June 29, 2013

Wichita’s recession job losses drag down Kansas; small counties are ‘bright spots’

Five years into recovery, Kansas still hasn’t regained all of the jobs it lost in the recession – and there is one big reason: Wichita.

Five years into recovery, Kansas still hasn’t regained all of the jobs it lost in the recession – and there is one big reason: Wichita.

The Wichita metro area, as of May, remains 16,000 jobs down from 2008. Sedgwick County is by far the worst of the state’s 105 counties for job losses. Neighboring Butler County is second worst, and Harvey and Sumner are close behind.

The Wichita area’s jobs drain pulls Kansas into the negative column. Counting the Wichita area, Kansas is down 9,000 jobs from May 2008; without it, the state is up about 7,000 jobs.

Kansas has seen a 0.6 percent decline in jobs since 2008. In the same time period, the United States has seen a 5 percent gain.

The numbers only hint at the cost for people’s lives.

Barbara Hyle was laid off last year from Cessna Aircraft, where she was a marketing coordinator. Since then, she’s spent time networking, applying for jobs, interviewing – and getting frustrated. She and her husband had just bought a house based on two incomes. Her unemployment check now goes to pay the mortgage. The first 26 weeks of checks are about to run out, and she’s anxiously waiting to see if she qualifies for an extension.

“It’s just been rough,” she said.

The good news for Kansas is that much of rural and small-town Kansas has seen job growth, driven by more oil drilling and services, and the growth in services due to the overall wealth increase from farming, as well as government transfers such as Medicare.

Meanwhile, the state’s traditional growth engines, its bigger cities, have been down or flat. Johnson County is up about 2,700 jobs, or 1 percent over 2008 levels. Topeka is up 500 jobs and Leavenworth is up 400 jobs. But other populous counties – Riley, Douglas, Reno and Saline – all saw modest declines. Wyandotte County data show that it had exactly the same number of jobs in May 2008 as in May 2013.

“Manufacturing is still soft, and Johnson County isn’t growing,” said Donna Ginther, director of the Center for Economic and Business Analysis at the University of Kansas. “And so what we have is a very slow recovery with some bright spots in small counties. It’s uneven growth, uneven distribution.”

Shrinking numbers

There’s no secret to what’s pulling down employment in the Wichita area, say experts. Employment in aircraft construction remains about 11,000 jobs below what it was in May 2008, according the Kansas Department of Labor’s non-farm jobs survey.

About half of the jobs that disappeared from the Wichita-area economy were for people directly employed in aircraft manufacturing in 2008. And there doesn’t seem to be any expectation that will improve in the next year.

Most of the rest of the jobs lost were in the support sectors that thrive or suffer based on the health of the economy, which itself rides partly on the health of the aircraft industry. Jobs in these sectors include waitresses, retail clerks, real estate agents and computer repairmen.

Many find themselves in positions similar to Hyle’s. She said she’s caught in a difficult situation: She never got a college degree but worked her way up by knowing people who knew she excelled at her job. Now she is back on the job market dealing with people who don’t know her or her skills. All they see is a resume.

She’s wondering if she’s considered “overqualified” for these jobs given her previous Cessna paychecks.

She recently applied at the new Starwood Hotels contact center. She had worked at the Spiegel call center years ago and had long experience booking travel for Cessna staffers. She thought she had a good shot.

“I couldn’t even get an $11-an-hour call center job,” she said. “They sent me an e-mail saying I’m not being considered. There’s nobody to call to tell me why. That is the frustration right now.”

Wichita hasn’t technically been in recession since 2009. The real metro gross domestic product has been growing, although extraordinarily slowly, and it remains well below 2008.

But it’s not all gloom. The Wichita job market appears to finally be responding to the rebound here and elsewhere. Wichita added about 2,000 jobs between May 2012 and May 2013, according to state labor data.

While some aircraft workers are still waiting for jobs to open back up, many have found other opportunities.

