In this episode of WichitaLiberty.TV: John Todd joins Bob Weeks and Karl Peterjohn to discuss issues involving the City of Wichita, including the future of Naftzger Park and economic development. View below, or click here to view at YouTube. Episode 157, broadcast July 9, 2017.
The Wichita Eagle’s coverage of the number of workers in Downtown Wichita isn’t fake news, just wrong news.
A recent Wichita Eagle article reported on the number of workers in downtown Wichita, designated as zip code 67202: “The 67202 ZIP code had lost nearly 15 percent of its businesses and 20 percent of its employees in the decade ending in 2015, according to the U.S. Census’s County Business Pattern data. The loss of the State Office Building in 2016 and the Wichita school district’s downtown office this summer — employees are moving to the former Southeast High School — will make that decline steeper.” 1
In the first sentence, the reporter is correct. The trend in the number of business establishments, the number of employees, and the annual payroll is downwards. 2
But the second sentence reveals a misunderstanding of the meaning of two sets of Census Bureau data. According to the Census Bureau’s description of the County Business Pattern data — that’s the data referenced in the article — the two events mentioned will not change the CBP data. That’s because governmental agencies are not included in CPB data. The Census Bureau plainly explains:
“Statistics are available on business establishments at the U.S. level and by State, County, Metropolitan area, ZIP Code, and Congressional District Levels. … CBP covers most NAICS industries excluding crop and animal production; rail transportation; National Postal Service; pension, health, welfare, and vacation funds; trusts, estates, and agency accounts; private households; and public administration. CBP also excludes most establishments reporting government employees.” 3
A second set of Census Bureau data known as LODES will change with the departure of USD 259 from zip code 67202. LODES is the source of 26,000 downtown Wichita workers claimed by Wichita State University’s Center for Economic Development and Business Research, the Wichita Downtown Development Corporation, the Greater Wichita Partnership, the City of Wichita, and other agencies. An earlier Eagle article from May 10 just scratched the surface on this topic. 4 That article described the Census Bureau data as erroneous. But there is no error in the data, as the Census Bureau plainly explains what the data means. 5 The error was in the application of the data by someone who used it to represent something it does not represent.
Readers of the Wichita Eagle may be thoroughly confused by now. Can we expect a correction or explanation? The Eagle says no.
For this year’s report, the news for the Wichita area is mixed. For the period 2010 to 2015, Wichita ranks 88th in growth, 69th in prosperity, and 44th in inclusion. (The 100 largest metro areas were ranked.)
Looking at just the most recent years, 2014 to 2015, Wichita ranks 73rd in growth, 42nd in prosperity, and 9th in inclusion. That’s moving in the right direction. So perhaps there is hope for progress, in that the rankings for the most recent years are better than the rankings for the past five years.
There is good news in these numbers, too. Wichita does well in most measures of “Inclusion,” which Brookings describes: “Inclusion indicators measure how the benefits of growth and prosperity in a metropolitan economy — specifically, changes in employment and income — are distributed among individuals. Inclusive growth enables more people to invest in their skills and to purchase more goods and services. Thus, inclusive growth can increase human capital and raise aggregate demand, boosting prosperity and growth.”
Wichita’s productivity ranking is good, also.
Brookings computed a measure called “Metro area competitive shift.” It’s described as “The difference between the actual job growth and the expected job growth. It indicates whether the metro area overperformed or underperformed given its industrial structure.” For the period 2010 to 2015, Wichita scored -4.2 percent. For 2014 to 2015, the measure is -0.5 percent. Again, movement in the right direction.
Looking at more recent data gathered from the Bureau of Labor Statistics through April 2017, we see that at a time private sector employment in the entire nation is rising steadily, in Wichita (and Kansas) employment rose at a slower rate, and has been (roughly) level since 2016.
Looking forward, the employment situation may not improve, or improve only slowly. Recently Wichita State University’s Center for Economic Growth and Business Research revised its forecast downward: “Revised employment numbers showed that Wichita’s economic growth came to a screeching halt in October of 2016. Even though employment growth presumably stopped, there is lacking evidence that the slowed employment growth is systemic. Employment growth is expected to pick up marginally, but multiple headwinds could derail that growth.” 1
Other data from BLS that I’ve charted through the Federal Reserve Bank of St. Louis show that Wichita’s unemployment rate is going down, and so is the civilian labor force. Manufacturing employment is far below previous levels, and is on a slow downward trend. You may view the Wichita dashboard here. A similar dashboard for Kansas is here.
An interactive visualization of state Gross Domestic Product by industry.
The Bureau of Economic Analysis is an agency of the United States Department of Commerce. BEA describes its role as “Along with the Census Bureau, BEA is part of the Department’s Economics and Statistics Administration. BEA produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation’s economy. To do this, BEA collects source data, conducts research and analysis, develops and implements estimation methodologies, and disseminates statistics to the public.”
One series BEA produces is gross domestic product (GDP) by state for 21 industry sectors on a quarterly and annual basis. BEA defines GDP as “the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production.” It is the value of the final goods and services produced.
In describing this data, BEA says “These new data provide timely information on how specific industries contribute to accelerations, decelerations, and turning points in economic growth at the state level, including key information about the impact of differences in industry composition across states.” This data series starts in 2005. An announcement of the most recent release of this data is here.
I’ve gathered the data for this series for all states and regions and present it in an interactive visualization using Tableau Public. The data is presented in real dollars, meaning that BEA adjusted the numbers to account for changes in the price level, or inflation. This visualization uses annual data.
Tabs along the top of the visualization hold different views of the data. You may select a time period, one or more industries, and one or more states.
