Kansas, Wichita do better than most in coronavirus economy, but it likely won’t last
In these days of coronavirus closures, about 103,000 of us are in essential industries in Sedgwick County and 117,000 are classified as non-essential.
And while Kansas is suffering less than most from the COVID-19 economic crisis in the short term, the state and Wichita in particular will likely have a harder time bouncing back than other areas that are bearing a bigger brunt now.
Those are among the key findings of economic research released in the past week by Wichita State University.
The university’s Center for Economic Development and Business Research has been crunching numbers since the coronavirus crisis began.
The university’s first take was to analyze how stay-at-home orders — first imposed by county government and later superseded by Gov. Laura Kelly — affect employment in Sedgwick County.
Those orders have shuttered many local businesses and idled thousands of people who have either been laid off or furloughed until conditions improve.
“I was a little surprised that the order wasn’t more restrictive in terms of the total number of people being forced to stay home,” said Jeremy Hill, director of WSU’s research center. “With that said, although we have estimated that there are 103,648 people in the essential group, there are likely even fewer people working in those establishments due to layoffs and other coronavirus related restrictions.”
The converse is also happening. Many people employed in non-essential industries — a total of 117,844 — are still working because they have jobs that can be done from home.
For example, an architect would be classified non-essential and thus required to stay at home. However, he or she could fairly easily transition to working from home. Hill said his center is currently working with architects on the design for its planned new building and “they haven’t missed a beat.”
Meanwhile, restaurants are part of the food supply chain and are considered essential businesses. But hoards of food servers are out on furlough or layoff right now because dining rooms have been shut down to avoid spreading the virus. Restaurants are either closed or have switched to takeout-only service for the duration of the emergency.
Other states worse
Painful as the situation may be for Kansas service-industry workers, it’s more painful right now for the same industries in most other states, the WSU research shows.
The reason is simple: Kansas doesn’t have a large travel and tourism industry and hence has fewer service industry personnel.
WSU ran the numbers for the 10 most immediately impacted service industries and Kansas was below the national average in all of them.
The WSU center has published several charts and visualizations showing concentration levels for coronavirus-impacted industries — a measure of how heavily the economies of Kansas and other states rely on those types of businesses.
WSU used a scoring system assigning the national average a value of one.
Numbers below one indicate a concentration level below the national average; numbers larger than one indicate a higher concentration than average.
Kansas concentrations for each of the 10 most beleaguered service industries, compared to the most-heavily impacted states, were as follows:
▪ Hotel/motel accommodations, Kansas .6; Nevada 10
▪ Air transportation, Kansas .1; Alaska, 5.8
▪ Amusement, gambling and recreation, Kansas .9; Montana, 1.9
▪ Food services and drinking places Kansas .9; Hawaii, 1.3
▪ Museums, historical sites and zoos, Kansas .9; Hawaii, 4.1
▪ Performing arts, Kansas .5; New York, 1.9
▪ Personal care services, barbers, stylists, etc., Kansas .9; New Jersey, 1.9
▪ Sightseeing transportation and tours, Kansas 0; Hawaii, 30.7
▪ Temporary help services, Kansas .9, South Carolina, 1.7
▪ Travel arrangement services, Kansas .5; Hawaii, 4.8
The numbers look slightly worse in the four-county Wichita metro area because the city is a hub supplying coronavirus-impacted services for a large part of the state, Hill said.
For example, while the state as a whole scored well below the national average for air transport services at .1, metropolitan Wichita, home of Eisenhower National Airport, had a score of 1.9, exceeding the national average.
Metropolitan Wichita also exceeded the national average for museums, historical sites and zoos with a score of 1.25.
Manufacturing woes
Wichita State is now turning its research muscle toward analyzing the crucial manufacturing sector of the economy.
Preliminary projections are that over time, the numbers will be worse for manufacturing than for service industries.
And that could hamper recovery, in Kansas in general and the Wichita area in particular, Hill said.
Wichita was already reeling from layoffs in the locally critical aircraft industry, especially at the city’s largest employer, Spirit AeroSystems.
The company makes the fuselages for the Boeing 737 Max jetliner, which has now been grounded worldwide for more than a year after two deadly crashes overseas claimed 346 lives.
The 737 Max problem caused Spirit to announce 2,800 layoffs before the coronavirus pandemic was even on the radar.
Coronavirus has led to furloughs for thousands more as the company has suspended nearly all its Boeing contract work.
Textron Aviation, maker of Cessna, Beechcraft and Hawker aircraft and Wichita’s No. 2 planemaker, has also furloughed about 7,000 workers because of the coronavirus threat.
COVID-19 has drastically lowered demand for aircraft and other manufactured goods, while at the same time disruption to the global supply chain has increased the cost of materials and parts that factories need to maintain production, Hill said.
“For a durable-manufacturing town and a durable-manufacturing state . . . that means it’s going to be really harder for us to bounce back than other states,” Hill said. “Kansas City will do it a little faster because they have more on that service side, but the rest of the state (and) particularly Wichita, it’s going to be harder for us to bounce back from something like this if the coronavirus is not fixed within a month.”
In the one-month scenario, “We’ll have deep layoffs and then we’ll hire them back going forward,” Hill said.
“If this is three months, which some people keep talking about . . . then that means that’s going to have more lasting effects on the supply chain and our ability to get back up,” he said. “You see the visual effects of all the service sectors on this one, (but) it’s going to start hurting all of the manufacturing even more the longer it goes.”
The one potential positive for the Wichita economy is that the coronavirus-caused pause in manufacturing is giving Boeing more breathing space to fix the problems with the 737 Max, Hill said.
“I was super scared just a couple months ago that we were going to lose all of the talented labor that we needed” for commercial aircraft to come back, he said.
Hill said he’s now more confident those workers will stay put in Wichita and return to local factories when conditions improve.
“This (coronavirus impact) flattens everyone across the globe,” he said. “Labor’s not going to get up and move. Everyone’s doing hiring freezes and that gives us time for Boeing to fix the product and get it back online so we can retain some of the same labor.”
This story was originally published April 5, 2020 at 5:51 AM.
