In the fourth quarter of 2020, the Kansas economy grew at the annual rate of 4.0 percent. GDP grew in all states, with Kansas performing in the middle. (more…)
Tag: Featured
Wichita jobs and employment, January 2021
For the Wichita metropolitan area in January 2021, the number of unemployed persons is down, the unemployment rate is up, and the number of people working is down when compared to the same month one year ago. The recent trend is positive.
Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows the effects of the response to the pandemic in the Wichita Metropolitan Statistical Area for January 2021.
Click charts and tables for larger versions.
Total nonfarm employment fell from 306,200 in January 2020 to 283,100 in January 2021, a loss of 23,100 jobs (7.5 percent). (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, employment in the nation fell by 6.1 percent. The unemployment rate in January 2021 was 6.8 percent, up from 3.6 percent the same month one year prior.
Considering seasonally adjusted data from the household survey, the labor force rose by 6,404 persons (2.0 percent) in January 2021 from December 2020, the number of unemployed persons rose by 6,056 (40.7 percent), and the unemployment rate was 6.5 percent, up from 4.7 percent in December. The number of employed persons not working on farms rose to 301,230 in January from 300,882 the prior month, an increase of 348 persons (0.1 percent).
The following chart of the monthly change in the labor force and employment in Wichita shows the magnitude of the drop in employment in April 202 overwhelming other months, and thenbotha positive and negative changes in employment for the following months. The rate of job growth is generally small except for October. The number of people in the labor force has both grown and shrank.
The following chart of changes from the same month one year ago shows a similar trend — fewer jobs, although the difference is becoming smaller as more people return to work.
The following chart of changes in employment from the same month of the previous year shows months when the Wichita MSA performed better than the nation before the pandemic. In months affected by the pandemic, we see the loss in employment Wichita has not been as severe as the nation, although that is not the case in recent months.
The following chart shows the monthly change in nonfarm jobs for Wichita and the nation. For January, the number of jobs in Wichita rose slightly, while for the nation, the number also rose by a smaller amount.
The following two charts show changes in jobs for Wichita and the nation over longer periods. The change is calculated from the same month of the previous year. For times when the Wichita line was above the nation, Wichita was growing faster than the nation. This was often the case during the decades starting in 1990 and 2000. Since 2010, however, Wichita has rarely outperformed the nation and sometimes has been far below the nation.
(For data on all metropolitan areas in the nation, see my interactive visualization Metro area employment and unemployment. It is updated through January 2021.)
The link to the archived version of the BLS news release for this month may be found here.
National employment, February 2021
The unemployment changed little in February 2021, but job growth was stronger than any month since October.
The Bureau of Labor Statistics, part of the United States Department of Labor, reported the closely-followed jobs number rose in February 2021 by 379,000 jobs from the prior month. The unemployment rate was “little changed at 6.2 percent.” Compared to the economy before the onset of the pandemic, BLS wrote: “Both the unemployment rate, at 6.2 percent, and the number of unemployed persons, at 10.0 million, changed little in February. Although both measures are much lower than their April 2020 highs, they remain well above their pre-pandemic levels in February 2020 (3.5 percent and 5.7 million, respectively).”
The summary report from BLS may be found here.
Of note: BLS revised recent figures, which it does as more data becomes available. After revision, the job loss in December is 79,000, but the January figure was revised up by 117,000.
In its reporting, the Wall Street Journal wrote, “The U.S. economy is set up for a stronger recovery this spring after a February surge in hiring at restaurants and other hospitality businesses created the best monthly job growth since last fall. … In February, most of the job gains occurred in the leisure and hospitality sector, which includes restaurants, adding 355,000 jobs. There were smaller increases in temporary help services, manufacturing and healthcare. The gains reflect reduced business restrictions, more people receiving vaccines, a lower level of Covid-19 infections and a recent round of government aid to households and businesses, which boosted consumer spending early this year.” See February Hiring Sets Up Stronger Spring Recovery .
Axios reported: “Good news for your Friday: the economy added a whopping 379,000 jobs in February — far outpacing expectations. Why it matters: Virus cases eased in recent weeks and states lifted restrictions, helping fuel a hiring surge. It’s proof of how much control the pandemic has over the job market. The clearest signal: The bounce-back was largely driven by hiring in the leisure and hospitality sectors, which came even in the dead of winter.” See Vaccine dreams juice jobs report .
