For April 2018, the unemployment rate in the Wichita metropolitan area fell, and the number of jobs grew.
Today the Bureau of Labor Statistics released employment statistics for metropolitan areas through April 2018. These are numbers that are not seasonally adjusted, so it’s not very useful to compare any month with the month before. But it is appropriate to compare a month with the same month of the prior year.
The good news, sort of: The unemployment rate for the Wichita metro area declined to 3.6 percent in April 2018, down from 3.9 percent in April 2017. The number of unemployed persons also declined by 8.9 percent for the same period.
These numbers should be good news. But these two statistics don’t exist in a vacuum. Specifically, the unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 2,676 persons over the year, while the number of unemployed persons fell by 1,071. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.
Click for larger.
A further indication of the health of the Wichita MSA economy is the number of nonfarm jobs. This rose by 100 from April 2017 to April 2018, an increase of 0.03 percent. This follows a decline of 0.5 percent from March 2017 to March 2018.
For April 2018, BLS reports:
Unemployment rates were lower in April than a year earlier in 305 of the 388 metropolitan areas, higher in 63 areas, and unchanged in 20 areas, the U.S. Bureau of Labor Statistics reported today. Eighty-eight areas had jobless rates of less than 3.0 percent and three areas had rates of at least 10.0 percent. Nonfarm payroll employment increased over the year in 312 metropolitan areas, decreased in 70 areas, and was unchanged in 6 areas. The national unemployment rate in April was 3.7 percent, not seasonally adjusted, down from 4.1 percent a year earlier. 1
Sources:
Bureau of Labor Statistics. Table 1. Civilian labor force and unemployment by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t01.htm.
Bureau of Labor Statistics. Table 3. Employees on nonfarm payrolls by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t03.htm.
Of 422 metropolitan areas considered, Wichita ranked 383, dropping 28 spots since the previous year.
Among 100 medium size metropolitan areas, Wichita ranked 93, dropping 5 spots from the previous year.
NewGeography.com uses employment data from the United States Bureau of Labor Statistics from November 2006 to January 2018. 1 Last year’s publication contains a more detailed explanation of how the rankings capture current year-growth, mid-term growth, and momentum. 2
In the analysis for 2017, Wichita had also fallen in ranking.
Wichita has momentum, they say
Despite this news, Wichita leaders are in denial. Recently Greater Wichita Partnership president Jeff Fluhr told a group of young people this:
From the innovation campus at Wichita State University and development along the Arkansas River in downtown, including a new baseball stadium, to the conversations happening now about a new convention center and performing arts facility, Fluhr said the momentum is pushing to keep Wichita on par with the development of other communities around the country.
That development, which has in recent years expanded to incorporate the entire region, is a critical component to attracting and retaining talent — the exact kind of talent in the ICT Millennial Summit crowd. 3
In March Sedgwick County Commissioner David Dennis penned a column for the Wichita Eagle praising the county’s efforts in economic development. 5 Dennis is also chair of the commission this year. In his column, the commissioner wrote: “Economic development is a key topic for the Board of County Commissioners and for me in particular. Right now we have a lot of momentum to make our community a more attractive place for people and businesses.”
At the same time, the Wichita Eagle editorialized: “Wichita’s economy struggled to rebound from the last recession, which held the city back. But there have been positive economic signs of late, including a renewed focus on innovation and regional cooperation. … There also is a sense of momentum about Wichita. Yes, challenges remain, but the city seems to have turned a corner, with even greater things ahead.”6
In announcing his candidacy for Sedgwick County Commission, Wichita city council member Wichita City Council Member Pete Meitzner (district 2, east Wichita) said, “We have enjoyed great progress and growth during my two terms as a City Council member and I plan to do my part to assure Sedgwick County is part of this continued success.” 7
Given all this, it ought to be easy to find economic data supporting momentum, progress, and growth. Besides the NewGeography.com report cited above, let’s look at some other indicators.
Personal income. For the Wichita metropolitan statistical area, personal income in 2016 rose slightly from the 2015 level, but is still below the 2014 level. In real (inflation-adjusted) dollars, personal income fell in 2016. 8
Personal Income Summary, Wichita, through 2016. Click for larger.
