In Kansas, managers’ income gains nearly match farm, telecom worker losses

Heavy layoffs at Sprint and a painful plunge in farm incomes in 2015 helped drop Kansas’ income growth to seventh worst in the nation, according to the U.S. Bureau of Economic Analysis.

Kansans’ personal income overall grew 2.5 percent for the year, far below the national gain of 4.4 percent. Kansas joins other states on the Great Plains as among the worst performers last year, as oil, gas and agricultural incomes all saw steep declines.

Personal income includes wages, dividends and rents, and government transfer payments such as Social Security.

Farmers and ranchers in Kansas saw their incomes fall by $823 million, a drop of more than 26 percent, because of lower crop and livestock prices. An even bigger hit befell the state’s information sector, which includes telecommunications employees, when it dropped $911 million. Sprint has announced a series of deep cost-cutting layoffs in recent years as it has struggled.

On the other side, the biggest winners — by far — were the managers of companies and enterprises, with a gain of $1.4 billion in income. This reflects not corporate executives generally but employees of firms that own other firms, such as holding companies, or manage other firms, such as management companies.

The amount collected by this one small group of employees was equal to about half of the entire $3.2 billion income gain by all Kansas residents. The payout in Kansas was second only to the amount paid out in California.

Matthew von Kerczek of the BEA said he couldn’t say exactly what had caused this, but speculated that it might reflect bonuses paid to executives of holding companies.

There are many holding companies in the state. A holding company is simply a corporate entity that legally controls an operating company or series of operating companies, and can be small or large.

Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University, said he had heard of companies forming holding companies and splitting operations into separate companies so they could cut the number of employees below the threshold of 50 to escape regulation under the federal Affordable Care Act.

This story was originally published March 24, 2016 at 10:03 AM with the headline "In Kansas, managers’ income gains nearly match farm, telecom worker losses."