In an opinion piece in the Washington Post, Catherine Rampell wrote: “Yay for a strong jobs report, finally! And yet: No way, no how, should this news let Congress off the hook for more stimulus, whatever Republicans might say today.
Employers added 379,000 jobs in February, the Bureau of Labor Statistics reported Friday. That was the fastest pace of hirings since October, and more gains than had been expected. Most of the hiring came in the struggling leisure and hospitality sector (primarily at restaurants and bars). The unemployment rate also ticked down, to 6.2 percent from 6.3 percent in January. This decline happened for the “right” reasons: that is, because more people got jobs, not because more people gave up looking for work and stopped being counted as unemployed. ” See Opinion: February’s jobs report doesn’t let Congress off the hook for more stimulus .
My interactive visualization is updated with this data and is available here.
Kansas tax revenue, February 2021
For February 2021, Kansas tax revenue was 1.7 percent greater than February 2020. Over the eight months of the current fiscal year, revenue is 14.2 percent higher than at the same point of the previous year.
Tax reports from the State of Kansas for February 2021 show tax revenues falling from the previous month, but higher than the same month the prior year, despite the effects of the response to the pandemic. The fall from January is characteristic of the seasonal pattern.
When reporting on Kansas tax collections, the comparison is usually made to the estimated collections. Those estimates were revised in April 2020 based on economic conditions affected by the response to the pandemic. To get a feel for the effects of the response to the pandemic, it is best to compare to the same month the prior year.
(The estimated revenue figures are still important because the state budget is based on them. If the actual revenue is much below the estimated revenue, there may not be enough income to pay expenses.)
For February 2021, individual income tax collections were $193.7 million, up by 13.0 percent from the prior February. Retail sales tax collections rose by 0.8 percent to $179.3 million. Total tax collections were $455.9 million, up 1.7 percent from the same month the prior year. A nearby table summarizes.
For fiscal year 2021, which started on July 1, 2020, total tax collections are up by 14.2 percent over the same period of the previous fiscal year. A large reason for this is the change in tax deadlines from April to July, shifting much revenue from fiscal year 2020 to fiscal year 2021. That hasn’t always been explained, as I show in In Kansas, explanations for tax collections may vary.
As can be seen in a nearby table, tax revenue for fiscal year 2021 is $673.9 million greater than at the same time in the previous fiscal year. Of this, $527.0 million, or 78.2 percent, is due to the increase in individual income tax revenue.
My report on tax revenue for April details some changes made by the estimating group.
My interactive visualization of Kansas tax revenue has been updated with October data. Click here to use it.
An example from the visualization illustrates the composition of Kansas tax revenue for the last year ending in November 2020. Individual income tax accounted for 50.5 percent of revenue, and retail sales tax 31.5 percent. Together, this is 82.0 percent. Add compensating use tax of 7.0 percent and corporate income tax of 5.6 percent, and that is nearly all — 94.6 percent — of Kansas tax revenue.
The governor’s press release for this data is at February Total Tax Collections Outperform Estimate by $19.8 million.
Historic buildings bill on tap
A bill designed to protect two buildings in downtown Wichita has a legislative hearing this week.
Last year a citizen group gathered signatures on a petition that would prevent the City of Wichita from disposing of two downtown buildings without an approving vote of a majority of citizens. Based on having the required number of valid signatures, the petition was certified as valid. But the city sued to have the petition thrown out, contending the petition went beyond what Kansas law allows as the subject of municipal petitions. A judge agreed with the city.
Now the group has a bill in the legislature with a hearing this week. The bill is HB 2233, titled “Enacting the municipal historic building act.”
The key provision of the bill is this: “No city shall be permitted to sell, destroy, demolish, dispose of or otherwise alienate any public building that is more than 80,000 square feet in size and has been placed on the national register of historic places without first obtaining the approval [of voters.]”
At present, there are only two buildings that meet the criteria: Century II and the former Central Wichita Library.
