Following, articles that address some of the topics I presented:
Industrial revenue bonds in Kansas: Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes.
Wichita TIF projects: some background: Tax increment financing disrupts the usual flow of tax dollars, routing funds away from cash-strapped cities, counties, and schools back to the TIF-financed development. TIF creates distortions in the way cities develop, and researchers find that the use of TIF means lower economic growth.
For the Wichita metropolitan area in August 2018, jobs are up, the unemployment rate is down, and the labor force is smaller, compared to the same month one year ago.
Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving employment situation for the Wichita Metropolitan Statistical Area.
The best numbers for Wichita are the total nonfarm employment series, which rose from 291,300 last August to 296,000 this July. That’s an increase of 4,700 jobs, or 1.6 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.)
The unemployment rate fell to 3.8 percent, down from 4.6 percent from a year ago.
Considering seasonally adjusted data from the household survey, the labor force rose by five persons from July 2018, and the number of unemployed persons fell by 511 (4.7 percent), and the unemployment rate fell to 3.6 percent from 3.8 percent. The number of employed persons not on farms rose to 296,366 in August from 295,810 the prior month, and increase of 556, or 0.2 percent.
What is the importance of agriculture to the Kansas economy?
United States Representative Roger Marshall said: “My district is the largest ag-producing congressional district in the country, with 60 percent of the economy being ag related. Forty percent of the Kansas economy is ag related.” 1
The Kansas Hospital Association argues: “In Table 5, the total income impact of health care services resulted in an estimated $19.4 billion for the economy. Thus, health care is directly or closely related to about 11.6 percent of the state’s total income.” 2
The Kansas Department of Transportation produced a study that finds: “In 2017, $20.6 billion in annual economic benefit was supported by aviation and aviation-related activities in Kansas, supported nearly 91,300 jobs, and generated more than $4.4 billion in annual payroll.” 3 $20.6 billion is 14.9 percent of the $138.328 billion Kansas economy.
The nonalcoholic beverage industry says: “With a direct economic impact of $2.0 billion.” Then “Factoring in this retail impact further broadens the economic reach of the nonalcoholic beverage industry by an additional $1.7 billion beyond what our industry generates directly.” 4 The total of $3.7 billion is about 2.7 percent of the Kansas economy. That’s coming just from nonalcoholic beverages.
We can easily find other examples of industry groups emphasizing their importance to the Kansas economy. But these findings are almost always exaggerated, especially in the case of agriculture.
For example, the Kansas Department of Agriculture says “Using the most recent IMPLAN data available (2015) adjusted for 2017, 65 agriculture, food, and food processing sectors were analyzed to determine their overall contribution to the Kansas economy. These 65 sectors have a total direct output of approximately $47.9 billion and support 125,714 jobs in Kansas.” 5 The document says this is 31.6 percent of Kansas GDP.
Direct output is defined in the same document in this paragraph: “Direct, indirect, and induced effects sum together to estimate the total economic contribution in the state. Direct effects capture the contribution from agricultural and food products. Indirect effects capture the economic benefit from farms and agricultural businesses purchasing inputs from supporting industries within the state. Induced effects capture the benefits created when employees of farms, agricultural businesses, and the supporting industries spend their wages on goods and services within the state.”
Adding indirect and induced effects results in $67,461,102,358 ($67.5 billion) in economic contribution, which the Department of Agriculture says is 44.5 percent of Kansas economic output, also called gross domestic product (GDP).
It is true that agricultural workers spend money like anyone else. They spend on food, shelter, taxes, recreation, cars, clothing, and other things. Therefore, an agriculture industry support group might say “Farmers keep small town Kansas restaurants in business, providing jobs for restaurant workers.”
Then, a restaurant industry support group might say “By buying meats and produce locally, restaurants keep Kansas farmers in business.”
All this is true. But we need to be careful when counting contributions to the whole. Here, when farmers eat at restaurants, that is counted as induced effects of agriculture contributing to Kansas GDP. But, the restaurant industry counts the production and serving of these meals as its own direct output to Kansas GDP.
