,” Ward concluded. “Perspectives of the ideal mix will differ and every path a college town might take comes with trade-offs.”

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