In a release, John Todd writes:
House Bill No. 2233 is a bill initiated in the Kansas Legislature by the Wichita Save Century II citizens committee that is written to require a mandatory majority vote of Wichita qualified electors before municipally-owned buildings exceeding 80,000 square feet and on the National Register of Historic Places can be demolished or destroyed. We believe only two buildings in the state of Kansas meet this narrow definition: Century II and the former Wichita public library.
A public hearing is being held on Wednesday, February 24, on House Bill No. 2233 titled the Municipal Historic Buildings Act at 9:00 a.m. in the House Local Government Committee at the statehouse in Topeka.
Celeste Racette, Save Century II Committee Chair, Karl Peterjohn, Save Century II Committee Member, and I (also a Save Century II Committee Member) will be testifying in person at the committee hearing in Topeka.
Naftzger Park event management agreement still ambiguous
This week the Wichita City Council will update an agreement from last year, but it appears important issues were not addressed.
Last February the City of Wichita approved an agreement with a local business to manage events at Naftzger Park. With the pandemic upending public events, the business — Wave Old Town, LLC — was unable to program any events. Therefore, the city wants to add additional time to the agreement.
During the delay, the city could have addressed problems with the original agreement. Some problems concern the bidding process. My concern was the uncertainty in the profit-sharing agreement, which could result in widely varying results depending on how the profit is calculated. None of these issues are mentioned in the agenda packet for Tuesday’s meeting. Further, the item is scheduled on the consent agenda. This means there will be no discussion on this item, and there will not be a vote specifically on this item, unless at least one member of the council decides to “pull” it from the consent agenda.
There is discussion on Facebook in the Naftzger Park group here. Following, my article from February 2020, which applies today as then:
Naftzger Park event management agreement ambiguous
The profit-sharing agreement for Naftzger Park event management contains ambiguity that could lead to disputes.
Today the Wichita City Council approved an agreement with Wave Old Town LLC for event management in Naftzger Park in downtown Wichita. The agreement was approved unanimously.
While there was controversy over the awarding of the contract (Wichita Eagle reporting is here), others have noticed that the contract is imprecise in a way that could lead to problems.
The city and Wave will share profits and losses based on a schedule in the management agreement contained in the agenda packet for today’s meeting, Item V-2. The issue is when the profit-sharing is calculated.
Profit-sharing agreement for City of Wichita and Wave. Click for larger. Based on the way the profit-sharing is calculated, different profit-sharing results could be obtained from the same event history. The management services agreement the city council passed today does not speak to this issue. Neither does the request for proposal for event management.
The issue is when the profit-sharing calculation is performed and using which data, as follows:
- Profit-sharing could be calculated independently for each event, using data for just the current event. This is illustrated in example 1.
- Profit-sharing could be calculated once at the end of the year (or another period) using the sum of events during the period. This is shown in example 2.
- Profit-sharing could be calculated independently for each event, using cumulative data for the year (or another period). Example 3 illustrates.
As the following examples show, the differences between these three methods of calculation could be substantial. These three examples assume two events, one with an event profit of $49,999, and the second with an event loss of $49,999. Notice that depending on how and when the same calculation is performed, Wave’s share of profits could be $0, or $25,000, or $49,999. The city could either lose $25,000 or $0.
While these examples are contrived and use extreme values, they illustrate that the agreement the council passed is ambiguous. There could be disputes that could be avoided with careful attention to detail by the city when constructing contracts.
Click for larger. 
Say no to special tax treatment, again
In Kansas, a company seeks to avoid paying property taxes, again.
In a bill presented in the Kansas Legislature, the owner of health clubs seeks to avoid paying property taxes. The same company and its owner have tried this before. In 2014, I explained how granting this exemption was a bad idea.
What has changed since then? This exemption is still a bad idea for reasons of public policy. Additionally, Brandon Steven, the owner of the health clubs, plead guilty to a gambling charge and forfeited one million dollars in earnings. The companies also owe a lot of the tax it seeks to avoid.
Following, my article from March 2014.
Special interests struggle to keep special tax treatment
When a legislature is willing to grant special tax treatment, it sets up a battle to keep — or obtain — that status. Once a special class acquires preferential treatment, others will seek it too.