Trends of business activity in downtown Wichita. Click for larger.Downtown Wichita. There’s been a lot of investment in downtown Wichita, both public and private. But since 2008 the trend is fewer business establishments, fewer people working downtown, and lower earnings generated in downtown Wichita. Almost every year these numbers are lower than the year before. This is movement in the wrong direction, the opposite of progress. There may be good news in that the number of people living downtown may be rising, but business activity is declining. 9
Employment. While officials promote the low Wichita-area unemployment rate, there is an alternative interpretation. First, the good news: The unemployment rate for the Wichita metro area declined to 3.9 percent in March 2018, down from 4.2 percent in March 2017. The number of unemployed persons declined by 8.3 percent for the same period. 10
Is Wichita’s declining unemployment rate good news, or a byproduct of something else? The unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 3,367 persons over the year, while the number of unemployed persons fell by 1,056. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.
A further indication of the health of the Wichita-area economy is the number of nonfarm jobs. This number declined by 1,200 from March 2017 to March 2018, a decline of 0.4 percent. This follows a decline of 0.7 percent from February 2017 to February 2018.
Of the metropolitan areas in the United States, BLS reports that 308 had over-the-year increases in nonfarm payroll employment, 72 (including Wichita) had decreases, and 8 had no change.
Growth in output. The worst news, however, is that the Wichita-area economy shrank from 2015 to 2016. In real (inflation-adjusted) dollars, the Wichita metropolitan area gross domestic product fell by 1.4 percent. For all metropolitan areas, GDP grew by 1.7 percent. Since 2001, GDP for all metropolitan areas grew by 29.3 percent, while Wichita had 12.3 percent growth. 11
Wichita MSA employment, annual change. Click for larger.The GDP figures are for 2016, and figures for 2017 won’t be available until September. So what happened in 2017? Could 2017 be the genesis of momentum to drive our economy forward?
While GDP figures aren’t available, jobs numbers are. For the year 2016, total nonfarm employment in the Wichita metropolitan area grew by 0.62 percent. For 2017, the growth rate was 0.56 percent — a slowdown in the rate of job growth. These job growth figures are far below the rate for the nation, which were 1.79 and 1.58 percent respectively.
Annual change in job growth, Wichita and USA through 2017. Click for larger.
Furthermore, Wichita’s job growth rate in 2016 was lower than 2015’s rate of 1.07 percent. This is momentum in the wrong direction. Nearby charts illustrate. 12
What to do?
The failure of the Wichita-area economy to thrive is a tragedy. This is compounded by Wichita leaders failing to acknowledge this, at least publicly. While we expect people like the mayor, council members, and the chamber of commerce to be cheerleaders for our city, we must wonder: Do these people know the economic statistics, or do they choose to ignore or disbelieve them?
From private conversations with some of these leaders and others, I think it’s a mix of both. Some are simply uninformed, while others are deliberately distorting the truth about the Wichita economy for political or personal gain. The people who are uninformed or misinformed can be educated, but the liars are beyond rehabilitation and should be replaced.
—
Notes
“The methodology for our 2018 ranking largely corresponds to that used in previous years. We seek to measure the robustness of metro areas’ growth both recently and over time, with some minor corrections to mitigate the volatility that the Great Recession has introduced into the earlier parts of the time series. The ranking is based on three-month rolling averages of the U.S. Bureau of Labor Statistics’ ‘state and area’ unadjusted employment data reported from November 2006 to January 2018.” 2018 How We Pick The Best Cities For Job Growth. Available at http://www.newgeography.com/content/005973-2018-how-we-pick-best-cities-job-growth. ↩
In some presentations these figures may differ slightly due to data revisions and methods of aggregation. These differences are small and not material. ↩
Real Personal Income for States, 2016. Bureau of Economic Analysis. Click for larger.For the state of Kansas, real personal income declined from $137,975 million in 2015 to $137,307 in 2016, a decline of 0.5 percent. For the entire country, the growth was 1.1 percent. Among the states and DC, Kansas ranked forty-fifth in magnitude of change.
For the Wichita metropolitan statistical area, real personal income declined from $30,913 million in 2015 to $30,747 in 2016, also a decline of 0.5 percent. Of 382 metro areas, Wichita ranked 337th in magnitude of change.
Looking at per capita figures, real personal income per capita in Kansas fell from $47,483 in 2015 to $47,221 in 2016, a decline of 0.6 percent. For the entire country, the growth was 0.4 percent. Among the states and DC, Kansas ranked forty-third in magnitude of change.
