It has been a pretty good year in Wichita so far.
Employment is up. So is spending.
It has taken a really long time, but Wichita finally seems be feeling some of the love from the ongoing economic recovery.
It’s not all good, of course. The city still remains below its 2008 employment peak and, on a whole range of measures, is growing slower than it used to. So, it hasn’t solved its long-term problems.
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The economy still feels fragile, in part because many of the new jobs are low paying. And, if the country were to go into recession this year or next, as some analysts believe, it would pull the local economy down with it.
But, for now, in the short- and medium-term, things are looking up. And the city seems to be tackling its longer-term problems with energy through a wide variety of initiatives – such as building entrepreneurship and Wichita State University’s efforts promoting economic development.
The result is that people and businesses are feeling more confident, even expansive.
Margaret McHenry Maids, a residential maid service based in Wichita, broke sales records this month, said owner Kandi Turner. After starting her business in Wichita 20 years ago at age 19, she has grown enough here to encourage her to expand in the Kansas City area.
We like what we’re seeing.
Consultant James Chung
Her business is growing in double digits this year, she said, partly at the expense of competitors, but also because of the local economy.
Her customers tend to be higher-income households that are very busy, often with dual incomes. In good times, those people are willing to pay somebody to clean in order to rest on their time off.
“I think the economy is showing strength and that always helps,” Turner said. “And it helps a business like ours because (our customers) are, maybe, working harder and valuing their non-paid time more.”
On the upswing
Sedgwick County saw spending growth of nearly 2 percent so far in 2016 compared to a year ago, based on sales tax receipts.
Between June 2015 and last month, the Wichita area gained about 5,000 jobs, according to the Kansas Department of Labor. That’s 1.6 percent growth in jobs from the year before, which is slightly below U.S. job growth but still decent.
The unemployment rate is 4.9 percent.
As part of that, the Greater Wichita Partnership – the county’s main economic development agency – is reporting its best results in years. The partnership absorbed the old Greater Wichita Economic Development Coalition, which has gone away as a separate entity and name.
One of the partnership’s missions is to coordinate economic development incentives for plant expansions and job retentions. So far in 2016, it has worked with companies that have kept or added 2,470 jobs in Sedgwick County, a near doubling over the same period of 2015.
20,000 jobs added since employment hit bottom in 2011
And the good news isn’t over, said Jeff Fluhr, president of the partnership. He expects several more announcements on new projects in the coming months.
On Wednesday, Norc at the University of Chicago announced it is locating a 300-person call center at New Leaf Plaza.
The caution is that in the past, Wichita has lagged the U.S. economy by 12 to 18 months. That’s because the economy of the city since WWII has largely rested on the aircraft industry’s business cycle. When the aircraft industry added workers, city employment grew. The old formula was that each new aircraft worker equaled about two other jobs because the spillover was so great.
So, if the U.S. were to go into recession, which is always hard to know when it happens, the city economy may not be far behind.
Tillie’s Flower Shop will celebrate its 140th year in business next month, but this year really hasn’t been that great. Owner Ken Denton said he thinks the people are holding back because of what’s happening nationally and internationally.
“I’ll be glad when the election is over,” he said. “It’s the not knowing which party will try to improve the economy.”
The hidden change
But, wait, there’s more … the local economy also appears to be diversifying, becoming more like a normal city with no one dominant industry.
In the medium term, this may benefit the city by tamping down the punishing ups and downs of the aircraft business cycle by spreading the local economy over more industries and companies.
While the city has added 20,000 jobs since employment hit bottom in 2011, aircraft jobs continued to drift down, turning up only in the past year. That’s likely because of a continued slow rebound in general aviation sales and more automation, outsourcing and consolidation within the industry.
The sectors seeing the biggest growth contain jobs such as hotel workers, waitresses, landscapers, security guards and janitors. But it also means more higher-paying jobs such as technical writers and registered nurses.
I think the economy is showing strength and that always helps.
Kandi Turner, owner of Margaret McHenry Maids
“Diversification is extremely important,” Fluhr said. “We always want to take care of the aircraft industry and do what you can to help them realize their growth and expansion, but we also continue to look for opportunities in other areas.”
He cited the Healthcare Innovation Forum, which brought together industry leaders from around the region to suggest ways for health care to become a stronger economic development driver for the local economy.
Embracing the challenge
But fewer higher-paying aircraft jobs and more low-paying service jobs isn’t a good long-term strategy, and that is where, as consultant James Chung puts it, “the heavy lifting” comes in.
Chung, who was hired by the Wichita Community Foundation a year ago to come up with suggestions to improve Wichita’s long-term prospects, puts Wichita into a group of 33 similar-sized, slow-growing cities across the U.S.
But Wichita is showing a lot of promise for long-term success, Chung said.
“We like what we’re seeing,” he said. “We’ve got very current data, and we like what’s been happening. I’d characterize it as a higher level of business confidence in Wichita.”
But he cautioned that there are several deep and interconnected challenges for Wichita: The city has a low rate of business formation caused by lower rates of investment, a substantial number of young and early middle-aged adults are leaving or want to leave, and it has a big image problem both among residents and those outside Wichita.
He said city leaders need to work on:
▪ Higher venture formation.
▪ Building the depth and quality of workforce talent.
▪ Improve the quality of life in Wichita to help retain talent.
But, Chung said, the Wichita Partnership and other local leaders and organizations have embraced the challenges and are mounting serious efforts to improve them.
For entrepreneurship, these include a new e2e venture fund, the just-launched e2e Accelerator, the weekly 1 Million Cups event and the efforts of WSU to build links between companies, faculty and students.
On the effort to recruit more talent to Wichita, the partnership plans to hire a talent recruitment specialist by late August. The talent specialist’s job will be to encourage the development of corporate internships, assist companies in college recruiting and do targeted recruiting of a particular specialty.
There has been a tremendous upswing of effort in the last year or two, Chung said, and it must continue through any local economic downturn.
“Each of the three require heavy lifting,” he said. “We are the in the early days, but there are positive signs that that’s getting done.”
How good 2016 is looking
Results from the Greater Wichita Partnership efforts to recruit and retain
2016 (to date)
Source: Greater Wichita Partnership