When preferential tax treatment is granted, that is, when government says someone doesn’t have to pay taxes, it’s usually the case that someone else has to pay. That’s because governmental bodies usually don’t reduce their spending in response to the tax breaks they give. Spending stays the same (or rises), but someone isn’t paying their share. Therefore, others have to make up the missing tax revenue.
In Kansas, SB 72 has been passed by the Senate and may be considered by the House of Representatives. This bill would, according to its supplemental note “provide a property or ad valorem tax exemption on all property owned and operated by a health club.” In effect, this bill would give all health clubs the same property tax exemption that the YMCA enjoys on its fitness centers.
When the legislature uses tax law to achieve goals, the statute book becomes complicated as illustrated by the many special sales tax exemptions in Kansas. K.S.A. 79-3606 details the special sales tax exemptions that the legislature has granted. In order to list them all, the statute has sections labeled from (a) through (z), then from (aa) through (zz), then from (aaa) through (zzz), and finally from (aaaa) through (gggg).
Some of these sections are needed and valuable, such as the section that exempts manufacturers from paying sales tax on component parts and ingredients used to build final products. It is supposed to be a retail sales tax, after all.
But then there are sections like this: “(vv) (18) the Ottawa Suzuki Strings, Inc., for the purpose of providing students and families with education and resources necessary to enable each child to develop fine character and musical ability to the fullest potential.”
I have no doubt that this organization is engaged in useful work and that there should be more of this. But what about all the other organizations engaged in similar activities, and which are undoubtedly as deserving of the same tax break? Should they be penalized because they did not have the temerity to ask?
In the area of property taxation, we find many similar circumstances, where two businesses that seem to be similarly situated are treated very differently by the tax collector.
For example, Wesley Medical Center, one of Wichita’s principal hospitals, is Wichita’s second-largest property taxpayer, with taxable assessed value representing 0.90 percent of the total of such property in Wichita.
One hospital has many millions in property, but is not taxed on that property. But another large Wichita Hospital, Via Christi Hospital on St. Francis, has assets valued at over $115 million, yet pays no property tax. For the mill levy rate that applies to its address, this represents about $3.5 million in property tax savings. (It did pay a Sedgwick County Solid Waste User Fee of $8.91.)
How can we meaningfully distinguish between Wesley and St. Francis Hospitals? Does one provide more charity care than the other? Does the non-profit hospital charge lower rates? (I’d be surprised if so.) Does St. Francis impose less of a burden on city and county resources such as fire and police protection than does Wesley? Since Wesley attempts to earn a profit and St. Francis purportedly does not, does that make Wesley evil and St. Francis saintly? Why do we exempt St. Francis from millions of property tax, yet insist it pay $8.91 in solid waste user fees?
A scene from a non-profit retirement living center. We find other examples: A luxury retirement community (Larksfield Place) with real property valued at $27,491,440 pays no property tax, except for $5.95 in the solid waste user fee. Less than a mile away, Sedgwick Plaza, a senior living center, has a valuation of $5,067,350 for its real property, and was billed $70,080.51 in property tax, including its solid waste user fee of $972. Despite — or perhaps due to — its non-profit status, Larksfield Place is able to provide its president a salary of over $130,000.
A Goodwill thrift store on West Central in Wichita has real property valued at $696,600, but paid no property taxes except for $5.94 solid waste user fee. On the other side of town, a small thrift store on East Douglas has real property valued at $113,800. It pays $3,437 in property tax, including its solid waste user fee.
These differences in what seem to be properties in similar situations are not justifiable under any theory of taxation, one of which is that similar situations are taxed similarly. The YMCA’s fitness centers are difficult to distinguish from others in Wichita — except for the YMCA’s rarefied tax-exempt status.
The slippery slope
Here’s the danger: Should SB 72 pass and all health clubs start enjoying the same tax privileges as the YMCA, shouldn’t we then expect to see for-profit hospitals like Wesley Medical Center ask to be relieved of their tax burden, using the same logic? If the legislature were to deny that request, how could it possibly explain its reasoning to citizens?
In defense of its tax exempt status, the YMCA says it engages in many charitable activities. I’m sure that’s true, and we’d like to keep those activities. Perhaps the YMCA would consider separating its fitness centers from the rest of its operations. Separate the business-like activities from the charitable. The YMCA can use the “profits” from its fitness centers to finance its charitable activities. To the extent it does that, it will avoid paying state and federal income tax on its profits.