It’s appropriate, then, to understand what the 26,000 number means. The Eagle article mentions “a likely mistake in how the number of jobs downtown is calculated.”3 The same article quotes Jeremy Hill, director of CEDBR, as saying, “It looks very obvious and plausible that it is an error.”
There is no “mistake” or “error” in this Census data, which is known as LEHD Origin-Destination Employment Statistics, or LODES. But we need to be curious or cautious enough to investigate what this data means. Documentation from the Census Bureau for LODES data gives the definition of the place of work and a cautionary note: “A place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often.”
The Census Bureau continues with another warning regarding this data: “Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided.”4
In the case of downtown Wichita, the mistake was made in the application of this data, which is the claim that there are 26,000 workers in downtown Wichita. There may be that many people who draw a paycheck from an administrative office located in downtown. But large numbers of these don’t come to downtown to perform their jobs.
The LODES data reports a one square block in downtown that holds 7,740 workers. This is the block that holds the administrative office building for the Wichita public school district. Regarding this, the Eagle article reports: “One of the most likely reasons for the difference, according to multiple local academics, including Hill, is that the Census is reporting that every employee for USD 259 works downtown. Most USD 259 employees work in buildings across the city, but the central office is located downtown.” This is something the Census Bureau warns users to consider.
There’s another area of erroneous application, too, and it isn’t mentioned in the Eagle article. This concerns the second largest concentration of workers in downtown Wichita (according to the LODES data) in a Census block which has 3,437 employees. This is the block that holds Wichita city hall. In 2014 the city had 3,270 employees. But they don’t all work at Main and Central. They’re dispersed throughout the city in police stations, fire stations, and other sites.
How was this missed?
Nearby is an example of using the Census OnTheMap application.5 This is the source of LODES data that the WDDC cites in its footnotes to its annual report. When using the application for zip code 67202, there are two — and only two — large dark blue dots. These represent the census blocks with the greatest number of workers, 7,740 and 3,437. I’d like to think that if someone at CEDBR, WDDC, or city hall looked at this map and saw those two big blue dots, they might ask a few questions. Wasn’t someone curious as to how a single block of downtown Wichita manages to hold so many employees? Which companies do they work for? What can we learn from the success of these companies that employ so many people? Can we duplicate this success in other parts of downtown?
But I don’t think anyone asked these questions. No one — not at CEDBR, WDDC, or city hall — was inquisitive enough to really look at this data and see what it means. It’s either that or there was a willful misrepresentation.
The Eagle article also reports this: “This won’t make much of a difference to most businesses downtown, according to Hill. They already know how big the market is because they have experience with it. … The best companies will look at census data when coming up with their business plans, Hill said, but every business relies on several numbers, so even if there are thousands of fewer jobs downtown than previously thought, it’s unlikely that it would have much of an impact.”
On these remarks, I would say that first, we’re trying to recruit new businesses to downtown Wichita. It’s those business firms that this data speaks to. While the “best” companies may use other sources of data, I don’t think we want to discriminate. All companies are welcome to Wichita, I hope.
Second, Hill says companies “will look at census data.” Well, this is census data.
Third, Hill says this mistake won’t have “much of an impact.” In the future, I think we’ll need to ask CEDBR, WDDC, and city hall if the data they supply is intended to have an impact, or is it for something else.
Fourth, there is other census data. The United States Census Bureau tracks business data by zip code.6 The data that is available includes the number of business establishments, the number of employees, and the annual payroll, expressed in thousands of dollars not adjusted for inflation. It includes private-sector workers only, so it does not count all workers.
Nearby are results for zip code 67202. For 2015 the number of jobs is 13,581, not much more than half of what city leaders have told us. Again, these are private-sector workers only.7
Not only are these numbers much smaller, the results since 2007 show fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. In all cases, the trend is lower. The LODES data is on a downwards trend, too.
“But the reason for this is not because 7,000 workers actually will leave but because of a likely mistake in how the number of jobs downtown is calculated. ↩
“For LODES, a place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often. The distinction of worksite and administrative address may be especially significant in some industries such as construction, where work is often carried out at temporary locations. In some cases, employers do not provide a multiple worksite report when it would be appropriate to do so. Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided. Bureau of Labor Statistics (BLS) data show a national noncompliance rate of 5.61 percent of multiunit employers responsible for about 4.45 percent of multiunit employment.” U.S. Census Bureau. Matthew R. Graham, Mark J. Kutzbach, and Brian McKenzie. Design comparison of LODES and ACS commuting data products. Available at ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-38.pdf. ↩
Wichita has recovered from recessions, but after the most recent, the city is falling further behind.
Since 1990 the country has experienced three recessions. For the first two of these, Wichita was able to catch up with the employment growth experienced by the entire nation.
For the most recent recession, however, this hasn’t been the case. In fact, as time progressed since 2010, the gap between Wichita and the nation has grown.
Following are three charts of private sector employment for the Wichita metro area and the nation. Each is indexed starting with the end of a recession so that job growth may be compared. Click charts for larger version. You may access and alter the chart here.
Even if we accept the measure of jobs used by the City of Wichita, the trend is in the wrong direction. Citizens should ask for truth and accountability.
The City of Wichita and its surrogates tell us there are 26,000 daytime workers in downtown Wichita, defined as zip code 67202. There is a serious problem with that number, as it includes workers whose “administrative home” is downtown, even though they work somewhere else.1 The largest example of this is the counting of all Wichita school district employees as downtown workers, even though almost all work in schools and other locations throughout the city.
