Business

Wichita State forecasts uptick in local job creation

The Wichita Eagle

Thursday morning, Jeremy Hill will serve up a small dish of hope to hundreds of breakfasting community leaders at the Wichita Area Economic Outlook Conference.

Hill, director of Wichita State University’s Center for Economic Development and Business Research, forecasts that the Wichita area will gain nearly 4,500 new jobs next year, a 1.5 percent increase.

That would would mark a significant acceleration of the plodding local recovery, although employment would remain far below the 2008 peak.

In Kansas as a whole, he predicts, non-farm job growth will look slightly more robust: growing by 23,200 or 1.7 percent next year. Increases in oil and gas production and construction jobs, health care, and business services will continue to drive the state economy.

The center has seen strong job growth in its crystal ball before only to have those forecasts smashed by the continued struggles of Wichita’s general aviation manufacturers. Since Hill took his post in 2009, the center has consistently predicted that the local economy would create thousands of more jobs than were actually realized.

Last year, Hill called for an increase of 3,400 jobs. But, through August, the Wichita area had an average monthly gain of just 100 non-farm jobs over last year, according to the Kansas Department of Labor. The aircraft industry alone has lost more than 2,500 jobs locally this year.

But next year, Hill said, the story looks to be different. He sees growth across all major sectors, with one of the biggest positives coming from business and professional services, especially corporate managers and executives. Other strong sectors include health care, construction and oil and gas production.

The growth in demand for corporate managers is being driven, in part, by hiring at Koch Industries, as well as other expanding companies such as Freddy’s Frozen Custard & Steakburgers, he said.

The demand for managers is strong enough that some local firms are facing the unfamiliar problem of having to raise wages to keep managers, he said.

A symbol of that growth in that sector here and statewide is rising on 37th Street North as Koch constructs a three-story, 210,000-square-foot building to house 745 of its headquarters employees.

The $115 billion global conglomerate has seen growth in many of its businesses in recent years and continues to acquire new units. The company has added about 400 jobs in Wichita since July 2013 for a total Wichita employment of about 3,300 workers. The company has 400 job openings in Wichita.

Who’s up, who’s down

In addition to the increased demand for corporate managers, construction is also seeing robust growth.

Hutton Construction is the general contractor for the Koch building, as well as many more, said the company’s president Ben Hutton.

Over the past year and a half, he said, the company has doubled employment from 110 to 250 across the region. His business is a bellwether for other sectors seeing growth, such as manufacturing and refineries, Hutton said. And it’s not just his construction company.

“When I talk to others in the industry, I hear optimism,” he said. “They’re growing and hiring as well. I was just at a job fair, and we’re all really trying to find more skilled workers. New graduates in the field from K-State and other colleges are getting multiple job offers.”

Another sector that Hill pointed to is residential care facilities, a sector that, even more than health care as a whole, is being driven by the aging of the population.

Doug Stark owns Comfort Care Homes, neighborhood-based group homes for those with dementia and Alzheimer’s Disease. His niche is exploding because of the demographics. One in 10 people older than 65 has some form of dementia, he said, while nearly one in two over the age of 85 do.

Employment at his company rose from 51 a year and a half ago to 84 today, he said.

“Our country has no idea what’s coming down the pike when it comes to dementia,” he said. “Anybody who is in my business will see increased demand, increased demand, increased demand. Will I add another 30 or 40 people next year? Probably not, but somebody else will. Demand for senior care will do nothing except explode over the next 10 years.”

Hill also expects decent job growth among machine shops that have found work outside of aircraft, and the hotel and restaurant sector.

Why so slow?

Wichita peaked at more than 311,000 jobs in June 2008. In August 2014, its job total stood just below 289,000 jobs.

The most direct reason for the weak job growth in Wichita has been clear for five years, Hill said: the continued depression in the manufacture of small and medium-sized corporate jets.

The good news, he said, is that while that the job collapse in 2008 and 2009 brought down all of the economy’s sectors that support aircraft manufacturing – the construction workers who renovated plant facilities, the cooks who produced lunches for aircraft workers, the real estate agents who sold houses to new executives – something subtle seems to be happening. Wichita has diversified just a little.

Wichita has had enough job growth in the past two years to compensate for the shrinkage in the aircraft industry. The growth in the number of corporate managers and executives has been terrific for the local economy because those managers make good money. Wichita is actually seeing decent wage growth even though it isn’t seeing a lot of overall job growth.

That’s the good news. The bad news is that Hill doesn’t see a lot of further room in the long term for growth among managers and corporate managers. The Wichita market just isn’t that big.

What Wichita has is plenty of unemployed and underemployed production workers. And many of the local manufacturers believe they don’t have to hire a lot of them even as business starts to grow again. They are investing in technology and processes to boost productivity.

“For our economy to have any significant amount of growth, we have to re-engage the production worker,” Hill said. “We can’t expect growth in professional services to continue, there isn’t enough labor supply.”

Hill doesn’t see production workers being shut out forever. Wichita will continue to recover as the nation recovers, he said.

Next year will be better, just not what everybody keeps hoping for.

“It’s difficult in the context that the U.S. is doing better,” he said, “and consistent low growth is problematic thing.”

Reach Dan Voorhis at 316-268-6577 or dvoorhis@wichitaeagle.com. Follow him on Twitter: @danvoorhis.

WSU Wichita area jobs forecast for 2015

Industry

2014 jobs (est.)

Change in 2015

Percent change in 2015

Total nonfarm jobs

289,775

4,472

1.5

Construction, oil and gas production

15,717

564

3.6

Manufacturing

50,557

378

0.7

Wholesale trade

9,426

42

0.4

Retail trade

32,443

303

0.9

Transportation

9,267

129

1.4

Information

4,355

126

2.9

Financial Activities

10,640

12

0.1

Professional and business services

32,388

976

3.0

Heath care and private education

44,701

1,007

2.3

Hotels, restaurants and entertainment

29,693

408

1.4

Other services

10,708

186

1.7

Government

39,880

344

0.9

Source: Center for Economic Development and Business Research, Wichita State University

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