But property taxes are something different from income taxes. The YMCA benefits from all the things the city (and other taxing jurisdictions) provide, ranging from public safety to schools to security for the mayor’s trip to Ghana. When it doesn’t pay its share, others have to pay. That means that others — you and me, for example — have less money available for the charitable (and other) activities they feel important. Even worse, I am forced to subsidize the charitable activities that the YMCA (or the Methodist Church, Boy Scouts, Girl Scouts, etc.) chooses to fund. This is especially true in Kansas, where low-income households pay a regressive sales tax on food.
When the YMCA — or any non-profit, for that matter — escapes taxation that other similar organizations must pay, it means that we all subsidize the charitable activities of these non-profits. It sustains a system in which special interest groups lobby to keep their advantages, and those who are not similarly blessed spend lavishly on campaign contributions and other lobbyists. Even when the organization is widely respected, as is the YMCA, this is wrong. It leads to cynicism as citizens realize that our laws are not applied uniformly, and that special interests feel they can buy their way to special treatment.
For their business-like activities, the YMCA, Larksfield Place, and Goodwill thrift stores should pay property taxes so they shoulder the same burden that the rest of us struggle under. That will spread the cost of government fairly, and let ordinary people themselves decide how to contribute their after-tax dollars.
GDP by metropolitan area and component
An interactive visualization of gross domestic product by metropolitan area and industry.
The Bureau of Economic Analysis, an agency of the United States Department of Commerce, gathers data about economic output, known as gross domestic product. The visualization I have created presents this data in tabular and graphic form. (more…)
National employment, January 2021
The unemployment rate fell in January 2021, but job growth was weak, and the December value was revised.
The Bureau of Labor Statistics, part of the United States Department of Labor, reported the closely-followed jobs number rose in January 2021 by 49,000 jobs from the prior month. The unemployment rate fell from 6.7 percent to 6.4 percent. BLS notes that the total nonfarm employment level is “below its February 2020 level by 9.9 million, or 6.5 percent.”
The summary report from BLS may be found here.
Of note: BLS revised recent figures, which it does as more data becomes available. After the revision, the job loss in December is 227,000 instead of the previously reported 140,000
In its reporting, the Wall Street Journal wrote, “The unemployment rate decline in January was driven by two factors. More people dropped out of the labor force—meaning they weren’t actively looking for a job and may have grown frustrated with their employment prospects. Also, the number of people reporting themselves as employed increased, consistent with a generally upward trend in hiring since last spring.”
It added: The broader economic recovery stalled significantly this winter. Unemployment claims, a proxy for layoffs, have remained above pre-pandemic levels. Consumers cut back on spending, as some were wary of leaving their homes as virus cases surged. Others wanted to shop and dine out, but had limited options. … Economists see the winter lull as temporary. They expect growth to pick up later this year as more people get vaccinated and business restrictions further ease. Many economists also say the economy could benefit from further government stimulus.” See U.S. Employers Added 49,000 Jobs in January, Growth returned to the labor market after one-month dip; unemployment rate fell to 6.3%.
Axios reported: “Driving the news: The economy ended the Trump years with an unemployment rate of 6.3%. That’s a lot lower than the pandemic-induced high point of 14.8% in April, but still well above the 4.7% unemployment that Barack Obama left behind. Why it matters: Former President Trump inherited a flourishing labor market. He’s handing President Biden one that has a ways to go before recovering from an unprecedented shock. … By the numbers: When Trump took office, the economy had 145.6 million jobs. The legacy he leaves Biden, as measured during the week of Jan. 11: 3 million fewer jobs, and a labor force of 160 million people that’s 4.5 million people smaller than it was four years ago.” See The Trump-COVID jobs legacy.
In an opinion piece in the Washington Post, Catherine Rampell wrote: “Well, at least we didn’t lose jobs last month, as was the case in December. But job growth in January — at an anemic 49,000 net payroll jobs — was still much slower than it was pre-pandemic. Which doesn’t do much to help us recover the 22 million jobs lost in early spring. (more…)