But even if we use the statistic promoted by the Wichita Downtown Development Corporation, the trend in jobs is in the wrong direction. WDDC promotes the large investment in downtown Wichita, by both private and public sources. But employment is trending in the opposite direction.
As Wichita considers other large downtown investments, such as STAR bond financing for the west bank of the Arkansas River or a new convention center and performing arts center, we should ask at least two questions:
Can we depend on the city to use meaningful and truthful data?
Will the city recognize the lackluster results of its economic development efforts?
Shouldn’t we insist on progress in projects like Block One before proceeding elsewhere?2
It is cited by our chief economic development agency.2
The city’s downtown development agency uses this number in brochures and annual reports.34
It appears in a federal grant application made by the city.5
It appears in our state’s largest newspaper, as reported by a journalist billed as a data specialist.6
It appears in a Wichita specialty business newspaper quoting a Wichita business leader.7
It’s advertised on a vacant downtown building, the former Henry’s store at Broadway and William.
The Wichita Downtown Development Corporation states the data for workers in downtown Wichita, which is defined for these purposes as zip code 67202, comes from the United States Census Bureau, specifically an application called “OnTheMap Application and LEHD Origin-Destination Employment Statistics.”8 The data is commonly known as LODES. Using this application and focusing analysis on zip code 67202 produces the figure 25,850 primary jobs. Round that to 26,000, and that’s the source of the job claims for downtown Wichita.
But: Census documentation for this data gives the definition of the place of work and a cautionary note: “A place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often.”
The Census Bureau continues with another warning regarding this data: “Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided.”9
This is highly relevant and important in the case of downtown Wichita. When using the OnTheMap application for zip code 67202, there are two large bright blue dots that stand out from all others. These represent the two highest concentrations of workers in downtown Wichita. One is Census block 201730043001036, which has 7,740 employees. This is a one square block area from First to Second Streets, and Wichita to Water Streets. The block consists mostly of surface parking lots, although there are three buildings. One building is the Wichita school district administration building, and there’s the problem with the way the city uses this data. The school district has thousands of employees. Only a small fraction, however, work in the downtown administrative building at First and Water Streets. The rest are dispersed throughout the city in school buildings and other sites such as the large facility at 37th Street North and Hydraulic.
But this Census data counts all these employees in one census block. This is an example of the warning the Census Bureau supplies with the data: Nonreporting of multiple worksites is especially common with state and local governments and school districts.
There’s another example. The second largest concentration of workers in downtown Wichita appears in Census block 201730043001023, which has 3,437 employees. This is the block that holds Wichita city hall. In 2014 the city had 3,270 employees. But they don’t all work at Main and Central. They’re dispersed throughout the city in police stations, fire stations, and other sites.
(By the way, the 26,000 number is often qualified as daytime workers. But we know that many police officers and firefighters work at night. The same is true for people working at the many hotels, restaurants, and bars in downtown. They aren’t all daytime workers.)
Here’s something to consider: The Wichita school district is moving its administrative offices to the former Southeast High School building at Lincoln and Edgemoor. That’s in zip code 67218. What will happen to the reporting of jobs in downtown Wichita when some seven thousand workers start receiving their paychecks from an office in that zip code, and the Census Bureau adjusts it data accordingly?
So how many people do actually work in downtown Wichita, zip code 67202? A different set of Census data gives the number 13,593 for 2014.10 This data is much more representative of the number of people actually working in a location, although it includes private-sector workers only. So we might add a few to that number. But it’s clear that the claim of 26,000 workers is far from true.
We’re told that the city makes decisions based on data and analysis. In the city manager’s policy message in the current city budget, the manager wrote: “In 2016, the City was selected by Bloomberg Philanthropies as a What Works City for making a public commitment to use data for informed decision making.” The same document also states: “Departmental goals and data drive decision making within each department.”
The use of data for decision making is especially important for downtown planning, we’ve been told. In selling the plan for downtown Wichita in 2010, the city’s consultants told us that the plan is “grounded in data and hard analysis.”11 But I showed that data the consultants relied on — a “walk score” — was based on nonsensical data.
We’re left with a few observations:
The claim of 26,000 workers in downtown Wichita is true. But as we’ve seen, it is not true in the way it is used, which is as an indication of the number of human beings actually working in downtown.
Did the person who gathered this data about downtown workers know what it means? If not, why not?
Did the person who decided to use this data in marketing downtown Wichita know what it means? If not, why not?
If someone knew the meaning of this data and decided to use it anyway: What does that tell us?
Did no one at Wichita city hall look at this data? As I’ve shown, it’s easy to see that the mapping application says 3,437 people work in the block holding city hall. Did no one look at the big blue dot and that number and realize that it is not real?
What if you opened a lunch counter in downtown Wichita based on the claim of 26,000 daytime workers, and then you learn there are really only half that many, with some of those working at night?
We want to trust our city leaders. We want downtown Wichita and the entire metropolitan area to succeed so that people may prosper and be happy. But episodes like this destroy trust and breed well-deserved cynicism. We can — we must — do better than this.
