October 2021 Jobs: Slow Growth Amidst High Inflation
The October jobs report from the Bureau of Labor Statistics shows Kansas gained 2,500 private-sector jobs. Unfortunately, this continues a trend of slowing job growth across the state. Since July, the monthly job growth rate has gone from .4% to .3% in August and September to .2% in October. If this sluggish growth rate continues, full recovery of January 2020 jobs levels won’t be until mid-to-late 2022. Kansas is still trying to close the 32,000-job gap from its pre-pandemic levels.
The job growth largely comes from 1,200 new retail jobs, 700 new jobs in the leisure industry, 600 in Construction, 500 in manufacturing, 500 in health care, and 300 in financial activities. However, Professional and Business Services lost 1,300 jobs while wholesale retailers also lost 400 jobs. Mining and Logging, as well as Information industries, largely stayed level.
The unemployment rate stayed at the same 3.9% it was from September. On top of this, the labor force participation rate also decreased from 67.6% to 67.4%, the decline in the rate means fewer Kansans are seeking work or working. This means that while many legislators point to Kansas’ high tax revenues as a sign of a “booming economic recovery,” the reality is that labor activity isn’t showing the same enthusiasm.
The issue on everybody’s mind right now is high inflation across the country – including Kansas. In the Midwest, consumers have seen a 6.6% increase in the general price of goods since October of last year. This includes a 33.3% jump in energy prices, including a 53% increase in the price of gasoline over the past year. High inflation eats away at the real value of somebody’s wages, thus making it harder to buy common goods and creating a slight disincentive to work more if that money isn’t going to have value. Furthermore, inflation could hit taxpayers with bracket creep issues, in which people are taxed more due to inflation if brackets aren’t indexed to the change in prices. Kansas doesn’t do this with their brackets and thus makes people susceptible to more taxation. In economics, high inflation accompanied by a lower unemployment rate is a sign of economic growth. However, Kansas’ unemployment rate increasing uninterrupted from 3.5% in May to 3.9% in October means the current high inflation is not a sure sign that growth is happening.
One way to help control inflation is to control government spending. Milton Friedman observed that inflation as a monetary phenomenon originating from the government pumping money into the economy faster than economic output. Kansas, at least at the state level, could control this by reducing and reigning in spending. Kansas has the third-highest ratio of state and local government employees per 10,000 residents in the nation and also has the third-lowest number of residents per government body. Controlling the size of government controls spending. Kansas should make a more conscious effort to reduce the size of the government and its footprint on the economy.