Mark Chance of Belle Plaine was laid off as a quality engineer from Cessna on May 24. A week later, he was hired on in a similar role at Atlas Aerospace.

He was bracing for a difficult job search and was surprised when he was contacted for the job. It was a combination of having the right skills, knowing the right people and sheer luck. He’s pretty happy about it, but he knows people who are still jobless. He is thankful to be working, he said.

“I think I was lucky and the exception to the rule,” he said.

Rural prosperity

Much of rural and small-town Kansas has witnessed a different recovery.

Many rural counties, which have suffered a 70-year depopulation trend, are actually seeing job growth. Often the numbers aren’t huge, but adding 100 jobs in a county with 2,000 people can be a big deal.

Among the 46 counties with fewer than 10,000 population, three-fifths have seen job growth.

The Kansas county with the second most jobs added – after large Johnson County – is Ellis, home of the city of Hays.

The likely reason is oil, said Aaron White, executive director of the Ellis County Coalition for Economic Development.

The price of Kansas Common crude in the $70 to $90 range has spurred more drilling.

“We’re still the No. 1 oil producer in the state,” White said. “And that creates a lot of oil-service jobs and manufacturing jobs for oil-related equipment, and not just for here. Some of it goes all over.”

Dodge City and Garden City, with their oil drilling and wind farm-related jobs, also saw significant job growth. And Dodge City has a casino and other new development.

Another industry doing well is agriculture, despite the drought. With high crop prices, farmers generally have seen strong incomes over the last five years.

As those incomes grow, more money is spent on products and services in nearby cities and towns: a second cafe, a new dentist or an expansion at the John Deere dealership.

But it doesn’t apply everywhere. Those counties with heavy natural gas production, such as those in the southwest and southeast corners of the state, have lost jobs as producers have slowed drilling in the face of low natural gas prices. And counties without oil or wind production may simply be continuing the decades-long decline in population.

Population growth

Kansas’ job picture grows even dimmer when you look at population growth.

Sedgwick County may have lost 12,700 jobs, but it also has gained about 18,000 people since 2008, according to 2012 Census figures. The percentage of the county’s population that is working has dropped from 49 percent to 45 percent.

Kansas lost 9,000 jobs but gained 78,000 people since 2008, dropping the ratio of people working and increasing the number of people searching for work.

But the trend in job growth now appears to be positive, if slow.

When Sam Brownback became governor, he promised to expand the number of private sector jobs. He maintains that he has done that.

According to the state’s Current Employment Statistics, the number of private jobs has risen 43,500 since he took office in January 2011.

The number of state employees has ranged from 51,800 to 53,800 from January 2011 to April 2013, showing virtually no consistent change until May, when the number of state workers dropped 8 percent to 48,100.

The number of state, federal and local government workers in Kansas has fallen by 10,000, or 3.7 percent, over the two and a half years to about 254,000.

Brownback points to his policies, particularly tax cuts, as contributing to job growth.

“The pro-growth tax policies put into place by Gov. Brownback and the Kansas Legislature just went into effect six months ago and have so far, left about $250million more in the paychecks of hard working Kansans,” Sara Belfry, deputy director of communications for Brownback, wrote in an e-mail. “We are seeing strong growth in private sector jobs across the state. We had a record number of new businesses opened in Kansas last year. And we are beginning to realize the benefit of the ROZ (Rural Opportunity Zone) program in our rural counties. This is progress but there is still a great more that needs to be done.”

Economist Malcolm Harris, a professor at Friends University, partly agrees with Brownback.

The state has become more business-friendly generally, and has been very supportive of oil and gas drilling in particular. That counts for a lot, he said.

But the state also benefits from the national economic revival, as well as specific federal policies such as mandated ethanol use that support crop prices. And international demand for American exports has increased in recent years, critical to a state that exports so heavily.

And the oil drilling boom is being driven largely by new technology and global high prices, rather than state policies.

Harris said it’s hard to draw a line from cause to effect.

“I’m not sure that anyone can say how much credit goes to what,” he said.

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