City of Wichita. Proposed Budget 2017 – 2018. Page 2. “Over 26,000 workers also populate downtown every day, working in industries such as education, finance, manufacturing, health care, government, and retail. ↩
Greater Wichita partnership. Living & Working. “With a highly trained pool of talent and a deeply rooted entrepreneurial spirit, Downtown Wichita is work central, boasting 26,000 daytime workers in the financial, healthcare, education, oil & gas and creative services industries.” Available at http://greaterwichitapartnership.org/living_working/downtown_wichita. ↩
“For LODES, a place of work is defined by the physical or mailing address reported by employers in the QCEW (formerly ES-202) or Multiple Worksite Reports. An address from administrative data may or may not be the actual location that a worker reports to most often. The distinction of worksite and administrative address may be especially significant in some industries such as construction, where work is often carried out at temporary locations. In some cases, employers do not provide a multiple worksite report when it would be appropriate to do so. Nonreporting of multiple worksites is especially common with state and local governments and school districts. In such a case, LEHD infrastructure files assign all workers for that employer (within the state) to the main address provided. Bureau of Labor Statistics (BLS) data show a national noncompliance rate of 5.61 percent of multiunit employers responsible for about 4.45 percent of multiunit employment.” Matthew R. Graham, Mark J. Kutzbach, and Brian McKenzie. Design comparison of LODES and ACS commuting data products. Available at ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-38.pdf. ↩
An interactive visualization of Wichita-area employment and jobs by industry.
The Bureau of Labor Statistics, part of the United States Department of Labor, makes monthly employment statistics available. I’ve gathered them for the Wichita metropolitan area and present them in an interactive visualization.
This data comes from the Current Employment Statistics, which is a monthly survey of employers asking about jobs.1
The four tabs along the top of the visualization hold different views of the data; one table and three charts. Employment figures are in thousands. All series except one are not seasonally adjusted.
“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”
But the reality of obtaining information and records from the City of Wichita is far different from the claims of its leaders. Two years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”
But there has been little, perhaps no, improvement in the data and information made available to citizens.
The city’s attitude
Despite the proclamations of mayors and manager, the city needs a change of attitude towards government transparency. Here’s perhaps the most glaring example of how the city goes out of its way to conduct public business in secret.
Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Visit Wichita (the former Go Wichita Convention and Visitors Bureau), and Greater Wichita Economic Development Coalition, now the Greater Wichita Partnership. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.
The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere.
Recently the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.
Another example of the City of Wichita’s attitude towards citizens and open government took place at a Kansas Legislature committee hearing. I had asked for email to or from a certain official for a certain period of time. The response from the city was that my request would encompass some 19,000 email messages, and the city denied the request as too burdensome. Fair enough.
But Dale Goter, the city’s lobbyist at the time, told legislators that my request for 19,000 emails was an example of abuse of the Kansas Open Records Act, citing it as evidence as to why reform was not needed. But I did not request 19,000 email messages. I made a request for messages meeting a certain criteria, and I had no way of knowing in advance how many email messages this would entail. The City of Wichita denied this request as burdensome, so there was either no cost or very little cost to the city. No harm, no foul.
Still the City of Wichita used this incident — and a similar incident involving the Kansas Policy Institute — as reasons that the Kansas Open Records Act needs no reform. This illustrates a problem with the attitude of Wichita city government towards citizens’ right to know.
This attitude may be noticed by the citizenry at large. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question.
The report says this performance is “much below” a benchmark set by the National Research Center National Citizen Survey.
An important way governments communicate with their subjects is through their websites. Wichita moved to a new website early in 2013. With the launching of the new City of Wichita website, the city has actually taken a step backwards in providing information to citizens.
Something that had been very useful is missing and hasn’t been replaced: MyWichita.
As described here, MyWichita was a useful service. By using it, you could receive email notices of new press releases, city council agendas and minutes, district advisory board agenda and minutes, agendas and minutes of other boards, and other items. Using MyWichita was much easier than having to check multiple sections of the city’s website looking for newly-released agendas, minutes, etc.
This email reminder service was very valuable. It’s a basic customer service feature of many commercial and governmental websites. But MyWichita didn’t survive the conversion to the new website, and there’s nothing that replaces its function. When I asked about this missing functionality, the city said it was working on a replacement that should be available in a month or two. It’s been several years since I asked.
Many governmental agencies post their checkbooks on their websites. Sedgwick County does, and also the Wichita school district. Not so the City of Wichita.
Until a few years ago, Wichita could supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to a useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This was a serious defect in the city’s transparency efforts.
Now, if you ask the city for this data, you’ll receive data in an Excel spreadsheet. This is an improvement. But: You must pay for this data. The city says that someday it will make check register data available. See Wichita check register for the data and details on the request.
Kansas law requires that local government agencies publish legal notices for a variety of topics. Presently these are published in the Wichita Eagle at great cost to taxpayers. These notices could also be published on the city’s website, where they could be searched and archived. This would increase the usability of these documents at very little cost to the city. See Towards government transparency in Wichita: Legal notices.
Publish fulfilled requests
When governmental agencies like the City of Wichita fulfill records requests, they could also publish the records on their websites. Most of the time the records are supplied electronically, so this is an additional simple (and low cost) step that would leverage the value of the city’s effort.
Leveraging our lobbyists
What do lobbyists, including taxpayer-funded lobbyists, do in Topeka? One thing they do is testify before committees, in both verbal and written form. Another thing they do is to prepare reports for the clients, advising them on upcoming legislation, analyzing how it affects them, and what the prospects for the bill might be. They also meet with legislators and their clients, which are your elected officials.
Here’s a proposal that will help citizens make best use of their taxpayer-funded lobbyists:
I see nothing in the Kansas Open Records Act that allows local governmental units in Kansas to refuse to disclose these documents: testimony, reports by lobbyists to their government clients, and the lobbyists’ calendars (or billing records for contract lobbyists). Instead of making citizens ask for these records, possibly paying fees to obtain what they’re already paying for, why don’t local governments post these documents immediately on their websites?
Citizens could then benefit from the activities of the lobbyists they’re paying for. They could learn more about legislation as it works its way through the process. Citizens could judge whether the positions taken by the government lobbyists they’re paying for are aligned with their policy preferences.