Real personal income per capita in the Wichita metropolitan statistical area fell from $48,076 in 2015 to $47,694 in 2016, a decline of 0.8 percent. Of 382 metro areas, Wichita ranked 325th in magnitude of change.
“Real” means that the values are expressed in a way that recognizes the effects of inflation. In this case the values are in “millions of chained (2009) dollars.” Additionally, BEA uses regional price data to measure and account for the effects of regional inflation.
BEA offers this definition: “Real state personal income is a state’s current-dollar personal income adjusted by the state’s regional price parity and the national personal consumption expenditures price index.” 2 Metro personal income is defined similarly.
Personal income, also from BEA, is “The income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.” 3
The growth of population in Wichita compared to other areas.
Several Wichita city officials have noted that the population of the City of Wichita now exceeds that of Cleveland. This, to them, is a point of pride and sign of momentum in Wichita.
It’s true, at least the population facts. For 2016, the U.S. Census Bureau estimates the population of Wichita as 389,902 and Cleveland as 385,809. From the 2010 census, Wichita’s population was 382,368; Cleveland’s 396,815. 1
That Wichita moved up in population rank is more due to Cleveland losing 11,006 people (2.8 percent loss) while Wichita gained 7,534 people (2.0 percent gain).
Looking only at city population, however, misses the fact that the Cleveland metropolitan statistical area population is 2,058,844 compared to the Wichita MSA at 645,628, a difference of 3.2 times.
For most types of economic and demographic analysis, metropolitan statistical areas (MSA) are preferred to cities proper. The Census Bureau notes: “The general concept of a metropolitan or micropolitan statistical area is that of a core area containing a substantial population nucleus, together with adjacent communities having a high degree of economic and social integration with that core.” 2
Further, there is more economic data available at the MSA level (compared to the city level) from agencies like Bureau of Labor Statistics and Bureau of Economic Analysis. This data includes important measures like employment, labor force, unemployment rate, gross domestic product, and personal income.
City boundaries are still important, as Wichita, for example, can’t impose property or sales taxes outside the city limits. Nor can it write laws affecting neighboring towns or the county.
But not even schools respect city boundaries, with several large suburban school districts (Andover, Maize, Goddard) reaching far into the city limits of Wichita.
While Wichita may be the 50th largest city, its rank is not as high when considering metropolitan areas. Worse, its rank is slipping as other areas grow at a faster clip. In the 1990 and 2000 census, Wichita was the 80th largest metro area. By 2010 Wichita’s rank had fallen to 82, and for 2017 the rank is 89.
Growth of Wichita MSA population and economy
Wichita officials incessantly talk about momentum. Using a misguided measure of regional size and growth (Wichita is larger than Cleveland!) is one example.
Unfortunately, there are many other examples. Recently Wichita’s mayor spoke of a “thriving city” and that “we’re going to continue our growth pattern.” 3
Recently Greater Wichita Partnership president Jeff Fluhr told a group of young people this:
From the innovation campus at Wichita State University and development along the Arkansas River in downtown, including a new baseball stadium, to the conversations happening now about a new convention center and performing arts facility, Fluhr said the momentum is pushing to keep Wichita on par with the development of other communities around the country.
That development, which has in recent years expanded to incorporate the entire region, is a critical component to attracting and retaining talent — the exact kind of talent in the ICT Millennial Summit crowd. 4
In announcing his candidacy for Sedgwick County Commission, Wichita city council member Wichita City Council Member Pete Meitzner (district 2, east Wichita) said, “We have enjoyed great progress and growth during my two terms as a City Council member and I plan to do my part to assure Sedgwick County is part of this continued success.” 6
But these pictures — thriving, growth, progress, momentum — just aren’t true, according to the best statistical evidence. Wichita is shedding jobs. 7 In 2016 the Wichita economy shrank. 8 Our labor force is declining. 9 Sedgwick County shows a decline in employees and payroll in 2016. 10
Finally, as can be seen in the nearby chart of population growth in the Wichita metro area and a few other examples. Wichita’s growth rate is low, and is slowing. (The other metro areas in the chart are our Visioneering peers plus a few others.)
