Media narratives on Kansas’ economy continue to ignore the state’s positive job growth trend in the three years post-tax reform, from December 2012 to December 2015. Recent U.S. Bureau of Labor Statistics releases show that the Sunflower State’s 4.6% growth rate ranks second behind only Colorado (9.2%) in the region over the period.
Longer-term job growth trends like the one above often get overshadowed by preliminary, month-to-month comparisons of how many private-sector jobs exist or existed in the state at two single points in time. Such comparisons are problematic because they give disproportionate weight to short-term, potentially anomalous industry-level spikes or declines when arriving at an overall jobs number and growth rate for Kansas.
The longer-term, 4.6% growth rate Kansas achieved from December 2012 to December 2015 also holds when comparing growth from Kansas’ annual average number of private-sector jobs in 2012 to the same average in 2015. Kansas ranks 29th nationally on this three-year annual average basis, a marked improvement after ranking 38th in the fourteen years from 1998 to 2012.
The adjacent table illustrates why cursory, shorter-term examinations of month-to-month state jobs numbers can be misleading. It looks at December 2014 to December 2015 job growth in Kansas and its regional peer states for four industries that together comprise less than 7% of each state’s private-sector economy but exert an outsized influence on each state’s jobs numbers due to largely global factors beyond the control of any particular state and its policy choices.
The outsized influence is evident in the differences between “total private-sector” job growth and “all other” private-sector job growth (with the four industries removed) in the table. For example, Kansas’ “all other” private-sector job growth—representing more than 93% of the state’s private-sector economy—ties Missouri in the region. Yet, its total private-sector job growth trails Missouri because Kansas is weighed down by developments in the four relatively small industries highlighted. Similarly, Oklahoma’s “Total Private Sector” job growth appears to be negative (-0.7%). Yet, its “All Other” private-sector job growth signals a completely opposite, positive trend.
You may be wondering why the four industries were chosen in particular to illustrate this phenomenon. Well, the mining & logging industry (which includes oil and gas extraction) is an industry that factors into jobs numbers for Kansas and all of its regional peer states except Nebraska. Yet, the industry is one of the most highly sensitive to global supply and pricing fluctuations that have little to do with particular policy choices made in Kansas or elsewhere in the region.
The aerospace industry is also a highly global one, but it is only large enough per BLS minimum reporting requirements to influence jobs numbers in Kansas and Oklahoma and no other states in the region.
Transportation equipment manufacturing is a large enough industry to influence jobs numbers for all states in the region. However, job growth within this industry can be tied to demand for a specific product that may be heavily produced in one or more regional states but not others.
Finally, job growth or decline in the motor vehicle manufacturing industry only influences jobs numbers for Missouri given that the industry is too small in every other regional peer state to meet aforementioned minimum reporting requirements.
In short, the industries above prove that preliminary monthly changes in the number of private-sector jobs within Kansas and any other state are inadequate measures of current economic vitality and future outlook in those states. Kansas’ longer term job growth in the three years post-tax reform is far more meaningful and telling.
Check back for next month’s update.