Similarly, when the restaurant buys food from a farmer, the purchase counts as indirect effects of the restaurant industry as they purchase inputs and contribute to Kansas GDP. The farmer, of course, considers that as his direct output, again contributing to Kansas GDP.
This economic activity is good and natural, and the more, the better. But we can’t count it twice when allocating GDP to industries.
Consider the industry category “Dog and cat food manufacturing,” said by the Department of Agriculture to employ 2,183.7 people in Kansas, producing $3,125,350,139 ($3.1 billion) in contribution to the Kansas GDP. That’s 2.2 percent of Kansas GDP. Should all the output of this industry be considered part of Kansas agriculture? The manufacturing industry counts this as part of its contribution to GDP. It’s true that the inputs to the manufacturing are agricultural products, but we don’t know if they are ag products that are produced in Kansas and should be counted as part of Kansas GDP.
The nearby table shows that for 2017, agriculture counted for 3.2 percent of the Kansas economy. For the period 1997 to 2017, it was 2.7 percent. There are many industry groups with greater output than agriculture.
How are the GDP numbers for agriculture inflated to 44.5 percent? IMPLAN, that’s how. It is an economic model used to estimate contributions of economic activity to the larger economy. 6
It’s true that when an industry produces economic activity, it spawns other economic activity. These are the indirect and induced effects that IMPLAN produces. But these numbers are hugely inflated. When considering all industries, economic activity is counted more than once.
When it suits their needs, industry groups, like other special interest groups, use IMPLAN to boost their importance. Consider manufacturing, which at 16.4 percent of GDP is the second-largest industry in Kansas. When manufacturing companies appeal to state or local government for subsidies, they use IMPLAN or related mechanisms to inflate their importance. Almost everyone does this. It’s standard procedure.
Except: When multiple industries the same indirect and induced economic activity, such analysis becomes meaningless. If we added up the IMPLAN-calculated value of each industry to the Kansas economy, we’d end up with a value several times larger than the actual value. This is what the Kansas Department of Agriculture has done. We expect this behavior from companies or local economic development agencies when they appeal for economic development incentives and other forms of special treatment. They need to inflate their importance to gullible government bureaucrats and elected officials. But government agencies should not do this.
On the other hand, what is the harm in overstating the importance of an industry? The harm is that policy decisions are made using false evidence.
For August 2018, more jobs in Kansas, and a nearly unchanged labor force. Wichita jobs also rose.
Data released this week from the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving jobs picture for Kansas in August 2018.
Over the year (August 2017 to August 2018), the Kansas labor force is down slightly, while up slightly over the past three months. These changes are small, all being in the range of 0.1 percent or less.
The number of unemployed persons continues to fall, declining by 1.4 percent from July to August. The unemployment rate was 3.3 percent in August, down from 3.6 percent from one year ago, and from 3.4 percent in July.
The number of Kansas nonfarm jobs for August 2018 rose by 1.9 percent over last August, adding 26,600 jobs. This is using seasonally adjusted data, and the non-adjusted figure is larger at 29,900.
From July 2018 to August, jobs in Kansas rose by 3,600, which is 0.3 percent.
This release also provided some data for metropolitan areas. For the Wichita MSA, here are employees on nonfarm payrolls, not seasonally adjusted:
August 2017: 291,300
July 2018: 294,500
August 2018: 296,000 (up 4,700 jobs, or 1.6 percent over the year)
Comparing July 2018 to August 2018 isn’t meaningful using this data, as it is not adjusted for seasonality.
The GDP figures are real, meaning adjusted for inflation. They are annual numbers through 2017. The release this week also includes revisions for the prior year. In the case of Wichita, the revision was significant, with a loss in GDP being revised to a gain. See Wichita economy shrinks, and a revision for details.
A nearby example from the visualization compares Wichita metro GDP growth to that of the nation’s metropolitan areas.
For 2017, the Wichita metropolitan area GDP, in real dollars, fell by 1.4 percent. Revised statistics for 2016 indicate growth of 3.8 percent for that year. Last year BEA reported growth of -1.4 percent.