It is terribly unfortunate that the Wichita economy is not growing. What’s worse is the attitude of our city leaders. If we don’t confront our problems, we probably won’t be able to solve them.
In an interactive visualization I’ve prepared from census data, you can compare growth in metropolitan statistical areas. Click here to access the visualization.
Wichita and other population growth. Click for larger.
—
Notes
Annual Estimates of the Resident Population for Incorporated Places of 50,000 or More, Ranked by July 1, 2016 Population: April 1, 2010 to July 1, 2016. Source: U.S. Census Bureau, Population Division. Release Date: May 2017 ↩
The unemployment rate in the Wichita metropolitan area fell. So too did the number of jobs.
Today the Bureau of Labor Statistics released employment statistics for metropolitan areas through March 2018. These are numbers that are not seasonally adjusted, so it’s not very useful to compare any month with the month before. But it is appropriate to compare a month with the same month of the prior year.
The good news, sort of: The unemployment rate for the Wichita metro area declined to 3.9 percent in March 2018, down from 4.2 percent in March 2017. The number of unemployed persons also declined by 8.3 percent for the same period.
These numbers should be good news. But these two statistics don’t exist in a vacuum. Specifically, the unemployment rate is the ratio of the number of unemployed persons to the labor force. While the number of unemployed persons fell, so too did the labor force. It declined by 3,367 persons over the year, while the number of unemployed persons fell by 1,056. This produces a lower unemployment rate, but a shrinking labor force is not the sign of a healthy economy.
A further indication of the health of the Wichita MSA economy is the number of nonfarm jobs. This number declined by 1,200 from March 2017 to March 2018, a decline of 0.4 percent. This follows a decline of 0.7 percent from February 2017 to February 2018.
Of the metropolitan areas in the United States, BLS reports that 308 had over-the-year increases in nonfarm payroll employment, 72 had decreases, and 8 had no change.
Sources:
Bureau of Labor Statistics. Table 1. Civilian labor force and unemployment by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t01.htm.
Bureau of Labor Statistics. Table 3. Employees on nonfarm payrolls by state and metropolitan area, not seasonally adjusted. Available at https://www.bls.gov/news.release/metro.t03.htm.
Someone asked a question regarding an item on the Wichita City Council agenda today: How much will this cost taxpayers?
The item in question is agenda item IV-1: Public Hearing and Request for a Letter of Intent to Issue Industrial Revenue Bonds (WAM Investments #6, LLC). 1
Attached was an article from the Wichita Business Journal previewing the matter. 2
How much do these bonds cost taxpayers? It’s important to remember that with Industrial Revenue Bonds in Kansas, cities and counties are not the lender. 3 If this company was not able to pay the bond interest or principle, the city would be under no obligation to pay. The city makes no guarantee as to repayment. Bond buyers know this.
(As an aside, the Business Journal article states: “However, using IRB financing can help the company secure a lower interest rate.” This is simply not true unless the bonds are tax-exempt municipal bonds. Those bonds have a lower interest rate because the interest income is not subject to income tax. But the IRBs considered today are not tax-exempt.)
So if the city is not lending money, and if the city is not guaranteeing repayment, do these bonds have a cost to taxpayers? The answer depends on which side of the fence you sit.
The benefit to WAM, today’s applicant, is that IRBs carry with them tax abatements. Specifically, a whole or partial exemption from paying some property taxes. Additionally, IRBs also enable escape from paying sales tax on purchases made with bond proceeds.
So one way to look at the IRBs is that they do indeed have a cost. The city, county, school district, and state will not receive tax revenue they otherwise would receive.
Supporters of this incentive make two rebuttals. One is that without the tax abatements, the project would not be built. Therefore, no tax revenue. So by abating taxes for a period of time, the project can be built, and after the abatements expire, it will be paying taxes. (For this project, the property tax abatement is for five or likely ten years, with a reduced rate of abatement in the final five.)
The second argument is that by building something, new jobs and commerce are created. These new employees and commercial activity pay taxes. The city and other jurisdictions receive more from these new taxes than they gave up in tax abatements. This is called the benefit-cost ratio. It’s computed by Center for Economic Development and Business Research (CEDBR) at Wichita State University. City documents often refer to something like a “1.57:1 benefit-cost ratio,” meaning that for every one dollar foregone in tax revenue, the city expects to gain $1.57 in other tax revenue.
