Business

Analyst presents sobering view of Wichita economy, community

Data analyst James Chung presents an analysis of the regional economy to local business and community leaders at the Kansas Leadership Center on Tuesday. (Sept. 22, 2015)
Data analyst James Chung presents an analysis of the regional economy to local business and community leaders at the Kansas Leadership Center on Tuesday. (Sept. 22, 2015) The Wichita Eagle

Wichita has suffered a three-decades-long economic decline.

Income levels are dropping.

The percentage of residents with college degrees is dropping.

We’ve lost our entrepreneurial mojo, James Chung, a home-grown and Harvard-trained analyst, said Tuesday

Chung and the Wichita Community Foundation are hoping to start a grass-roots movement to address Wichita’s current problems and possible future. The foundation hired Chung, a Harvard graduate with a master’s of business administration degree, to start what he calls a data-driven community conversation.

Over the next two years, he said, he and the foundation will roll out the data he’s collected and point toward solutions he’s found to give us hope.

After seven months of analysis, Chung identified four key challenges where the community can make changes and influence its future.

The business challenge

In 1980, the median household income in Wichita was 8.4 percent higher than the national average. Today, it’s 4.3 percent lower than the national average, a 12-point drop.

Between 2011 and 2013, he said, 5,400 households moved out of Wichita. They earned an average of $70,800 in household income.

During those same two years, 3,900 households moved into Wichita; they earn an average of $58,300.

“If nothing changes about this trend, we will probably see a continued decline,” Chung said. We’ll see an aging workforce, with more service jobs of the sort that don’t require a high school education.

Business and community leaders have often comforted themselves during lean times by saying that Wichita’s economic busts are followed by booms.

That’s not true anymore, he said.

The Wichita area is slower to recover from recessions than most areas. Each recession pulls Wichita further behind the U.S. norm, he said.

In gross regional product growth, an economic measure, Wichita now ranks in the bottom 25 percent of U.S. metro areas since the recession.

Keeping talented people

After the most recent recession began in 2008, Chung said, “10,000 people checked out of the workforce” by either leaving the area or leaving the job market. Many were high-income earners who boosted the economy with their spending.

Kansas in recent years has become the second most productive state (behind Massachusetts) in producing graduate-level students trained in STEM fields (Science, Technology, Engineering and Mathematics). But most of the STEM graduates leave the state, Chung told a group of business leaders on Tuesday.

“Our second-biggest export behind aircraft parts is talent,” he said.

Wichita is growing, but the growth is because more people are being born here than are dying. More people are moving out of the area than are moving in.

Between 2010 and 2014, he said, Wichita lost 11,148 people in net domestic migration – or the measure of newcomers vs. those leaving. Comparable-sized manufacturing cities gained: Omaha gained 2,869 people, Des Moines gained 16,559, Oklahoma City gained 37,528. Austin gained 126,296.

In every economic category, Wichita used to outshine comparable-sized manufacturing cities like Cedar Rapids and Des Moines in Iowa and Oklahoma City. Now they are growing fast.

Those cities found ways to grow and energize their schools, their economies and their people, Chung said. “They are also geographically challenged, but that hasn’t stopped them from improving their performance,” he said.

After Cedar Rapids lost several companies, the community invested heavily in its Kirkwood Community College, and an unusual thing happened: Local residents became so enamored of education and training that 40,000 of Cedar Rapids’ 160,000 residents now regularly take college courses. The result is a highly trained and highly productive workforce that attracted companies to stay and grow in Cedar Rapids, Chung said.

Des Moines, meanwhile, created a business dynamic and a buzz about women and family. Seventy percent of the managerial workforce in Des Moines is female, Chung said.

“They grew up in Iowa, moved away, worked in big cities – and then brought their families with them when they moved back,” Chung said. Many Des Moines companies emphasize quality-of-life issues. That helped make Des Moines a magnet for business growth, he said.

“They tell you that when you live in Des Moines, you will live in a place where employers respect your life,” he said.

Decline in entrepreneurs

A big impact from losing higher-educated, higher-earning people, Chung said, “is that it strikes at the heart of what made Wichita. With fewer of the people who would be entrepreneurs, entrepreneurship no longer drives Wichita.”

“Wichita was a remarkable place,” said Chung, who grew up here in the 1970s and 1980s. “Wichita then was a prospering city, a city delivering well over its weight class.”

He cut grass for members of the Carney family and saw the Pizza Hut franchise they created change the business world. Wichita was a haven for entrepreneurship then.

If it was inevitable that Pizza Hut would leave the city it was founded in, for example, “why could we not have become an epicenter of franchising?”

That was an innovative business model the Carneys and their partners pioneered here. When Pizza Hut left Wichita, so did some of the talent and brains that we could have used here.

As part of his analysis, Chung ranked 366 metropolitan communities for entrepreneurial “start-up density” per 100,000 residents. Wichita ranked 227th, Oklahoma City 59th, Kansas City 81st, Des Moines 116th and Omaha 129th.

Wichita did not even rank in the top 160 U.S. cities for capturing venture capital – money available to start companies that often can’t get loans from banks. But Kansas City drew $91.4 million in venture capital investment in 2014; Omaha, $34.1 million; and Des Moines, $14.7 million.

Perceptions

Des Moines was recently ranked as one of the wealthiest cities in America and one of the top 10 cities in America to land a job. Wichita was ranked as one of the hardest-working cities because residents are willing to work long hours and are likely to hold more than one job.

Beyond those rankings, Chung sees other serious problems here. Even one of Wichita’s seemingly obvious qualities – the friendliness of its people – may no longer be what it once was.

When his father came here as a Wichita State University professor, Chung said, his family was warmly welcomed, though they were a racial minority and outsiders. That has changed.

The U.S. Census Bureau civic engagement analysis now ranks Wichita 11th lowest in the nation for “talking with neighbors frequently,” ninth lowest for “doing favors for neighbors” and lowest of all metros in the nation in “see or hear from friends and family frequently.”

A Knight Foundation/Gallup study, “Soul of the Community 2010,” concluded that “the community continues to see young talent as the least welcome group. ... Currently, the young talent group is on a par with gays and lesbians as being perceived as the least welcome group.”

Something’s happened to us and it’s not good, he said.

Solutions

Chung said it’s time we had a serious talk about fixes. Wichita’s economic health will decay further unless addressed, he said.

“Just waiting for a revival is not going to happen,” he said.

One common denominator in cities that grew, Chung said: “They put their differences aside. Leaders came together and decided, you know, we are stuck with each other, so let’s (make) this a better city, with a lot of cooperation from the public, private and nonprofit sectors.”

Foundation director Shelly Prichard would not say how much Chung was paid for his latest analysis. She described it as “phase one” of an ongoing diagnosis of the Wichita economy.

“What he’s saying sounds sobering, but he’s also offering the opportunity for hope and for people at all levels to get involved,” Prichard said.

Reach Roy Wenzl at 316-268-6219 or rwenzl@wichitaeagle.com. Follow him on Twitter: @roywenzl.

If you go

What: James Chung’s Focus Forward presentation

When: 5 p.m. Wednesday in the theater at Exploration Place, 300 N. McLean Blvd.

How much: free and open to the public

For more information: The community foundation is encouraging people to start a conversation about solutions on Twitter at #focusforwardICT.

Related stories from Wichita Eagle

  Comments