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More clouds appear in Kansas’ silver-lined jobless numbers

By   /   May 20, 2012  /   News  /   No Comments

By Gene Meyer | Kansas Reporter

Fewer people last month were actively looking for work in Kansas and thus weren’t counted as unemployed.

FAIRWAY — Kansas’ unemployment rate dropped a notch in April, but trend watchers aren’t cheering. The seemingly good news may actually indicate trouble for the state’s economy.

A jump in seasonal hiring for construction, retail and leisure industries — golf courses and water parks, for example — helped trim Kansas’ unemployment rate to 6.1 percent in April, the Kansas Department of Labor reported Friday. That’s down from 6.2 percent in March, and 6.7 percent in April 2011.

The rate fell for another reason, too.

Fewer people last month were actively looking for work in Kansas and thus weren’t counted as unemployed, said Tyler Tenbrink, a labor economist with the state labor department.

Nearly 3,000 workers among 1.5 million in the state’s civilian labor force dropped out of job market in April, and between 2,200 and 3,600 a month have similarly vanished since January.

“The statistics don’t tell us why,” Tenbrink, said. “We don’t know how many retired, moved out of state or just stopped looking for work.”

The most recent estimates of how many workers are in this group or are working part time because they can’t find full-time jobs don’t yet include April’s numbers. Based on the first quarter 2012 figures available, however, probably more than 174,000 Kansans, or 11 percent of the workforce, would take a full-time job, Tenbrink estimated.

The shrinking workforce is a disturbing omen for the state’s economy, said Ernie Goss, a Creighton University economist in Omaha who also watches Kansas economic trends.

Having fewer workers instead of more jobs “makes unemployment rates better for the wrong reason,” he said.

Unlike labor department statisticians who use month-end results to track Kansas’ performance, Goss seeks signs of how things might change in the future.

Each month, he and fellow economists at the Creighton Economic Forecasting Group, an analytical arm of Creighton’s business college, conduct two surveys — of business purchasing managers in cities and community bankers in small-town and rural areas — throughout the Midwest, asking for their view of economic conditions in their communities in the next three to six months.

The results are then converted into a 100-point index on which readings above 50 indicate expected growth or expansion, and readings below 50 indicate contraction or recession.

The latest numbers for Kansas and its labor market, released Thursday, are mixed, Goss said. The state’s overall index is a healthy 62.1, up from 49.1 in April. High land values in rural Kansas, farm income prospects and a drop in energy prices were big contributors to the change, he said.

But the state’s jobs indexes, which are a positive 60.5 in rural areas and 57.8 in population centers, both appear vulnerable, Goss said. Farm incomes rely heavily on crop production, and farmers and business owners in parts of Kansas still worry about the lingering dry weather. Future population center job prospects remain uncertain in the state’s aircraft manufacturing and food processing industries, Goss said.

“I think we’re going to be hitting a soft patch in the next six months,” Goss said.

Kansas’ mostly rural areas — outside Kansas City, Wichita, Topeka, Manhattan and Lawrence — generally have been better in soft patches than the population centers, said Jeremy Hill, director of Wichita State University’s Center for Economic Development and Business Research. Hill has been pulling new information together for the department’s next round of state and regional forecasts.

Farm incomes and land values haven’t fallen to the same job-wounding forces felt by the population centers, Hill said.

“And you’ve got a surprising amount of manufacturing out there, too, making machinery and farm equipment,” he said.

And job prospects are looking up even in Kansas’ hardest-hit population center, Topeka, where state and local government job cuts have been especially painful, Hill said. More than 2,000 Kansas state employees lost jobs in a 2011 downsizing in which Kansas Gov. Sam Brownback abolished three state agencies. Topeka’s city government and its schools also have either laid employees off or left jobs vacant to save money. 

Mars Inc.  however, is opening a major chocolate factory next year in Topeka, which is projected to add 200 jobs to that local economy.