Last year, when Jeremy Hill gave his talk on the state of the economy in Hays at the annual Regional Economic Outlook Conference, the mood of Ellis County attendees was not good. Things have changed.
“The tone on this room is actually better than last year,” said Hill, director of the Center for Economic Development and Business Research at Wichita State University, speaking Wednesday to a lunch crowd of about 50 people at the Rose Garden Banquet Hall.
“Last year I came away wanting anti-depressant pills,” Hill said, “but I don’t feel that in this room. When you first came in you looked happier, smiling, so a lot better this year.”
Regional economist Jacqueline Michael-Midkiff, with the Bureau of Labor Statistics in Kansas City, opened her comments at the three-hour session asking people how they feel about the economy by giving a thumbs up or thumbs down.
“We’ve actually got a decent mix here,” Michael-Midkiff said, looking over the crowd.
Sponsored by WSU and Grow Hays, the conference speakers offered a detailed look at labor and wages in Kansas compared to the nation, with some insight into Ellis County and western Kansas as well.
Nationally, unemployment is low, but it has gone lower in the past, said Michael-Midkiff. The Kansas rate is 3.2%, which is not the lowest it has ever been (2.9%).
“We’re still seeing job growth, we’re seeing labor force growth over the past year, prices have risen and wages have risen,” she said. “The good news for consumers is that wages have risen faster than prices have risen, for the past few years.”
Compared to the nation, Kansas’ unemployment rate falls in the middle among the states, but its counties vary widely. Higher unemployment rates are heavily concentrated in the southeastern part of the state, with Ellis County about in the middle, she said.
“How do you feel about hiring right now? Are you having any difficulty hiring?” she asked, getting quite a few thumbs down. “Probably more not so good, than good. Well, the numbers support that.”
Data about job openings and labor turnover show that nationally there’s less than one unemployed person for every job opening.
“It makes a lot of sense that you might be having trouble finding the workers that you need to fill the jobs,” Michael-Midkiff said. “And I hate to tell you this, but it’s even worse in Kansas, that number is even a little lower in Kansas. There are actually about 1½ job openings for every unemployed person in Kansas.”
Job quits are on the rise, she said.
“That means workers are much more open to quitting their job because, usually, they think they’ll be able to find something else more easily,” she said. “That’s been trending upward more lately.”
Layoffs have flattened out and are steady.
In September 2019 the nation added 136,000 jobs for all non-farm industries. So far this year, the average monthly gain hasn’t been as much as the last couple of years. To absorb new entrants into the labor market, such as high school and college graduates, the nation needs to add 150,000 jobs monthly.
“We are still having job growth, but it has slowed, definitely,” Michael-Midkiff said.
The western U.S. has seen faster job growth than the rest of the country, with health care in a steady incline, taking the lead and not losing any jobs, even in the last recession.
“Kansas is experiencing a lot faster growth in leisure and hospitality than the nation is. Mining and logging, same thing. Construction, you’re doing better here in Kansas than the nation is,” she said. “On the other hand, educational services and health care are growing more slowly here in Kansas than in the nation overall.”
Retail trade job growth in Kansas is still growing, while declining nationally.
Urban areas of the state, such as Kansas City and Wichita, have run out of labor recently and don’t have enough people to fill jobs, said Hill.
Nevertheless, “our labor market is generally not overheated,” he said, noting employers every year say they can’t find employees but ultimately do, despite Kansas City being the outlier.
“It is a tight labor market,” Hill said. “The only way they get more people? Raise wages and they move in. And you can see that shift throughout the state, of people moving in.”
In Ellis County, jobs were added in 2018, and there was more growth in 2019.
Statewide, wages are playing catch-up.
“This is one of those factors that really weighed down on the Kansas economy,” Hill said, as wages for several years didn’t keep up with inflation.
“That really spilled over into the retail sales, that spills over into local governments, that spills over into other services,” he said.
Wage rates are now accelerating much faster, which he said is good news for the state. Manufacturing is driving that, in the hunt for the production worker with skills.
In northwest Kansas, he said, “you are now having to compete more to not lose your worker down to Dodge or not lose your worker over to Salina,” he said. “You have to increase (wages) because you have to compete against the region.”
He warned that job hoppers with low skills will jump for a dollar more, and that now the trend in 2019 is middle-skill workers joining the job hopping.
“The issue for companies today in this market, if you haven’t been thinking, and for this area, in particular, wages didn’t go up too much,” he said. “If you’re not really thinking about that wage, you better think about that wage, or someone’s just going to get up and leave for a couple dollars more, or at least a promise for a better start somewhere else.”
The wage pressure is a good thing for the overall economy, he said. “This tightness can be healthy for our economy.”
Their modeling of the state’s economy showed a statistical relationship that a 1% increase in wages in rural western Kansas has a positive effect of 0.5% on taxable retail sales in urban communities, including Kansas City.
“So all of this other income from ag and oil, they have an effect, a positive effect, or a negative effect, it goes the reverse way too, on big urban cities,” Hill said. “We are interconnected.”
Ellis County’s population is growing, but it’s declining in surrounding counties. The bulk of the state’s population growth, almost 95%, was in Johnson County, where people migrated in. A few years ago, migration was rural moving to urban, but that has slowed. Now Hill is seeing some urban-to-rural area migration.
“It’s a very interesting dynamic that’s going on,” he said.