Kansas

Labor Market

Jeremy Hill December 2013

• National/Global Conditions – It’s a small world after all

• Population Growth – Is Grandma having a baby?

• Labor Market – A job is a job!

• Paradigm Shift – Has the labor market crashed into a new reality?

• Employment Outlook – The Mad Scientist might make a comeback

Overview

National /Global Conditions

It’s a small world after all

December 2013

December 2013

Top 4 Exports from Kansas

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000Ja

n-02

Sep-

02

May

-03

Jan-

04

Sep-

04

May

-05

Jan-

06

Sep-

06

May

-07

Jan-

08

Sep-

08

May

-09

Jan-

10

Sep-

10

May

-11

Jan-

12

Sep-

12

Food & Agri Chemicals Machinery Aerospace

US headlines • U.S. auto sales continues to improve • U.S. real GDP grew by 2.8% • U.S. Employment grew by 204,000 in Oct,

which was above expectation • U.S. Small Firms shaken by shutdown

Forecasts 2013 2014

GDP 1.6% 3.1% Consumer Spending 1.9% 3.3% Consumer Price Index 1.5% 1.8% Savings Rate 4.5% 4.8% Source: Moody's 12-04-13

Population Growth

Is grandma having a baby?

Population Projections

Births Migrants

Deaths Migrants

2010 – 2040 W Migration: 14.4% (406,607) W/O Migration: 13.6% (385,728)

Rural Kansas Relative Concentration Over 60-85+

Under 0-39

2010 Population

2010-2020 (migration)

2010-2020 (w/0 migration)

• Trends are not always the greatest predictors, but you can’t ignore them

• Rural areas are likely to struggle with an aging population base

• Metro areas have benefited from migration

• Kansas will continue growth slowly over the next 30 years - (~0.45% annually)

Summary

Labor Market

A job is a job!

3Q 2013 Unemployment Rate *Underemployed

United States 7.6 14.1

Kansas 5.7 11.3

Missouri 6.8 12.2

Unemployment

Source: BLS – LAUS * U-6

Underemployed includes discouraged workers and people working part-time because they are unable to find full-time work.

Aug 2013 Unemployment Rate *Underemployed

United States 7.3

Kansas 5.1

Wichita 6.8 12.4?

EMP-Population Ratio

55

57

59

61

63

65

67

69

1976

1977

1979

1981

1983

1985

1987

1988

1990

1992

1994

1996

1998

1999

2001

2003

2005

2007

2009

2010

2012

US Recession Kansas United States Other KansasSource: BLS- LAUS, Census Population Estimates

EMP-Population Ratio

56

58

60

62

64

66

68

7019

76

1981

1986

1991

1996

2001

2006

2011

United States

Sedgwick County

Source: Bureau of Labor Statistics

56.0

61.0

66.0

71.0

76.0

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

EMP-Population Ratio

Untied States

Kansas

Source: Bureau of Labor Statistics

Ford County

52.0

54.0

56.0

58.0

60.0

62.0

64.0

66.0

68.0

70.019

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

0620

0820

1020

12

EMP-Population Ratio

Untied States

Kansas

Source: Bureau of Labor Statistics

Crawford County

• Labor market remains weak in Wichita • Although the unemployment rate has improved,

labor force has declined • Underemployed in Kansas could be as high as

11.3% • Excess labor stock will keep wages down in some

occupations (e.g. production workers) • Tight labor markets remain in western Kansas and

in selected sectors (e.g. professional services)

Summary

Paradigm Shift

Has the labor market crashed into a new reality?

• Evolutionary – Business Professional Services

» Basic business skills – Energy Sector – Health care?

» Urban/Rural – Home nurse aids

• Revolutionary – Agriculture and value added Manufacturing

» Sustainable Productivity? (machine -> genetic) Science – Manufacturing

» Global rebalancing (value of $, trade deficit, mature infrastructure) » Regional flow of capital

Evolutionary / Revolutionary

• Excess labor supply = ? • Productivity with technology = profits

– Productivity with specialization = profits • Contingent Workforce

– Temporary Agencies – Contract workers – Driving forces (Cost management and value added strategy)

• Corporate ladder to lattice work • Survey

– Competing for talent – Developing leaders – succession planning

Employer and Employee Relationship

Sources: Deloitte, Boiling Point?; Pew Research Center, Millennials-A Portrait of Generation Next

Jobs Demand Gap

• Manufacturing – 67% reported moderate to severe shortages

• Machinists, operators, craft workers, distributors, technicians • Aging workforce

– Deficiencies • Problem solving, vocational training, basic skills (attendance/work ethic)

• Non-Manufacturing – Information Technology 44% – Engineering 36% – Research & Development 29% – Sales 29% – Marketing 23%

Sources: Deloitte, Boiling Point?; Pew Research Center, Millennials-A Portrait of Generation Next

Skills

Sources: Accenture 2013 – Skills and Employment Trend Survey

• Gen Y – – Education - marginally attached

• Careers NOT based on demand & NOT academically/professionally challenging programs

– Work ethic – self-expression, helping others, family

• Job versus career • Social media – communication with generation Y

• Standoff?

