GUEST COLUMN, Ganon Evans, Kansas Policy Institute
Kansas is still 6,500 jobs below January 2020 levels despite private job growth in October 2022. While 27 other states across the country have fully recovered to their pre-pandemic job levels. Combined with a record-low labor force participation rate, Kansas still has a lot of room to improve its economy.
In October, Kansas gained 8,000 private-sector jobs based on revised estimates for that month’s job numbers. The Bureau of Labor Statistics routinely updates its data with subsequent releases. That’s a rate of 0.7% growth in the state, unseen since February of this year. If Kansas continues to grow at the same rate that it has since January 2021, the state will fully recover from its pandemic job losses by the end of this year.
Private job growth occurred across almost all industries this month. The biggest gains were in Professional and Business Services and the Leisure and Hospitality industries, which gained 2,000 jobs each. Manufacturing gained 1,600 jobs, and Education and Health Services gained 1,200 jobs. Gains of less than 1,000 jobs occurred in other sectors like Financial Activities. Meanwhile, comparatively small losses occurred in Construction, Information, and Mining and Logging industries, which all lost less than or equal to 300 jobs each. Kansas gained 500 government jobs last month, mainly at the local level.
The unemployment rate in Kansas went up to 2.8% – the highest it has been since December 2021. The labor force participation rate also declined to 66.0%, which is the lowest its ever been in the past decade. Last month, 2,249 employed people left employment, 1,861 were newly categorized as unemployed, and 388 people left the labor force entirely. The job gains themselves are good news but the fact that fewer people are participating in the labor market is not a good sign.
By comparison, the state that has recovered the most jobs as a percentage of its January 2020 levels is Utah, whose private-sector jobs numbers are 8.1% higher than its pre-pandemic levels this month. With a flat 4.95% Individual Income Tax Rate and an average combined state and local sales tax rate of 7.19%, the economy is a low burden on families and businesses while being fiscally responsible – especially during the COVID-19 pandemic. Utah was the first state to establish regulatory sandboxes: a unique opportunity for businesses to operate in conjunction with the government under low regulations. Thus far, businesses are innovating new ways to provide services like legal help at a lower cost.
Some lawmakers think costly megaprojects are the “spark” Kansas needs, but these projects have long shown to have a negligible effect on job growth at the cost of hundreds of millions of taxpayer dollars. What’s more, even if they are helpful in a certain area, the other areas of the state are left wanting and picking up the tax revenue slack. 2023 is an opportunity for tangible reform to promote broad-based growth – be it in regulations, tax reform, or elsewhere.