October 11, 2012

Wichita State economists: 4,900 new jobs for area in 2013

In their forecast for 2013, Wichita State University economists see a significant pickup in hiring for the Wichita area.

In their forecast for 2013, Wichita State University economists see a significant pickup in hiring for the Wichita area.

The forecast, to be delivered at Thursday’s annual Wichita Area Economic Outlook Conference, calls for 4,900 new jobs in the metro area next year — a gain of 1.7 percent in employment.

That would mark the strongest year for hiring since 2008, but center director Jeremy Hill cautioned that big unknowns are hanging out there and that could change the forecast drastically.

Most sectors of the economy will grow, but the strongest are business services, health care and restaurant/hotels. The area’s manufacturing sector is expected to see little growth.

Fundamentally, Hill said, both businesses and consumers seem stronger and ready to spend than last year, but are holding back because of some real question marks.

The biggest is the fiscal cliff, about $500 million in federal tax hikes and spending cuts that begin going into effect on Jan. 1. Others factors include a recession in Europe, a slowdown in emerging markets and, at the state level, the impact of dramatic tax cuts on state spending.

“In businesses, the attitude is to wait and see,” Hill said. “They’ve got money, they can move forward, but they have this cloud of uncertainty at the national and state side and will wait.”

But Hill doesn’t see the presidential race as one of the issues clouding 2013. It will be settled Nov. 6, and business will move forward under whoever wins.

“They might change their behavior in how fast they move forward, nationally,” he said. “One might cause more of a tiptoe – because they’ll have to deal with Medicare, the Affordable Health Care Act and other business taxes – and the other a slow walk. But either way uncertainty on the political side will be removed.”

Winners and losers

The forecast calls for the biggest bump in hiring to come in business services, a broad category that includes janitors, research scientists, advertising designers and more.

The sector will add nearly 2,000 more jobs next year. A big chunk of the increase might come from a surge in temp workers as local companies cautiously increase manpower.

The rise in business services also reflects a recession-driven cost-cutting move by local companies to outsource functions they may once have kept in-house.

Hill acknowledged some uneasiness in the size of the base jobs number supplied by the federal Bureau of Labor Statistics. The center tries to make the number more accurate by running it through their local formula, and then they tweak it after consulting with local businesses.

He said that number could be lowered in future revisions next year.

Ron King, co-owner of LSI Staffing, which supplies temp workers mainly to manufacturers, said he is seeing 6 to 7 percent growth over 2011. Companies are being very cautious, even in adding temp workers.

“I would tend to say I’m cautiously optimistic,” he said of his expectations for 2013. “We’re on a slow growth path, but who knows what all the health care and other government actions will do. It seems we are the mercy of the government, as far as the economy goes.”

The health care sector will continue its decades-long growth to accommodate a population that is growing older and sicker, but the health care law is also changing that, said Mick Tranbarger, co-owner of Family Prescription Shop.

He expects 1 to 2 percent growth.

“We think there will be an impact from the Affordable Health Care Act,” he said. “It’s expanding the field of those who will be covered, but the benefit is just anecdotal at this point.”

Optimistic forecasts

The center’s job forecasts have been overly optimistic in recent years.

At the 2009 outlook conference, the center projected 3,600 job losses for 2010, a year in which the metro region actually saw about 9,300 jobs disappear, according to the Kansas Department of Labor’s annual non-farm jobs totals for the Wichita metro area.

For 2011, the center projected a gain of 1,300, but the area actually lost 300 more jobs.

And last fall, the center forecast a gain of 3,800 jobs for 2012, but reduced that after Boeing announced it would be closing its plant in Wichita and Hawker Beechcraft headed toward bankruptcy. The actual number, through August, was 1,400 jobs gained.

Hill says in a relatively small area such as Wichita, a single impossible-to-predict event can knock a forecast way off track.

It has happened in other years, as well, such as a dramatic revision in local employment numbers sent down by Bureau of Labor Statistics in 2011.

“In each case, there have been unique circumstances,” he said.

He said the WSU staff spend a lot of time trying to get an accurate estimate; they run numbers and scenarios through computer models and get input from local business leaders before developing their outlook.

“It’s the best we can do,” he said.

Economist Malcolm Harris, a professor at Friends University and once chief economist for the U.S. Postal Service, agrees forecasting is difficult.

“Sometimes you get lucky,” he said, with a laugh.

He said he also distrusts the numbers put out by the Bureau of Labor Statistics, but there’s not much choice but to rely on them to some extent. He recommends calculating a variety of scenarios.

“The local forecast is driven by the national forecast and that’s something they really have no control over,” Harris said. “The economy has grown consistently slower than anybody was expecting.”

That’s something Sandra Holt hopes won’t hinder her ability to find work.

Holt was at the Workforce Alliance of South Central Kansas last week to start her job search.

She was let go from her position as a courier at a medical lab a week ago. She just bought a car and was feeling pressure to get a job soon.

“With this economy, I just want to find something to keep a roof over my head, food on the table, and keep my car,” she said.

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