In the revised statistics released today, GDP in 2012 was 28,346 million in chained 2009 dollars. In 2017 it was 29,610 million, a change of 1,264 million or 4.4 percent. For all U.S. metropolitan areas, the same statistic increased from 13,692,212 million to 15,224,212 million, an increase of 1,532,000 million or 11.2 percent.
The nearby table shows the change in GDP for major industry groups. Non-durable goods manufacturing showed the largest increase at 0.17 percent, while durable goods manufacturing fell by 0.21 percent.
Among nearby states, Kansas collects a lot of taxes, on a per-resident basis.
The United States Census Bureau collects data from the states regarding tax collections. Some data is available for each quarter subdivided by category.
From the first quarter of 2011 to the first quarter of 2018, Kansas and its local governmental units collected an average of $681 per quarter per resident in taxes. Of nearby states and a few others, Arkansas and Iowa had higher values, and Iowa is higher by only one percent.
Some states had lower values, such as Colorado at $565 per quarter per resident (17.0 percent less than Kansas), Texas and Missouri both at $486 (28.6 percent less), and Florida at $470 (31.0 percent less).
To learn more about this visualization and create your own, click here.
Kansas has nearly the highest number of local government employees per resident, compared to other states.
For all local government employees, Kansas had 50.59 per thousand residents in 2016, higher than all states (and areas) but the District of Columbia and Wyoming. These employees had an annual payroll of $2,141.16 per resident. Ten states were higher.
Considering elementary and secondary education, Kansas had 30.03 such employees per thousand residents. This was higher than all states but Vermont and Wyoming. The payroll for these employees was $1,150.85 per resident, with eleven states above Kansas.
Kansas is a small state in terms of population. Might small states have higher needs for employees on a per-resident basis? A plot of employees vs. population shows nearly no relationship between the two.
These are local government employees only. State and federal government employees are not included.
Of note, Hawaii has no local employees in elementary and secondary education, as it has one school district which is run by the state. 1
The source of this data is the United States Census Bureau. I’ve gathered it and placed in in an interactive visualization. Click here to learn about the visualization and use it to make your own charts and tables.
For the first quarter of 2018, the number of jobs in Sedgwick County grew, but at a rate slower than the nation.
Data released today from the Bureau of Labor Statistics, part of the United States Department of Labor shows an improving labor picture in Sedgwick County, but one growing at one-fifth the rate of the nation.
For the first quarter of 2018 there were 12,500 establishments in Sedgwick County employing 247,800 workers. That is an increase in jobs of 0.3 percent from the same time the previous year, a rate which ranked 293 among the nation’s 350 largest counties. For the same period, the national job growth rate was 1.6 percent.
(Ranked by labor force, Sedgwick County is the 120th largest county.)
The average weekly wage was $967, an increase of 2.4 percent over the year, that change ranking 228 among the same 350 largest counties. The U.S. average weekly wage increased 3.7 percent over the same period.
For the Wichita metropolitan area in June 2018, jobs are up, the unemployment rate is down, and the labor force is smaller, compared to the same month one year ago.
Data released this week by the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving employment situation for the Wichita Metropolitan Statistical Area.
The best numbers for Wichita are the total nonfarm employment series, which rose from 294,900 last June to 297,900 this June. That’s an increase of 3,000 jobs, or 1.0 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.)
Of note, the same series of data for the nation rose from 147,578,000 to 150,057,000 over the same time, an increase of 1.7 percent.
The unemployment rate fell to 4.0 percent from a year ago. Part of the improvement in the unemployment rate is due to a slightly smaller labor force.
Considering seasonally adjusted data from the household survey, the labor force rose slightly from May 2018, and employment was unchanged. This is a slowdown of a positive trend in the previous three months.
In the first quarter of 2018, the Kansas economy grew at the annual rate of 0.5 percent in real terms, slowing from the previous quarter.
In the first quarter of 2018, the Kansas economy grew at the annual rate of 0.5 percent in real (inflation-adjusted) dollars from 2016, according to statistics released today by Bureau of Economic Analysis, a division of the United States Department of Commerce. GDP for the quarter was $161,551 million.
