••• Tax & Spending •••

Kansas loses private-sector jobs for third month in a row


Once again, Kansas ranks in the bottom of the packet when it comes to monthly private-sector job growth. Last month, Kansas lost 500 jobs while 36 other states had growth or smaller losses. Though ebbing and flowing, this month’s poor results are part of Kansas’s four decades of slow economic growth that is causing people to leave the state.

The unemployment rate sits at the same 2.9% its been at since November 2022. However, Kansas’s labor force participation rate ticked up slightly from 66.6% to 66.7%, mostly from an increase in the number of people finding employment. Workers clearly want to go out and find jobs, but Kansas’s sluggish economy is destroying more opportunities than are being created.

And people are moving elsewhere. According to IRS Migration data from 2021, Kansas had a net loss of $234 million in adjusted gross income (AGI) because of residents leaving the state and moving elsewhere in the United States. Even Johnson County, the center for new job growth in the state, lost a net $64 million.  Wyandotte County lost a similar $61.5 million. Shawnee County lost $37.6 million. 51 counties total had a net loss in AGI, with 23 of those counties losing $2 million or more.

$717 million of the money leaving Kansas went to neighboring Missouri. The next highest was Texas, where $316 million moved, and then Florida, where $245 million moved. These numbers are larger than the net loss because AGI did move into Kansas, but at a rate much lower than it moved out.

The reasons why people are moving more to these states from Kansas come down to their strong economies. Texas alone gained just under 28,000 jobs in April: that’s as much as Kansas has gained since April of last year. Florida similarly gained 18,200 jobs. The AGI moving represents people and businesses taking private-sector jobs elsewhere.

These two states have no income tax, an end goal that Kansas failed to move towards when the legislature failed to override Gov. Laura Kelly’s veto of a flat tax proposal. According to the Bureau of Economic Analysis, states with no income tax like Texas and Florida had a 56.8% growth in private-sector jobs between 1998 and 2021 – at the same time, states that do tax income only had a growth rate of 25.0%. Wages and GDP also grew more in non-income taxing states than in those that do.

Retirement accounts aren’t taxed either in these two states. Comparatively, Kansas is ranked as the third least tax-friendly state for retirees across the entire country.  Private retirement plans like IRAs, 401ks, certain Social Security benefits, and out-of-state public pensions are all fully taxed. Seniors make up a large percentage of the AGI that moves across borders.

The longer that Kansas puts off substantial—sustainable–reform, the more its economy stays the same while others grow and become more attractive to business. Any state could grow quickly: Idaho and Utah are two of the fastest-growing states in the country for population and GDP because of a decade of reforms. It can happen in Kansas too.