Navigating the labor market is one of the broadest problems in Kansas

GUEST COLUMN, Vance Ginn, Kansas Policy Institute

Like many states, Kansas faces tough economic conditions in 2024. The latest data from the Bureau of Labor Statistics (BLS) paints a bleak picture of the state’s employment situation. While the non-farm population numbers give signs of stability, a closer look at household employment data reveals potential problems that require careful attention.

Understanding Non-Farm and Household Employment Factors

To fully understand employment trends in Kansas, it is important to distinguish between non-farm and household employment data.

Non-farm employment, reported by the Current Employment Statistics (CES) program called the establishment report, tracks wage employment in non-farm establishments, excluding agricultural workers, the self-employed and domestic workers. This measure is a primary indicator of employment in large industries. This BLS survey does not include agricultural and farm jobs because they are difficult to measure due to high uncertainty and lack of reporting.

On the other hand, household employment data collected through the Current Population Survey (CPS), called the household survey, includes jobs for the self-employed and private households but is not broken down by industry. This latest set of data captures changes in labor participation and unemployment, often providing a broader view of economic health.

Labor History Methods in Kansas

Kansas employment trends provide insight into the state’s economic conditions. Since the 1990s, Kansas has experienced periods of moderate job growth caused by major recessions, such as the recession of the 2000s and the Great Recession of 2007-2009.

For example, non-agricultural employment grew from 1.08 million in 1990 to 1.12 million in the mid-1990s, reflecting the country’s overall economic growth. However, in the early 2000s there was a decline in employment due to the bursting of the dot-com bubble, with a sharp drop during the Great Recession. The post-recession recovery was slow but steady, and domestic and non-farm employment regained some ground in 2015.

In 2019, Kansas had reached a new employment record. However, the COVID-19 pandemic disrupted these gains, causing a significant decline in employment across the country. Although there has been a recovery since then, employment trends in 2024 show differences that reflect broader national trends.

Nonfarm vs. Domestic Work: A Comparative Analysis

Since the COVID-19 shutdown, US employment trends have shown a disparity between domestic and non-farm employment. Initially, domestic work increased rapidly as people turned to self-employment and recreational activities to solve economic problems. However, non-agricultural employment took longer to recover as older businesses faced long-term disruptions and slow re-hiring processes. Last year, domestic employment declined and remained flat, while non-farm employment increased by 2.5 million nationwide.

These trends were similar to Kansas, where domestic employment rebounded faster than non-farm employment after the closures. As of July 2019, domestic employment increased by 3,100 jobs, while non-agricultural employment increased by 40,800. As with the national trend, domestic employment lost 13,146 jobs last year, while non-farm employment increased by 21,100.

Domestic employment has fallen in 12 of the past 14 months, with a drop of 14,475 jobs to the lowest level of 1.460 million since January 2022, but non-farm payrolls have increased by 10 in those 14 months, it increased by 21,400 jobs to 1.462 million.

In July 2024, Kansas lost 1,700 nonfarm jobs, a slight decrease of 0.1 percent. However, last year, the state added 21,100 non-agricultural jobs, marking a 1.5 percent increase, largely driven by gains in the leisure, hospitality and professional services sectors. On the other hand, domestic employment fell by 1,200 in July, raising concerns about the broader economy.

At the national level, the US added only 114,000 jobs in July 2024, which is well below expectations and reflects a significant slowdown in the labor market. This low performance suggests that Kansas’ challenges are part of a larger national trend.

Unemployment rates: Kansas and neighboring states

As of July 2024, Kansas’ unemployment rate is 3.2 percent, which ranks 17th nationally, and the US rate is 4.3 percent. The state’s unemployment rate reflects a stable labor market, but the loss of domestic jobs entering the unemployment rate numbers underscores the need for Kansas to remain vigilant in its economic policies to ensure continuous competition.

Differences in unemployment rates are notable when comparing Kansas to neighboring states. For example, Nebraska boasts one of the lowest unemployment rates in the country at 2.6 percent, which ranks fifth nationally, while Missouri’s unemployment rate is slightly higher at 3.8 percent, which ranks 30. Iowa ranks better than Kansas with an unemployment rate of 2.8 percent, which ranks eighth.

These comparisons highlight that while Kansas is doing well, there is room for improvement, especially in terms of creating a strong and stable labor market.

Improving Economic Strength and Competitiveness

Kansas must prioritize economic freedom and fiscal discipline to strengthen its economic competitiveness. Reducing government spending, reforming the tax system, and promoting regulatory reform are important. By adopting stricter spending limits tied to inflation and population growth, Kansas can create a more predictable fiscal environment and attract businesses. Streamlining regulations will encourage business activity and job creation, especially for small and start-up businesses.

Kansas’ current economic problems are not new. The country is facing a prolonged recession, with private sector job growth lagging behind national levels since the 1980s.

Solving these problems requires a concerted effort to reduce government spending and improve the business environment. Adopting reforms that promote economic freedom and growth-promoting policies are critical to ensuring long-term prosperity for all Canadians.