There are problems with these arguments. For the first: The developer of this project says the incentives are “critical.” If true, this claim exposes a large problem, which is if taxes are so high as to block investment, how are we going to grow as a city and region? Will every project require tax incentives? If not, why do some say they need incentives, and some don’t?
Second: Remember that government says that with the new project, tax revenue will increase. But this almost always happens regardless of whether the company has received incentives. Therefore, the benefit-cost ratio calculations are valid only if incentives were absolutely necessary.
Are incentives necessary? The benefiting companies usually make their case with a lot of numbers and projections, most of which are simply guesses. Plus, there is strong incentive to not tell — to not know — the truth. Here’s why. Suppose fictional company XYZ dangles the idea of expanding its presence in Wichita, or maybe in some other city. XYZ cites incentive packages offered by other cities. Wichita comes up with millions in incentives, and XYZ decides to expand in Wichita. Question: Were the incentives necessary? Was the threat to expand elsewhere genuine? If XYZ admits the threat was not real, then it has falsely held Wichita hostage for incentives. If the city or state admits the threat was not real, then citizens wonder why government gave away so much. No one has an incentive to be truthful. 4
Back to the item on today’s agenda. How much tax revenue is foregone through the abatements? City documents in the agenda packet did not have these numbers, but a presentation made to council members did, as follows:
Value of one year 95% tax abatement ($6,000,000 at 80%)
City of Wichita: $37,240
Sedgwick County: $33,508
USD 375 (Circle public schools): $61,255
State of Kansas: $1,710
Total: $133,713
These values would apply annually for five years. If occupancy goals are met, the incentives would apply for another five years, at a lower rate. (The values above are 95 percent of the usual taxes. The rate for the second five years would be 50 percent of the usual taxes.)
(As an aside, the Business Journal should not use headlines like it did in this case: “Wichita City Council to consider $6 million in IRBs for industrial spec building.” A better headline would be something like “Wichita City Council to consider $133,713 in annual tax abatements.” That is the real economic transaction that happened today.)
But this is not all. The applicant company will almost certainly receive an exemption from paying sales tax on the building. City documents did not provide an estimate for how much sales tax might be abated, but it could be several hundred thousand dollars.
—
Notes
Wichita City Council agenda packet for May 1, 2108. ↩
For more on this, see LeRoy, Greg. The Great American Jobs Scam. Especially chapter two, titled Site Location 101: How Companies Decide Where to Expand or Relocate. The entire book may be read online at http://www.greatamericanjobsscam.com/pages/preview-book.html. A relevant excerpt: “These prisoners’ dilemma games also enable companies to create fictions about cause and effect. These fictions can be used to create public versions of how deals happened that no one can credibly contradict, because the company’s real decision-making process will never be revealed. The most important fiction to maintain, of course, is that subsidies matter in deciding where a company expands or relocates. For example, being able to send secret signals to competing cities means companies can tell contradictory stories to different cities and have no fear of being exposed. If a company really has its heart set on City A, it can tell that city that it is in the hunt, but needs to do better. Meanwhile, it can send less urgent signals to Cities B and C, even if they offered bigger packages at first. Eventually, City A offers the biggest package, and the company announces its decision to go there.” ↩
Liquor enforcement tax collections provide insight into the economic impact of hosting NCAA basketball tournament games in Wichita.
In Kansas, a tax is collected at liquor stores, grocery stores, and convenience stores on the sale of alcoholic beverages. The same tax is also collected on sales to clubs, drinking establishments, and caterers by distributors. 1 This tax is called the liquor enforcement tax. The rate has been 8 percent since 1983, when it was raised from 4 percent. 2
This tax provides some insight into the level of sales of alcoholic beverages at bars, clubs, and restaurants. It is not a perfect measurement of that, and perhaps not even a very good measurement, as it also includes sales at retail outlets for consumption offsite.
Nonetheless, it’s data we have. The Kansas Department of Revenue provides this data on a monthly basis for each county. With the touted influx of visitors for the NCAA men’s basketball tournament games in Wichita in May — along with the generalized party atmosphere — we might to expect to see these tax collections rise during March. Here’s what happened.
The liquor tax collections exhibit pronounced seasonality, so it’s useful to compare the same month of the previous year, as follows for Sedgwick County:
March 2017: $1,315,653
March 2018: $1,085,214
Change: -$230,439, a decline of 17.5 percent.