If the actions taken by taxpayer-funded lobbyists are truly in the public interest, you’d think that cities, counties, and school boards would already be making this information easily available. In any case, there should be no resistance to starting this program.
Economic development transparency
For several years, the Kansas city of Lawrence has published an economic development report letting citizens know about the activities of the city in this area. The most recent edition may be viewed here.
The Lawrence report contains enough detail and length that an executive summary is provided. This is the type of information that cities should be providing, but the City of Wichita does not do this.
It’s not like the City of Wichita does not realize the desirability of providing citizens with information. In fact, Wichitans have been teased with the promise of more information in order to induce them to vote for higher taxes. During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this information regarding economic development spending if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” (This is what Lawrence has been doing for several years.)
The “Yes Wichita” campaign promised, “Reports will be measured and reported publicly.” (But “Yes Wichita” was a campaign group and not an entity whose promises can be relied on, and can’t be held accountable for failure to perform.)
These are good ideas. The city should implement them even though the sales tax did not pass. If it’s good for citizens to have this type of information if the sales tax had passed, it’s good for them to know in any circumstance, because the city (and other overlapping governmental jurisdictions) still spends a lot on economic development.
Where are our documents?
Government promotes and promises transparency, but finds it difficult to actually provide.
During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” The “Yes Wichita” campaign promised “Reports will be measured and reported publicly.”
Why is this information not available in any case? Is the city’s communications staff overwhelmed and have no time to provide this type of information? During the sales tax campaign Wichita city staff had time to prepare news releases with titles like “City to Compete in Chili Cook-off” and “Jerry Seinfeld Returns to Century II.”
Since then the city has hired additional communications staff, adding a Strategic Communications Director. Now, while the city’s Facebook page has some useful information, there is also time to promote Barry the Bison playing golf.
Now Wichitans have to wonder: Was transparency promised only to get people to vote for the sales tax? Or is it a governing principle of our city? I think I know the answer.
Here’s an example. A few years ago as Sedgwick County was preparing and debating its budget, I wanted to do some research on past budgets. But on the county’s website, the only budgets available were for this year and last year. There was nothing else.
So I asked for budgets and other financial documents. I received them on CD. Then I created a shared folder using Google Drive and uploaded the documents. Now, these documents are available to the world. They can be found using a Google search. Oh, and here’s something a little ironic. These old budgets had been on the Sedgwick County website at one time. Someone made the decision to remove them.
Creating this depository of budget documents cost nothing except a little bit of time. Well, if you have a lot of data to share, you might have to pay Google a little, like ten dollars per month for each agency or person. But it is so simple that there is no excuse for the failure of agencies like Wichita Transit to make documents like agendas and minutes available. You don’t need specialized personnel to do this work. All you need is the will and desire to make the documents available.
Here’s another example of how simple it can be to achieve transparency. These days live and archived video of governmental meetings is commonplace. Commonplace, that is, except for the Wichita public schools. If you want to see a meeting of the Wichita school board, you must either attend the meetings, or view delayed broadcasts on cable TV. There’s a simple and low-cost way to fix this. It’s called YouTube.
When the Sedgwick County Commission was faced with an aging web infrastructure for its archived broadcasts, it did the sensible thing. It created a YouTube channel and uploaded video of its meetings. Now citizens can view commission meetings at any time on desktop PCs, tablets, and smartphones. This was an improvement over the old system, which was difficult to use and required special browser plug-ins. I could never get the video to play on my Iphone.
The Wichita school district could do the same. In fact, the district already has a YouTube channel. Yes, it takes a long time to upload two or three hours of video to YouTube, but once started the process runs in the background without intervention. No one has to sit and watch the process.
I’ve asked why the district does not make video of its meetings available archived online. The district responded that it “has a long-standing commitment to the USD 259 community of showing unabridged recordings of regular Board of Education meetings on Cox Cable Channel 20 and more recently AT&T U-verse Channel 99.” The meetings are broadcast seven times starting the day after each meeting. Two of the broadcasts start at 1:00 am.
Showing meetings delayed on cable TV is okay. It was innovative at one time. But why aren’t meetings shown live? What if you can’t watch the meeting before it disappears from the broadcast schedule after a week? What if you don’t want to pay cable television bills? What if you want to watch meetings on your computer, tablet, or smartphone? I don’t think the fact that meetings are on cable TV means they can’t also be on YouTube.
There are two elements of irony here, if that is the correct term. One is that earlier this year the Wichita school district considered hiring a marketing firm to “gauge its reputation and suggest new branding strategies.” Here’s an idea: Act as though you care about people being able to view the district’s board meetings.
Recently the Wichita school district raised property taxes. The mill levy will rise by 2.86, an increase of about five percent from its present level. The projected cost is an additional $33 per year for a home worth $100.000. That is quite a large increase. That’s bad. What’s also bad is the district’s lack of respect for taxpayers. As I’ve just told you, it’s difficult to view a meeting of the school board, which is a sign that the district prefers to operate in the shadows as much as possible. The board will raise your taxes, and at the same time keep it difficult for you to see them do it.
Just for the sake of completeness, let’s not let the state of Kansas off the hook. Currently, the proceedings of the Kansas Senate and House of Representatives are not available on video. The audio is broadcast on the internet, but it’s live only. No archiving. You must listen live, or figure out some way to record it on your own.
But for eight dollars per month the legislature could make its audio proceedings available to listen to at any time. For eight dollars per month at least one podcast hosting company offers an unlimited plan. Unlimited storage, and unlimited bandwidth. That is just what is needed. And since the audio of the proceedings of the House and Senate is broadcast on the internet, it must pass through a computer somewhere. That computer could also be recording the audio. Once recorded, the process of uploading the audio to the podcast host is a trivial procedure.