This is a decline in the rate of growth from the fourth quarter of 2017, when the rate was 2.3 percent.
The first quarter numbers put Kansas in 47th position among the states, with only Arkansas, Idaho, and North Dakota posting lower numbers. Quarterly GDP can be volatile, as shown in the nearby chart.
For Kansas, industries that differed markedly from the state average include:
Agriculture, forestry, fishing, and hunting, down by 1.08 percent.
Wholesale trade, down by 0.13 percent.
Management of companies and enterprises, up by 0.07 percent.
Administrative and support and waste management and remediation services, unchanged.
Educational services, up by 0.01 percent.
Arts, entertainment, and recreation, down by 0.03 percent.
Accomodation and food services, down by 0.03 percent.
Wichita employment trends are positive for three consecutive months.
Seasonally adjusted data from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a rise in the Wichita metropolitan area labor force and job count. This data is through May 2018 and shows three consecutive months of rising employment.
This is a reversal of the long term trend for Wichita, in which the labor force and employment have been falling or trending steady while the nation’s economy has been growing. An interactive visualization of employment data for all metropolitan areas is available here.
While the upward trend is welcome, it is not known whether Wichita can sustain positive growth.
In May, the forecast for Wichita from Center for Economic Development and Business Research (CEDBR) at Wichita State University was pessimistic: “The production sectors are projected to remain approximately flat in 2018. Natural resources and construction employment is forecast to increase by less than 100 jobs while manufacturing employment is projected to decline by less than 100 jobs.”
This decline in manufacturing employment is forecast even after the new Spirit Aerosystems jobs are accounted for. In its reporting on this forecast, the Wichita Eagle wrote:
Late last year, Spirit, the city’s largest employer, announced plans to hire an additional 1,000 mostly production workers over two years, with the bulk of the hiring expected in 2018. Bombardier announced plans to add 100 jobs when it moves its Global 5000 business jet interior completions work from Canada to Wichita later this year.
“I’m not so sure all of the positive news means we’re growing,” [CEDBR director Jeremy] Hill said.
He said the gains at Bombardier and Spirit are offset by contraction and consolidation by smaller manufacturers that supply parts to Spirit and other aircraft manufacturers. In some cases, work the smaller firms have done has been taken back by larger manufacturers, who are now doing it themselves. Retirements in aircraft manufacturing may also be affecting the numbers, Hill said, but he doesn’t have the data to confirm that.
“It is hard to get your hands on,” he said. “It’s definitely not showing up in the (employment) numbers, not showing up in output in durables manufacturing.”
A look at income in Wichita compared to other Midwest cities.
How much do Wichitans earn at their jobs, compared to other cities?
This data is of interest as recently James Chung told an audience that “average income” is $10,000 higher in Midwest comparable cities than in Wichita. He didn’t define the term “income,” he didn’t define the comparable cities, and he didn’t provide any sources of data. But mention of this is a good time to look at income in Wichita and other cities.
The Bureau of Labor Statistics, part of the United States Department of Labor, collects data regarding salaries of occupations in different cities in a program called Occupational Employment Statistics. More information about this program may be found here.
One way to examine income in different cities is to compare the salaries for different jobs using the OES data collected by BLS. I selected some cities to compare with Wichita: Cedar Rapids, IA; Colorado Springs, CO; Des Moines-West Des Moines, IA; Fayetteville-Springdale-Rogers, AR-MO; Kansas City, MO-KS; Oklahoma City, OK; Omaha-Council Bluffs, NE-IA; and Tulsa, OK. (The data is collected for Metropolitan Statistical Areas (MSAs), not cities. But it seems more natural to use the term city.)
The OES dataset is large, holding data on over 800 occupations, and it’s unwieldy to make apt comparisons. Besides what I report below, I’ve also created an interactive visualization of the OES data. In the interactive visualization, you may select any cities and occupations for comparison. Click here to learn more and use it.
Considering all occupations for this sampling of cities, the annual salary in Wichita is $43,880, while it is $50,600 in Des Moines. That’s $6,720 lower in Wichita, or 13 percent.
