Archive for Monday, October 9, 2017

Kansas job growth to be flat in 2018, WSU forecast says

October 9, 2017

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— The job market in Kansas is expected to remain flat during 2018, growing by a mere 0.1 percent, or less than 1,500 jobs, according to a new report from Wichita State University.

But the author of that report says that's not necessarily bad news, especially given the 0.8 percent decline in jobs during the 12-month period that ended in July, because it's the result of relatively full employment in the state and a tight labor market that could soon bring about higher wages.

"Yes, 0.1 percent is definitely a gloomy outlook," said Jeremy Hill, director of the Center for Economic Development and Business Research, part of the W. Frank Barton School of Business at WSU.

"But it should be stated that I don’t think that households in Kansas are feeling that same outlook today, even though employment declined a little bit over the summer," he said. "Households are still feeling great. Why? Because we are at full employment."

The report was released Thursday during the 38th Kansas Economic Outlook Conference in Wichita. Hill spoke to the Journal-World about it during a telephone interview Friday.

He said the overall business climate in Kansas is also relatively stable, with productivity and profit margins both inching up. That has also been reflected in recent state revenue reports showing corporate income tax collections up nearly 27 percent in the first quarter of the fiscal year compared with the same period last year.

Over the short term, he said, the tight Kansas labor market could put upward pressure on wages as businesses struggle to attract highly skilled labor.

Over the long term, however, he said, Kansas faces a serious challenge because much of the labor shortage is due to the outward migration of highly skilled and highly educated people of working age.

"When you have an aging workforce, the need for a supply of labor, our core industries could slowly go away because we’re not competitive at getting that labor," he said.

Hill said he does not have hard data to show why there is an out-migration of talented labor from Kansas, but he offered some educated speculation.

"From my perspective, when we see this shift in the labor market, even though jobs are available and wages are going up, that tells me that either job opportunities are much better in those other markets, and basic fundamentals that say there are larger economies, larger metro areas that are going to give more upward mobility to those younger generations like the millennials," he said. "That is definitely a possibility, that they’ll see a better career opportunity over there, or better wages over there, or even better quality of life."

"It also could be part of the sentiment that’s been going on in this state versus some of the other markets," he added. "They may be here saying, well you’ve had a lot of negative news about the tax structure, or local communities suffering from agriculture, oil or manufacturing, and that might have weighed on some of their opinions as well."

According to the report, the service sector is expected to be the main source of job growth in the coming year, adding nearly 2,700 jobs, or 0.4 percent. Within that sector, however, the report forecasts continued job losses in information services, which includes news media and publishing.

The report also says there will be modest job growth in the wholesale trade industry, but that will be largely offset by losses in retail trade.

It also predicts job losses in the production sector, including a loss of nearly 900 manufacturing jobs.

The Kansas City, Topeka and Wichita metropolitan areas are expected to see more rapid job growth than the state as a whole, the report said.

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