Wichita’s turtle-speed economic recovery will continue its slow climb in 2017, but new worries are arising just as it approaches the top of the hill, according to a new employment forecast.
The forecast by Wichita State University’s Center for Economic Development and Business Research will be unveiled Thursday morning at the Wichita Area Annual Economic Outlook Conference.
In the outlook, Center Director Jeremy Hill predicts that the Wichita area will add about 2,500 jobs next year. That’s less than a 1 percent increase in the number of jobs, and about the same as this year.
Statewide, Hill is calling for growth of 12,500 jobs, also less than 1 percent growth.
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Wichita has consistently grown more slowly than the rest of the nation, which itself has seen frustratingly slow recovery. The state grew faster than Wichita earlier in the decade but is seeing a decline in jobs this year.
What makes this year different, Hill said, is a subtle feeling that the national recovery may be peaking and possibly headed for a downturn. Wichita typically lags the national economy by a year or 18 months.
But that’s not what national forecasters are saying, Hill said. Forecasts he has seen show just a 20 percent chance of recession in the coming year, but he thinks there is a case to be made for business caution.
“With 20 percent chance of recession, there is more steam left in the economy,” he said.
“But I think we should exercise caution. This is where businesses in Kansas should say, ‘We need to watch for any sign of recession so we don’t get caught off guard.’ ”
But Hill said the Kansas business executives and owners he consults about the conditions in the state are pretty optimistic this year.
A few years ago, these executives were anxious about the future. They said they might hire, but only on a contract basis and were not willing to pay for job training. Last year, they said they were feeling confident enough to hire more, Hill said, but only for higher-value employees.
Not this year.
“When I started asking again, they were not bashful,” Hill said. “Their openings continue to increase. Job openings are out there. They are ready to hire, pay for training, pay higher wages.
“This is a very different environment,” he added. “They’re worried about how to find, recruit and retain their labor.”
Where is the growth?
Hill thinks the sectors that will grow the most in 2017 are the same ones that have outperformed for years: professional and business services, and health care.
Professional and business services includes a wide variety of jobs, from lawyers to janitors, but one slice of it really caught Hill’s attention: people who work at corporate headquarters in the Wichita area.
Hill said federal statistics show those employees saw an average pay increase of $23,000 in 2016.
That is evidence, Hill said, of a tightening labor market in Wichita, especially for highly skilled, highly paid corporate managers and executives.
“That’s mind-boggling,” he said. “That’s Koch, but it’s also Freddy’s and other corporate headquarters.
“This is a very tight labor market, and when you see management of companies go up $23,000, that really is affecting wages,” he added. “It’s gotten to the point where you ask: How are things going to continue to grow?”
He said workers are migrating from the state’s smaller cities to its bigger ones in search of more money. That helps, but the lack of deep reserves of such workers will limit the growth in Kansas.
The rest of the state
Last year, Hill predicted Kansas would add about 20,000 jobs. Instead, it lost 8,000 jobs.
That, he said, is because of the collapse in oil drilling.
“We knew that was going to be an issue last year; we just didn’t know how much,” he said.
Also, low agricultural prices have cut farm incomes, and exports are being held down by a sputtering global economy and a high value to the dollar.
But he said these economic factors don’t seem to faze his business roundtable.
“They really weren’t concerned about oil or some of the other sectors,” he said. “Business optimism across Kansas is pretty high.”
Despite that optimism in the state, and in the local economy, Hill remains wary about 2017. That’s why he toned down the forecast from previous years.
He’s worried that the turning point will come and nobody will feel it until the economy starts sliding downhill.
“Are there we there? We may be getting close to there … we might need to start thinking about are we at the peak and need to prepare for what’s next.”
2017 Wichita area job forecast, by sector
change from 2016
Construction, oil and gas
Trade, transportation and utilities
Telecom, media and other information
Finance, insurance and real estate
Professional and business services
Health care and private education
Restaurants and hotels
Local, state and federal government and public education