Low unemployment and rapid wage growth show that Montana's economy is humming as well as any in the nation, state officials said Wednesday.

Delivering the state's 14th annual Labor Day Report, Keith Kelly, commissioner of the Department of Labor and Industry, noted that in March Montana's unemployment rate fell to 2.0 percent, the lowest in the country. It's since risen to 2.7 percent, still well below the national average of 4.9 percent.

Meanwhile, the state's wages grew an average of 5 percent last year, a growth rate good for 11th in the U.S. And those wages went up even while the number of jobs available in Montana grew 3.1 percent, another figure that's well above average on a national scale.

"You've got the dollar growth in wages, and the number growth in jobs," Kelly said.

Economist Tyler Turner noted that the state is showing strong job growth in business and professional services and construction, jobs that tend to pay decent wages.

"Montana is not increasing employment levels in low-paying areas," Turner said. "We're getting good job growth in Montana."

Turner noted that wage growth in Montana has outpaced the national average in every year since 2001, when a national recession essentially bypassed the Treasure State.

Even with the growth, Montana ranks near the bottom in the country in per capita income, so there's still plenty of room for improvement.

Still, the low unemployment rate and rapid wage growth aren't all good news. Employers are struggling to find workers to fill low-end jobs, and if the perception persists that Montana has no workers to fill positions, companies will look elsewhere for their own growth opportunities.

Economist Brad Eldredge noted that the growth in wages took place predominantly at the lower end of the pay scale, and that higher pay is prompting more Montanans to enter the labor market.

The published unemployment rate only includes people who are actively part of the labor market but not working -- people recently laid off, people between jobs, recent graduates and the like.

It doesn't include people who could work but choose not to for various reasons, including retirees, stay-at-home parents, high school drop-outs and others. It's members of the latter group who have been lured back to work by higher wages in recent years.

To that end, "we need to get the message out that we have a lot of groups that aren't engaged at all in even looking for work. They could be trainable and become part of the workforce," Eldredge said.

Gov. Brian Schweitzer said another untapped pool of Montana workers lies across the country, in the form of Montanans who left the state to earn more money but who want to come home.

We have a talented work pool, they just don't happen to be in Montana right now," he said.

Eldredge noted that long-term projections for Montana show a growing population but a shrinking labor pool -- a dangerous combination.

"We're going to have a population that's growing and demanding more goods and services, and a labor pool that's shrinking," he said. "We'll either have to increase labor force participation, or we'll have to make the current labor force more productive, so we can produce more stuff and services per person so we can maintain our standard of living."

It's unlikely that unemployment will remain below 3 percent for a sustained period of time. Higher wages will bring more people into the labor pool and help shift the balance back toward 4.5 percent, which economists traditionally consider to be "full" employment.

Still, Eldredge said it's good while it lasts.

"We'd rather have the problems associated with low unemployment than with high unemployment," he said.

John Harrington can be reached at 447-4080 or john.harrington@helenair.com.