But neither Kansas legislative chamber records their proceedings, according to the Secretary of the Senate and the Chief Clerk of the House. I asked. Recordings of sessions are not available because they are not made. It would be simple to record audio of the Kansas House and Senate and make it available for anyone to listen to at any time. It is almost without cost. It would have great benefit.
All these levels of government say they value open records and transparency. But let me ask you: Do you think they really mean it?
In this episode of WichitaLiberty.TV: Co-host Karl Peterjohn joins Bob Weeks to discuss the Kansas congressional nominating conventions, taxing and spending in Topeka, and Wichita economic development and promotion. View below, or click here to view at YouTube. Episode 139, broadcast February 19, 2017.
Greater Wichita Partnership features untruthful information on its website, which casts doubt on the reliability of the organization and the City of Wichita.
Greater Wichita Partnership uses the url of its predecessor, the Greater Wichita Economic Development Coalition, or GWEDC. GWP is in charge of efforts to develop the economy in the greater Wichita area. It describes itself as “a driving force in building a remarkable city and region.”1
But there is a problem. Based on the information GWP makes available on the front page of its website, I don’t have much confidence in the organization’s efforts. And that’s too bad.
In the past I’ve observed how GWEDC — that’s the predecessor to GWP — was derelict in keeping its information current. In 2014, I noticed that GWEDC credited itself with recruiting a company named InfoNXX to Wichita.2 But GWEDC did not update its website to reflect current conditions. When I looked at GWEDC’s website in October 2013, I found this on a page titled Office Operations:
Wichita hosts over a dozen customer service and processing centers — including a USPS Remote Encoding Center (985 employees), InfoNXX (950), T-Mobile (900), Royal Caribbean (700), Convergys (600), Protection One (540), Bank of America (315) and Cox Communications (230.)
The problem was this: At the time I looked at the GWEDC website in October 2013, InfoNXX had closed its Wichita operations in 2012.3 Still, the official Wichita-area economic development agency touted the existence of a company that no longer existed in Wichita, and claimed a job count that the company never achieved. (Also, at that time the USPS facility was in the process of closing and eliminating all Wichita jobs.)
Now, the Greater Wichita Partnership website trumpets — on its front page — the expansion of a company that has actually contracted its operations in Wichita.
The company is NetApp, a maker of computer server storage systems. It’s the type of high tech company all cities are recruiting, and for which cities and states will open the economic development incentives pocketbook. Locally, Wichita and the State of Kansas announced expansion plans for NetApp operations in Wichita in 2012. But by the end of 2015, NetApp was not meeting its job goals in Wichita, according to information from Sedgwick County. Since then, NetApp announced two rounds of job cuts, with the cuts in Wichita unspecified.45
NetApp has not met the lofty expectations Wichita and Kansas officials promoted. That’s unfortunate, and perhaps the situation will improve and NetApp will grow.
Relevant to public policy is that NetApp was slated to receive a lot of incentives from many levels of government, up to $35 million.6 It is likely impossible to determine how much of these incentives were actually paid to NetApp. We do know that both the City of Wichita and Sedgwick County stopped paying incentives to NetApp, as these incentives were predicated on achieving certain levels of job counts, and NetApp has not met them.
But the lesson to learn today is that the Greater Wichita Partnership, the agency in charge of economic development in the area, still advertises NetApp as a success.
The problem is not only the blatant lie that GWP promotes prominently: “NetApp doubles its Wichita footprint.” It’s a serious problem that GWP has not updated its website to reflect reality. What if a company considering Wichita for expansion or location checks the NetApp story? How would such a company reconcile reality with what GWP promotes? What does this say about the reputation and reliability of GWP?
I don’t expect GWP to highlight its failures. But we ought to expect GWP to care enough about the truth to remove false information from such a prominent presentation.
In September 2015 James Chung delivered several lectures on the Wichita-area economy and its outlook.7 In the event I attended, Chung showed examples of web pages from the Des Moines and Omaha chambers, and contrasted them to a similar page from the Wichita chamber. Chung got it wrong, as the page he showed to illustrate the Wichita chamber was a print version of the page, which — intentionally — is a simplified version of the page designed for viewing in a web browser.8 The print version of the page, however, is what appears in Google, and most people will not investigate beyond that.
Still, the Wichita chamber page was stale compared to the others. And Chung’s point was, and is, relevant: First impressions matter.
The Wichita chamber’s site is better now. But someone at the Greater Wichita Partnership didn’t get the message. Content — reliable content — counts.
The performance of the Wichita-area economy, compared to other large cities, is on a downward trend.
While good news for the Wichita metropolitan area economy is becoming more frequent, it’s important to compare how Wichita is doing relative to other cities. The Milken Institute produces ranking of cities based on their economic performance in its Best-Performing Cities project.
The ranking are composed of a number of factors such as short-term and long-term job growth, short-term and long-term wage and salary growth, growth of high-tech industry, and high-tech location quotient.1 Milken also notes: “Best-Performing Cities is solely an outcomes-based index. It does not incorporate input measures (business costs, cost-of-living components, and quality-of-life conditions, such as commute times or crime rates). These measures, although important, are prone to wide variations and can be highly subjective.”2
I’ve gathered data from the Milken project for Wichita. The data starts in 2003, the first year for which data is available. The data in the table is the rank for Wichita among 200 large metropolitan areas. The best rank is 1, while the worst is 200. In the line chart for each data series, I’ve inverted the data so that the best performance is at the top.