Generational redefinition of the meaning of a career

Sources: Deloitte, Boiling Point?; Pew Research Center, Millennials-A Portrait of Generation Next

• There will be a shift in industries moving forward, which will affect labor demand causing some structural employment problems.

• The employer and employee relationship will change, but employees may not be ready.

• Generation Y will eventually understand the reality of a career, and employers will compromise .

Summary

Employment Outlook

The Mad Scientist might make a comeback.

Career aspirations – may include exacting revenge on a perceived antagonist and re-animating corpses

EMPLOYMENT

-7%

-5%

-3%

-1%

1%

3%

2006 2007 2008 2009 2010 2011 2012 2013 2014

US

Kansas

Wichita

Source: CEDBR

Production Sectors

• Natural Resources - Oil is rematerializing and creating wealth, but is far from previous peak

• Construction - Market place is improving in selective segments and selective areas. Overall, it is matching weak general growth

• Machinery – has been up because of agriculture and aerospace suppliers, continued growth is not likely

• Plastics/rubber- steady increase since 2009, auto and general consumption is improving slowly

• Food Manufacturing – declining since 2012 because of cost of production

Nat. Res. & Const.

Durable Goods

Non-Durable Goods

Goods Production

Source: CEDBR

Trade, Trans. &Util. Sectors

Wholesale Trade

Retail Trade

Transportation & Utilities

• Consumption • Unemployment and income are limiting growth

• Retail • Large scale growth is not likely – pushed to discount stores and

high end retail. • Transportation

• Pipeline improvements are opening up processing and byproduct opportunities

Trade, Transportation and Utilities

Source: CEDBR

Services - 2013 Outlook

• Financial Services – has adapted to a constantly evolving regulatory environment, but pressure remains for small and regional banks

• Professional Services – there is currently unmet demand for labor

• Education– Higher Education funding is counter to needs and national trends

• Leisure and Hospitality – slowing, but continued growth

Services Fin. Act. Pro. & Bus.

Edu. & Health Leisure & Hosp.

Other

Services

Information

Source: CEDBR

Summary

• Labor market is determined and resourceful, and will continue to reengage over the next year

• Consumers will continue to bargain shop, while maintaining a balanced budget

• Businesses will invest strategically, carefully matching the fledgling increased demand

• Business are focused on “tomorrow” instead of the “past” or the “potential”

• Moderate growth will not occur because of slowing agriculture, machinery equipment, food production, and a weak aerospace market

• Employment is expected to increase by 1.4% (19,141) in 2014. This remains subpar from potential growth.

CEDBR DATA WSU's Center for Economic Development and Business Research is a responsive, reliable source of local, state and national demographic and economic data.

KANSAS INFORMATION DATABASE The Kansas Information Database (KID) is a set of data containing economically pertinent news articles and information on the state of Kansas and the Midwest region.

MARKET RESEARCH CEDBR provides customized market research to government, businesses and nonprofit agencies. Research.CEDBR.org

FORECASTS CEDBR provides employment and retail sales forecasts, as well as population projections. Presentations.CEDBR.org

CEDBR E-CONNECTION CEDBR publishes e-connection, a monthly e-mail newsletter, providing ongoing reports on business and the economy, as well as timely delivery of special reports. Newsletter.CEDBR.org

Kansas

Labor Market

Jeremy Hill December 2013

Wichita 2012 (a) 2013 (e) 2014 (f)

2013-2014 Level Change

2013-2014 Percent Change

Total Nonfarm 285,594 287,352 290,771 3,419 1.2% Production Sectors 67,355 67,612 68,466 854 1.3% Natural Resources, Mining & Cons. 14,534 13,793 14,220 427 3.1% Manufacturing 52,821 53,819 54,246 428 0.8% Durable Goods 45,347 46,224 46,596 372 0.8% Non-Durable Goods 7,475 7,595 7,650 55 0.7% Trade, Transportation & Utilities 49,747 49,778 50,114 336 0.7% Wholesale Trade 9,516 9,515 9,548 33 0.3% Retail Trade 31,306 31,310 31,510 200 0.6% Transportation & Utilities 8,926 8,953 9,056 103 1.1% Service Sectors 127,866 129,964 132,021 2,056 1.6% Information 4,525 4,498 4,550 52 1.1% Financial Activities 10,560 10,806 11,050 244 2.3% Professional & Business Services 30,083 31,397 32,229 832 2.6% Education & Health Services 43,470 43,401 44,154 753 1.7% Leisure & Hospitality 28,561 29,118 29,227 109 0.4% Other Services 10,666 10,744 10,810 66 0.6% Government 40,626 39,998 40,170 172 0.4% Indicators Nominal Taxable Retail Sales (mil) 8,832 8,866 9,228 362 4.1% *Annual values are derived from average quarterly observations and projections. (a) actual (e) estimated (f) forecasted