Fact-checking Brownback’s claims on the economy: Only part of story being told
Topeka ? Two competing views about the state of the Kansas economy emerged last week when state budget officials released their new forecast about state tax collections.
On one side, independent economists who took part in the process predicted the state’s economy would grow at a much slower pace than they had previously forecast.
“The Kansas economy appears to be growing somewhat slower than the nation as a whole,” said Ranney Gilliland, head of the Legislature’s nonpartisan Research Department, citing estimates that had come from the economists.
Overall, he reported, real personal income in Kansas is now predicted to grow 3.4 percent during 2015, down from the 4.2 percent growth rate the group had forecast back in November.
And the overall state economy, measured by the “gross state product,” or GSP, is expected to grow 2.3 percent this year, down from the 2.5 percent growth predicted earlier.
Those predictions factored into the revised revenue forecast, which now shows the state in an estimated $400 million budget hole.
But Gov. Sam Brownback’s budget director, Shawn Sullivan, painted a rosier picture.
“There are kind of two things I want to point out,” he said during a press briefing about the new forecasts. “The first is, we believe there are positive trends in the private-sector economy, and those are things we’ve seen over the last few months.”
Specifically, he pointed to employment growth, which he said was stronger in the first quarter of 2015 than it was during the same period a year earlier.
“There were 17,200 jobs that were added from January through March 2015 compared to January through March 2014, so that appears to be heading in the right direction,” Sullivan said.
“The second positive indicator is with wage trends with Kansas workers,” he said. “We’ve been at above 2.5 percent growth since the summer of 2014, which places us above our regional border states.”
But a review of economic data for Kansas from the U.S. Department of Labor shows the administration’s claims are only partly true and are based on figures that show only part of the overall picture.
Brownback’s press secretary, Eileen Hawley, said the figure of 17,200 new jobs referred to private-sector job growth from January 2014 through March 2015. But the Journal-World could not find any set of data, either on the state or federal Labor Department websites, to support that figure, and Hawley wasn’t immediately able to provide the source for that number.
However, numbers from the Kansas Department of Labor’s monthly labor market reports do support the claim that job growth during the first quarter of 2015 was slightly stronger than a year earlier, when growth was relatively flat.
But those numbers routinely fluctuate from month to month, so different conclusions can be drawn simply by choosing different starting and stopping points on the time line. For example, while the preliminary number for March is higher than it was in January, it is still well below December 2014, which was the high mark for the last two years.
Overall, though, private-sector employment in Kansas has been on a generally upward trend for the last couple of years.
But private-sector employment is only one part of the total labor market, and according to the Bureau of Labor Statistics, total employment in Kansas grew only 1.1 percent over the last 12 months, which ranks Kansas 40th in the nation during that period.
Also missing from Sullivan’s description was any description of the types of jobs being added.
According to BLS figures, the largest growth was in the low-wage “leisure and hospitality” industry, which added 5,300 jobs, or 4.35 percent. Construction jobs grew by about 1,800 jobs, or nearly 3 percent.
Other key sectors of the labor market shed jobs over the year. Manufacturing fell by 1,100 jobs, or about 0.7 percent, and government service, which was down 700 jobs, or about 0.3 percent.
Wages and income
Speaking to reporters last week, Sullivan cited a 2.5 percent growth in wages in Kansas since the summer of 2014.
According to BLS information, that statement is accurate. The average hourly wage for a Kansas worker in March was $22.59, up 2.5 percent from the March 2014 wage of $22.03 per hour.
Nationally, average wages rose only 2.1 percent, to $24.86 an hour during that same period.
But hourly wages are only one measure of how individuals are faring in the labor market. BLS defines that number as a worker’s, “straight-time wage rate or, for workers not paid on an hourly basis, straight-time earnings divided by the corresponding hours.”
In making their new estimates of state revenue, however, economists on the Consensus Revenue Estimating Group looked at a broader measure of earnings, “personal income,” which takes into account other types of income including earnings from investments, rents and royalties, and business income.
According to the U.S. Department of Labor’s Bureau of Economic Analysis, personal income in Kansas grew 2.9 percent last year, well below the national rate of 3.9 percent, ranking Kansas 42nd in the nation.
In November, the university economists who serve on the Consensus Revenue Estimating Group had predicted that personal income would grow 4.2 percent during 2015. Last week, they revised that downward to 3.4 percent, which would still be higher than the 2014 growth rate.
The three university economics professors, from Kansas University, Kansas State University and Wichita State University, who participate in the consensus estimating group historically have refused to speak publicly about the process they use in making their predictions.
The estimating group meets behind closed doors, usually twice a year, to analyze economic trends in the state and project what total revenues will be for the current fiscal year and the next year. By law, their numbers must be used as the basis for the budget that the governor submits to the Legislature as well as the final appropriations bill the Legislature passes in the spring.