Gov. Sam Brownback made an ambitious promise during his re-election campaign to add 100,000 private-sector jobs to the economy over four years, but six months into his second term, the governor is far off pace.
Kansas gained 3,600 private-sector jobs during the first six months of 2015 – a growth rate of about 0.3 percent. At this rate, the state would add 7,200 private-sector jobs during the calendar year and a total of 28,800 over four years – about 70,000 less than the number Brownback promised.
The governor has staked his legacy on private-sector growth. Last week, Brownback dismissed a study by Governing magazine that showed Kansas had one of the worst job growth rates during the first half of the calendar year, because it included government jobs rather than focusing solely on private-sector jobs.
Governing used total nonfarm jobs added since December by each state as its measurement. Kansas had a growth rate of 0.1 percent, according to that study, after gaining only 1,700 jobs during the six-month period.
“We’ve been focused on private-sector job growth because the public sector you’ve got to raise your taxes to pay for it,” Brownback said in response to the study. “We’re not cherry picking. This is what I told you we were going to do. This is what I ran on. It was private-sector job growth.”
However, Kansas doesn’t fare much better in 2015 with a private-sector jobs growth rate of 0.3 percent during the first six months of the year.
Missouri saw a 0.5 percent private-sector growth rate during that same six-month period, and Colorado saw nearly 1.6 percent private-sector job growth.
In fairness to Brownback, the picture improves over a 12-month period dating to June 2014. The state gained 12,300 private-sector jobs during that 12-month period and saw a growth rate of 1.1 percent – which puts Kansas ahead of bordering states, with the exception of Colorado.
Brownback wants to judge the health of the Kansas economy – and the success or failure of his signature tax cuts – solely on private-sector growth. However, several economists say that creates an incomplete picture of the job market.
Ken Kriz, director of the Kansas Public Finance Center at Wichita State University, argued that to measure “the health of the overall job market, then you should use the total jobs, because to a person looking for a job, a job is a job. … I don’t care if it’s QuikTrip or the highway department.”
“They (government workers) do get paid and they do put money in the economy, so if those jobs are declining, ultimately that’s going to have an impact in the private sector also,” Kriz said. “Similarly, if private-sector jobs are declining, the public sector employment’s going to eventually be affected, so it’s pretty spurious to think about one being superior to another.”
Melika Willoughby, the governor’s spokeswoman, said in an e-mail that private-sector job growth “gives us a better picture of true economic growth and prosperity – it shows us if Kansas is growing opportunity for everyone or merely burdening Kansas taxpayers to expand the size of government.”
The Kansas Department of Labor tracks both total nonfarm jobs and private-sector jobs each month.
Tyler Tenbrink, a senior economist with the Department of Labor, said the two numbers provide different insights.
“It depends a little bit in what you’re interested in finding out. If I’m interested in finding out how much money is floating around the economy in Kansas, how much people have to spend on goods and services, then I might look at total nonfarm. Because those government workers have jobs, too, and they bring home money and they spend that money,” Tenbrink said.
“If I’m just looking at what private companies are interested in investing in Kansas, then I might look at private-sector jobs and see, OK, these businesses that are driven by profit … it really means something when they invest and hire workers,” he continued.
Kriz noted that the lines can be murky between the two sectors. For example, a construction worker with a private company that is doing a building project for the state would be seen as a private-sector job. Workers for private firms that contract with the state to provide social services would also be counted as private-sector workers – even if their funding is primarily provided by state and federal money.
Philippe Belley, a labor economist at Kansas State University, agreed that the governor “should be talking about all sectors.”
“He has his own reasons not to do it, but, yeah, as a labor economist, I would say you should mention the public sector as well, given that it represents a sizable share of the market,” he said.
Dave Trabert, president of the Kansas Policy Institute, argued that private-sector growth is the best way to measure how the economy is doing, because “every dollar to fund a government job” first comes out of the private sector.
“Yes, government people spend money in the economy, but the money to pay those people for them to spend something in the private sector first comes out of the private sector,” said Trabert, who has been a vocal defender of Brownback’s tax cuts. “So you’re looking at a transfer of payments. It’s not new. If you hadn’t taken money out of the private sector to put it into this government … then it would have gone somewhere else in the private sector.”
Kriz said that treating government jobs as though they’re not real jobs should be odious “to any economist with any sense of intellectual honesty.”
At the end of last week’s news conference, Brownback distributed a chart showing that Kansas had 0.93 percent private-sector job growth from 1995 to 2012 and that it saw 1.44 percent private-sector job growth between 2013 and 2015. The governor argued that this was proof that the tax cuts, which went into effect in 2013, had spurred economic growth.
Kriz said in an e-mail that comparing a 17-year period to a three-year period was “incredibly problematic.”
“Comparing long-term growth rates over at least two recessionary periods with a short-term growth rate over an expansionary period is worse than comparing apples to oranges,” Kriz said. “It’s comparing apples to airplanes or something equally unrelated.”
Kriz has done his own analysis of total nonfarm jobs gained since the tax cuts. It shows that between July 2010 and December 2012, the state grew at 2.25 percent and that since the tax cuts have gone into effect in January 2013, it’s grown at a rate of 3.08 percent – a bump of 0.84 percentage points.
However, that increase came when all but 12 states also saw their growth rates increase, Kriz noted, suggesting the tax cuts might not be the determining factor. Arkansas, for example, saw its growth rate jump from 0.77 percent to 2.77 percent.
Kriz also said the Kansas growth has slowed significantly since January.
William Gale, a tax policy expert with the Brookings Institution, a centrist think tank based in Washington, argued this week in an article published on the group’s website that “there is no reason to believe that tax cuts are an elixir for economic growth.”
Gale said research showed that federal tax cuts enacted under President Reagan in 1981 “had virtually no net impact on growth” and that despite cutting taxes, Kansas has “failed to keep up with the region’s pace of job growth.”
Trabert, on the other hand, called it “way too early to declare tax reform a success or a failure.”
“It’s going to probably take at least a decade for the economists to really sort through … and say what do you think is the real net impact, where are we now versus where we wouldn’t be if we hadn’t done these things,” he said.
Trabert argued that early data suggest the state is moving in the right direction, noting that the state ranked 21st in private-sector job growth last calendar year. By comparison, he argued, it ranked 38th between 1998 and 2012.
However, Trabert said that growth is probably going to happen at a slower pace than Brownback predicted and that the goal of 100,000 new private-sector jobs in four years is unlikely.
“Do politicians exaggerate? You bet,” Trabert said. “The governor never should have said this was going to be a shot in the arm or adrenaline. … These things take time, especially when you’re as far back in the pack as Kansas was for a long time.”