Considering a few semi-random occupations: For buyers and purchasing agents, the highest salary is in Cedar Rapids at $75,830. The Wichita salary is $9,640 less, while the Des Moines salary is $15,070 less.
For food service managers, the highest salary is in Colorado Springs at $66,300. The Wichita salary is $1,520 less, while the Des Moines salary is $21,270 less.
For police officers, the highest salary is in Colorado Springs at $68,980. The Wichita salary is $21,670 less, while the Des Moines salary is $4,310 less.
For telemarketers, the highest salary is in Fayetteville at $27,760. The Wichita salary is $1,860 less, while the Des Moines salary is $2,100 less.
For the broad category of architecture and engineering occupations, Wichita is the leader in the sample at $82,710. Des Moines is at $71.930, which is $10,780 lower.
For the broad category of production workers, Wichita again leads the sample at $44,950, while Des Moines is at $35,190, which is $9,760 lower.
Another set of data that can help is personal income. For Des Moines, personal income per person is $50,677 (complete year 2016). For Wichita, the value is $47,395, which is $3,282 less. (For an interactive visualization of personal income, see Visualization: Personal income by metropolitan area.)
Comparing average salaries for groups of occupations in different cities has problems. One is the number of workers in occupations. Considering management occupations, there are few chief executive officers but many other managers. The weight of the number of workers needs to be considered.
Also, the magnitude of salaries is an issue. Chief executive officer salaries vary widely, by tens of thousands of dollars. The data tells us that a CEO in Wichita earns $65,400 less than in Des Moines. That variation is greater than the average salary across all occupations, and provides little insight into the salaries of the majority of workers.
The per capita personal income figures overcome these obstacles.
Do Wichitans earn $10,000 less than in comparable Midwest cities, as James Chung recently presented? Based on per capita personal income, the answer is no. Not even close to that, although Wichita’s per capita income is not encouraging.
Based on occupational salaries, Wichitans earn less than many comparable Midwest cities, but nothing near $10,000 less when all occupations are considered. In specific occupations, Wichita salaries are much less, but in some cases Wichita salaries are highest.
Kansas personal income rose at the annual rate of 4.2 percent in the first quarter of 2018, compared to the previous quarter. Compared to the same quarter of 2017, the increase was 2.2 percent.
The quarterly change for the first quarter ranked 32 among the states.
Major contributors to the change in personal income were farm earnings down 0.61 percent, durable goods manufacturing up 0.88 percent, finance and insurance up 0.53, professional, scientific, and technical services up 0.39, and health care and social assistance up 0.48.
From December 2016 to December 2017 Sedgwick County employment was level, changing by 0.0 percent. According to the BLS news release, that ranked 317 of the 347 largest counties.
Using the monthly average job count, Sedgwick County had 248,772 (monthly average) jobs in 2016. For 2017 that fell to 247,022, a decline of 1,750 jobs or 0.7 percent.
As can be seen in the chart of change in job levels, 2017 continues a trend of slower job growth in Sedgwick County, with the growth trend turning negative.
Nonetheless, Sedgwick County leaders, as well as other local leaders, proclaim momentum in the local economy. Earlier this year Sedgwick County Commissioner David Dennis penned a column for the Wichita Eagle praising the county’s efforts in economic development. 1 Dennis is also chair of the commission this year. 2
In his column, the commissioner wrote: “Economic development is a key topic for the Board of County Commissioners and for me in particular. Right now we have a lot of momentum to make our community a more attractive place for people and businesses.”
In the same column he also wrote “There is a lot of momentum and forward movement in our community right now and I’m encouraged to see what we can achieve as a team.”
Looking at these statistics, it’s difficult to see how anyone could come to these conclusions.
According to BLS, “The Quarterly Census of Employment and Wages (QCEW) program publishes a quarterly count of employment and wages reported by employers covering more than 95 percent of U.S. jobs, available at the county, MSA, state and national levels by industry.” Also “The primary economic product is the tabulation of employment and wages of establishments which report to the Unemployment Insurance (UI) programs of the United States. Employment covered by these UI programs represents about 97% of all wage and salary civilian employment in the country.”