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August jobs report says no Kansas full recovery until 2021

August jobs

Creating private-sector jobs is arguably the only remedy for the backlog of Kansans awaiting the state to process unemployment payouts. After losing over 120,000 private-sector jobs from the COVID-19 lockdown, the state could have fully recovered this month. However, every month since lockdown the state gained fewer and fewer private jobs. The August jobs report suggests Kansas won’t recover from COVID-19 and Governor Kelly’s lockdown until Spring 2021.

Every month, the Kansas Department of Labor (KDOL) releases the state’s job performance of the prior month. In this report, the KDOL reported that Kansas lost 124,000 private-sector jobs from March to April. The April job loss coincided with Governor Kelly’s initial closing of public schools, business shutdown, and a stay at home order. Many Kansas parents and business owners had little choice but to cut back from their professional duties to educate and supervise school-age children. After a substantial job loss, the KS economy mounted an equally robust comeback. In May, Kansas got back 29,400 private jobs. In June, it recovered another 33,300 private jobs. Then job growth hit the brakes. In July, Kansas gained only 5,900 jobs. Now,  the latest report says the state stalled even further, adding only 5,500 private jobs.

The chart below provides a visual update of 2020 private jobs recovery from COVID-19 and Governor Kelly’s lockdown. A value of 100% means a full economic recovery from April’s business shut down. In this graphic, the solid red line represents KDOL reported job gains/losses, and the two dotted lines are projections with different baseline assumptions. The blue dotted line projects Kansas private jobs if they grew at May and June growth rates. By that projection, Kansas would have reversed its 124,000-job loss…last month. The red dotted line projects the state of private jobs, assuming July and August growth rates. In other words, if Kansas doesn’t see a faster job growth than the last two months, the state won’t fully recover until well into 2021.

This isn’t to say Kansas private jobs will continue stalling. Rather it goes to highlight Kansas’s initial recovery and how our current reality dashes the hope for a “V-shaped” economic recovery.

When it comes to the labor force, the number of Kansans either working or looking for work, the news seemingly contradicts Kansas’ Acting Secretary of Labor Wright statements of a labor market “progress.”

Data for August demonstrates continued progress in Kansas with the unemployment rate and job growth moving in the right direction,” said Acting Secretary Ryan Wright. “While we have seen continued improvement, KDOL remains committed to serving our claimants’ needs during this time as more than 96,000 individuals received unemployment insurance benefits in August.

The unemployment rate is a share of Kansans looking for work out of all Kansans who either have a job or are job hunting. The state saw a decrease in the unemployment rate from 7.2% in July to 6.9% in August. However, this isn’t actually “progress” as claimed by Wright’s comment. The reality is tens of thousands of Kansans stopped job hunting all together and left the labor force. According to KDOL, 20,408 Kansans left the job market. Of that,  9,700 left their jobs and didn’t bother looking for work. Also, another 10,700 Kansans who already didn’t have a job gave up job hunting entirely. In short, the unemployment rate moved lower because Kansans gave up the job search, not because they found jobs. Taken together with Kansas’ stalling job gains, it’s no wonder the state likely won’t recover until next year.

Last month we spoke to analysis showing that states that didn’t shut down are on a faster path to recovery. Kansas’s August jobs report hammers that point home even further. Whether by comparison to other states or its past performance, Kansas isn’t creating an environment of prosperity; getting Kansans back to work.