As the charts show, for overall ranking, Wichita has been declining for some time.
This does not mean the Wichita-area economy is on the decline. But it means the relative performance of Wichita has not kept up with other cities. As can be seen in the chart of Wichita, Kansas, and U.S. non-farm employment, Wichita employment is rising. But it isn’t rising as fast as the nation, as can be seen in the widening gap between Wichita and the nation since 2010.
Of note, Wichita economic development agencies rely on Milken data.34
“High-tech location quotients (LQs), which measure the industry’s concentration in a particular metro relative to the national average, are included to gauge an area’s participation in the knowledge-based economy. We also measure the number of specific high-tech fields (out of a possible 19) whose concentrations in an MSA or MD are higher than the national average.” Milken Institute. 2015 Milken Institute Best-Performing Cities.http://www.best-cities.org/2015/best-performing-cities-report-2015.pdf. ↩
Wichita offers special regulatory treatment for special circumstances, widening the gulf between the haves and have-nots.
The Wichita Eagle reports that part of what the City of Wichita is offering to Cargill as an inducement to stay in Wichita is regulatory relief.1 In particular:
The city has offered smaller incentives to Cargill as well, including an ombudsman.
[Wichita assistant city manager and director of development Scot] Rigby called the ombudsman something of a project manager.
“They’ll just call one person,” Rigby said of Cargill’s dealings with the city. “It’s a way to eliminate … a business trying to figure out, how do I get through the labyrinth of city processes?”
Rigby said the city has done this with other companies, such as Spirit AeroSystems and JR Custom Metal Products, and would do it for any company with an expansion or project that needs streamlining.
He said the city also is committed to work with the state and the Greater Wichita Partnership to create a talent recruitment position that could help Cargill and other companies recruit employees at all levels.
The city has said it would offer a 15-day turnaround instead of the customary 30 days for plan review and permits, along with a 50 percent reduction in plan review, utility and building permit fees.
Let me repeat the highlights:
labyrinth of city processes
15-day turnaround instead of the customary 30 days
50 percent reduction in … fees
All of this is an explicit admission that City of Wichita regulations are burdensome. If not, why would the city devote time and expense to helping Cargill obtain relief from these regulations?
Further: Why do we have these regulations? If the purpose of the regulations is to protect people from harm, how can we relax or streamline them for the benefit of a few companies? Wouldn’t that expose people to the harm the regulations purportedly prevent?
What’s even worse is this: Cargill is a large company with — presumably — fleets of bureaucrats and lawyers trained to deal with burdensome government regulation. These costs can be spread across a large company. Meaning that Cargill can afford to overcome burdensome regulations.
What about the small companies that don’t have fleets of bureaucrats and lawyers? That can’t spread the costs of burdensome regulation across a large volume of business? What will the city do for these companies? This is especially important because the spirit of entrepreneurship the city wants to cultivate is most commonly found in small, young, companies. The type without fleets of bureaucrats and lawyers.
Well, the city says it would do for any company what it is doing for Cargill.
Except: How are companies supposed to know to ask for regulatory relief, streamlining, and a discount on fees?
And is it equitable to offer special companies special regulatory relief when it is not readily available for all?
Last year Kansas Policy Institute, in collaboration with the Hugo Wall School of Public Affairs at Wichita State University produced a report titled “Business Perceptions of the Economic Impact of State and Local Government Regulations.”2 On the city’s offer of special treatment to one company, KPI Vice President and Policy Director James Franko commented:
This bears out one of the key findings from a paper we did with WSU’s Hugo Wall School: Companies want transparency and simplicity in the local regulatory environment. Businesses are not as concerned about the regulation themselves as they are in navigating what the city admits is a “labyrinth” of regulations and processes.
The regulatory process should be simplified for all businesses, not just a few. Hopefully there is a realization that an “ombudsman,” or better yet a transparent, straightforward regulatory regime, should be available to anyone wanting to start or grow a business in Wichita.
Instead of the city offering regulatory relief on an as-needed, as-requested basis, why not simplify and streamline regulation for everyone? That seems to make a lot of sense. But if you were a city politician or bureaucrat, this isn’t in your best interest. If regulations are burdensome, and you — as a bureaucrat or officeholder — can offer relief, then you have power. You become important. You have the ability to grant favors and make people feel special.
But if regulations were streamlined and reformed for everyone as the city will do for Cargill, then bureaucrats and politicians would not be so powerful and important. But the people would be more free and prosperous. Think about that trade off.
An interview with James Franko of Kansas Policy Institute on the topic of regulation is on WichitaLiberty.TV here.
In this episode of WichitaLiberty.TV: Was it “Trump” or “Bernie” that incited a fight, and how does the Wichita Eagle opine? Economic development in Wichita. Blight and property rights. Teachers unions. Explaining capitalism. View below, or click here to view at YouTube. Episode 117, broadcast April 24, 2016.
State and local leaders need to help meet Cargill’s needs2
The second headline was in response to the news story “Cargill plans to move its Wichita headquarters — but where?” 3 In this story, Carrie Rengers reports “Cargill is looking to move its Wichita headquarters, but whether that’s within downtown, where it already is, or outside of it or even outside of Kansas is unclear. … City and state officials are working in full gear to make sure Wichita — downtown specifically — is the option Cargill selects.”
Rengers reports that Wichita city officials say no specific incentives have been offered to Cargill, but “any incentives likely would involve infrastructure help, such as with parking, or assistance with easing the process for a new building, such as with permitting.” Wichita Mayor Jeff Longwell says “cash incentive won’t be an option,” according to Rengers.
A Cargill official says that the company needs to attract millennials and younger people, who are not attracted to “traditional office space and office-type buildings.”