Not only was March 2018 lower than March 2017, it was lower than five of the previous six months of March.
The monthly average for the 12 months prior to March 2018 was $1,243,793. March 2018 didn’t meet that standard.
Kansas liquor enforcement tax collections are available in an interactive visualization here.
Liquor enforcement tax collections in Sedgwick County. Click for larger.
—
Notes
“Liquor Enforcement or Sales Tax. The second level of taxation is the enforcement or sales tax, which is imposed on the gross receipts from the sale of liquor or CMB to consumers by retail liquor dealers and grocery and convenience stores; and to clubs, drinking establishments, and caterers by distributors.”
Also: “Enforcement. Enforcement tax is an in-lieu-of sales tax imposed at the rate of 8 percent on the gross receipts of the sale of liquor to consumers and on the gross receipts from the sale of liquor and CMB to clubs, drinking establishments, and caterers by distributors.
A consumer purchasing a $10 bottle of wine at a liquor store is going to pay 80 cents in enforcement tax.
The club owner buying the case of light wine (who already had paid the 30 cents per gallon gallonage tax as part of his acquisition cost) also now would pay the 8 percent enforcement tax.”
Kansas Legislative Research Department. Kansas Legislator Briefing Book 2017. Available at http://www.kslegresearch.org/KLRD-web/Publications/BriefingBook/2017Briefs/J-4-LiquorTaxes.pdf. ↩
Hotel tax collections provide an indication of the economic impact of hosting a major basketball tournament.
The Kansas Department of Revenue has released transient guest tax collections for March 2018. This is a tax added to hotel bills in addition to sales tax. The rate in Kansas is 6.00 percent, although some localities add additional tax to that.
For the city of Wichita, here are the collections:
March 2017: $538,539
March 2018: $543,844
Increase: $5,305 or 0.99 percent
With the hotel tax at 6.00 percent, that increase implies additional sales of $88,417 for the same month of the prior year. (The 2.75% tourism fee that is also added to Wichita hotel bills is paid directly to the city, so it does not appear in the statistics from the Kansas Department of Revenue.)
While an increase from the same month of the previous year is good, the average monthly hotel tax collections for the year before (March 2017 through February 2018) was $590,770.
So March 2018 didn’t exceed the average month of the previous year. It also didn’t exceed March 2016. Whatever was happening in Wichita during that month, the city generated $665,854 in hotel taxes.
Kansas transient guest tax collections are available in an interactive visualization here.
If Wichita-area companies can’t fill jobs, the declining labor force may be the reason. Who is responsible?
The Chung Report has a recent article noting the low unemployment rate in Wichita. That may make it difficult to fill jobs: “Wichita also has a low unemployment rate, which has seen steep decline in the past five years and now sets at 3.9 percent, below the national average of 4.1 percent. So even if companies are dead set on hiring, do we have the available workforce?” 1
It’s a useful article. But where it could be better, especially when discussing how Wichita companies will find workers to fill anticipated new jobs, is to note the shrinking Wichita labor force.
Here is a table of data for the Wichita MSA from the Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) program. 2 It is part of the Bureau’s Current Population Survey (CPS), which is a “monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics.” 3
I chose the year ending January 2011 as a comparison point, as it is near the low point of the great recession. Since then, the unemployment rate has fallen greatly, and is just half the rate of 2010.
But that isn’t the total story. It isn’t even the most important part of the story. Since the unemployment rate is a ratio, it has two moving parts, specifically the number of unemployed people and the number of people in the labor force. (The labor force, broadly, is the number of persons working plus those actively looking for work.)
It is possible that the unemployment rate falls while the number of people employed falls or rises slowly. This is the general trend in Wichita for the past seven years or so. The nearby table illustrates this. The labor force has fallen, and by a lot, while employment growth has been modest.
In fact, of the changes, we can say that 35.2 percent of the change in the unemployment rate is due to new jobs, while 67.8 percent of the change is due to a smaller labor force.
So when Wichita leaders ask “Do we have the workforce?” the answer might be no. The next question ought to be “Why not?”
Our leaders are quick and eager to take credit for economic development gains. But what about the shrinking labor force caused by the many of the same leaders and their policies?
As the proverb says, “Success has many fathers, while failure is an orphan.”