Now, consider the first opinion headline: “Investment in downtown Wichita is impressive.” In this op-ed, Phillip Brownlee writes “It’s encouraging that investment in downtown Wichita is continuing — and that it is mostly privately funded. A vibrant downtown is important to the city’s image and to attracting and retaining young adults. More than $1 billion in private and public investment has occurred downtown in the past decade. About $675 million of that investment has been privately funded, and $411 million has been public projects, according to Wichita Downtown Development Corp.”
Brownlee goes on to note other investments, such as 800 new apartment units “in the works.”
On the importance of downtown, Brownlee writes “City leaders have long recognized the value of a healthy downtown. Besides the symbolic importance of not having a lot of empty buildings, many young adults prefer an urban environment. That makes downtown important even for businesses not located there, because it can help or hurt their ability to recruit and retain young professionals.”
I see a discontinuity. Our city’s leaders — opinion, elected, and bureaucratic — brag about all the investment in downtown Wichita, public and private, yet it doesn’t seem to be enough to retain a major Wichita employer in downtown.
At least editorialist Rhonda Holman recognizes the problem in her column: “It’s concerning that Cargill’s stated intentions to relocate and consolidate have not included a commitment to remain downtown or even in Wichita or Kansas.” What is her solution? “Elected and business leaders need to be creative and assertive in helping Cargill meet its needs.”
I share Holman’s concern. It’s very troubling that with $411 million in private investment over the past decade, downtown Wichita still isn’t attractive enough to retain Cargill, if the company’s intent to move is real and genuine. And advising the same group of people who have been in power during the decline of the Wichita economy to be “creative and assertive” is a solution?
One of the things that may be offered to Cargill, according to Rengers, is “assistance with easing the process for a new building, such as with permitting.” This is a big red flag on a very tall flagpole. If the city has regulations so onerous that they are a consideration as to whether to locate in Wichita, this is something that must be fixed immediately. But the instinct of the Wichita City Council and city bureaucrats is to create more regulations covering everything from the striping of parking lots to the personal hygiene of taxi drivers.
Mayor Longwell says there will be no cash incentives offered to Cargill. Instead, something like help with parking may be offered. This might take the form of building a parking garage for Cargill. We should ask: What is the difference between giving cash to Cargill and building a parking garage for Cargill’s use? There really isn’t a meaningful difference, except for Cargill. That’s because cash incentives are taxable income. Free use of a parking garage isn’t taxable. 45
Further, Cargill may qualify for PEAK, or Promoting Employment Across Kansas.6 This program allows companies to retain 95 percent of the payroll withholding tax of employees. The original intent of this program was to lure companies to locate in Kansas, but in recent years the program has been expanded to include incentivizing companies to remain in Kansas. While this is a state program and not a city program under the mayor’s control, PEAK benefits are more valuable than cash.
On the map of metropolitan areas, blue means faster growth, and orange means slowest. You can see that Wichita has the economic growth of a typical rust belt city. (Click charts for larger versions.)
The table showing changes in indicators over the past decade shows Wichita almost always below the middle.
The charts of trends over time shows Wichita falling behind the nation, then catching up in 2007 and 2008, but falling behind since then. As time goes on, the gap between the nation and Wichita widens, not narrows.
The response of Wichita political, bureaucratic, and civic leaders is, by any measure, new paint on an old barn, or just keeping pace with other cities. The Greater Wichita Partnership is just a new name for the same old collection of institutions and people who have been responsible for the dismal performance shown in Brooking’s Metro Monitor. In fact, if you visit greaterwichitapartnership.org and click on “Economic Development” you’re taken to the same old page for Greater Wichita Economic Development Coalition, although with a new logo. Same old barn; new paint.
While we have to hope that the Wichita State University Innovation Campus works as advertised, we also must realize that dozens and dozens of major and minor universities across the country already have similar initiatives up and running.
The Sedgwick County Commission makes a bid for accountability with an economic development agency, but will likely fall short of anything meaningful.
The Greater Wichita Partnership is a reorganization of local economic development agencies. It has asked the Sedgwick County Commission for $300,000 to fund a portion of its activities this year. Those on the commission who are skeptical of GWP and its predecessors have asked for measurable outcomes of the progress GWP makes.
Here is a paragraph from the agreement with GWP that commissioners will consider this week:
9. Measurable Outcomes. GWP shall be subject to measureable outcomes as it shall determine, subject to review by the Board of Sedgwick County Commissioners. GWP shall present an annual report to the Board of Sedgwick County Commissioners at a regularly-scheduled Commission meeting no later than December 31, 2016.
I appreciate the attempt by members of the county commission to ask for accountability. But this paragraph is so weak as to be meaningless. The nature of the measurable outcomes is not defined, even in broad strokes. Further, GWP gets to decide, at an unknown time, what constitutes the measurable outcomes. Then the county commission gets to “review” them, which is a weak — really, nonexistent — form of oversight. We ought to ask that the county commission “approve” them, and sooner rather than later.
But there is a bit of good news. Paragraph 10 of the agreement calls for a separate accounting fund to be created for the money the taxpayers of Sedgwick County will give to GWP. Then: “GWP agrees and understands that, by entering into this funding Agreement, any and all of its records, documents, and other information related to the Fund and the activities financed thereby shall be open and made available to the public upon request, in accordance with the Kansas Open Records Act.”
That’s good news, and a move towards the type of transparency and accountability that local governments — especially the City of Wichita — promote but finds difficult to actually deliver. Although this provision applies to only the county-supplied funds, hopefully GWP will realize that being transparent is better than being secretive.