It isn’t the worst in the country, but second worst isn’t a good place to be, either.
New government estimates show that from August 2010 to August 2011 only the Atlanta area lost more jobs than the Kansas City area.The KC area shed about 12,600 jobs, or 1.3 percent of its payroll employment. Both on a numerical and percentage basis, the area ranked second worst among the 127 of 372 major U.S. cities where employment shrank over the year.The U.S. Bureau of Labor Statistics published Kansas City’s sad set of employment figures at the same time Wednesday that 300 area business leaders gathered for an annual economic outlook breakfast.At the breakfast sponsored by the Greater Kansas City Chamber of Commerce, Frank Lenk, senior economist at the Mid-America Regional Council, coincidentally presaged the Bureau of Labor Statistics’ report, saying the area needed to dig itself out of a hole created by the loss of tens of thousands of jobs since the recession began in December 2007.The labor bureau estimated the Kansas City area’s establishment payroll total at 953,500 last month, down from 966,100 a year earlier and down from 1,021,200 when the recession started. The area’s unemployment rate was estimated at 8.7 percent in August, up from 8.4 percent in July. It was down from 9.1 percent in August 2010 because the size of the labor force and the number of job hunters fell, not because more jobs were created. Lenk’s forecast said the digging out from the recession would become apparent next year if the rosier of his two economic forecasts was realized. His better-case scenario — which assumes that Kansas City mirrors a national recovery — will produce a 4.1 percent growth in the area’s gross regional product, after a paltry gain of 1.2 percent this year.That brighter forecast would add 19,100 regional jobs in 2012.Lenk’s drearier forecast, which assumes a “second recession,” would result in a net gain of just 5,000 jobs.Economists have noted for months that Kansas City’s economy sank a bit later than the national economy in this recession, and that its job market has continued shrinking while recovery has begun in other markets. Notably, 238 of the 372 metro areas studied by the labor bureau gained employment from August a year ago. Seven areas recorded no change.The Houston area was the largest numerical gainer, adding 65,600 jobs. The New York, Boston and Dallas areas followed, each gaining more than 50,000 jobs. The largest percentage increases in employment were in Hot Springs, Ark.; Pittsfield, Mass.; and Sandusky, Ohio.On the down side, the Atlanta area was estimated to have lost 30,800 payroll jobs, or 1.4 percent of its establishment employment, to be the biggest job loser by both measures.Other big losers by number were the Philadelphia and Indianapolis areas, and by percentage the Sandy Springs-Marietta, Ga., and Indianapolis areas. Lenk said his more optimistic outlook for Kansas City’s recovery mirrors the expectations of Moody’s Analytics for the U.S. economy. Under that scenario, metro area employment would bump up by 1.5 percent in 2012 and by 2.9 percent in 2013.Going by that outlook, “the Kansas City economy does not return to its pre-recession employment levels until the end of 2014 — six full years after the Great Recession began,” Lenk said. But, “rather than experiencing meager job growth, the region may, in fact, still be losing jobs,” he told the chamber gathering. If the region follows the nation into a second recession beginning in the fourth quarter this year, Lenk said, the Kansas City area would not return to pre-recession employment until late in 2016 — nine years after the Great Recession began.That second-recession scenario would delay job growth until mid 2012 and have “very modest” gains in 2013, he said. Appreciable employment growth would occur only in the services industry, particularly in health care.Linda Nickisch, economist in the Kansas City office of the labor bureau, said the August employment report estimated widespread and continued job losses on both sides of the state line.On a non-seasonally adjusted basis, Nickisch said, the new data showed these year-over-year losses for the metro:•Construction employment, down 2,000 to 38,900 jobs, with 56 consecutive months of year-over-year declines.•Information, down 2,100 to 29,800 jobs; 40 months of year-over-year declines.•Professional and business services, down 3,700 to 139,600 jobs; nine months of year-over-year declines.•Financial activities, down 3,300 to 69,000 jobs; eight months of year-over-year declines.Another big job loss, Nickisch said, was recorded by local governments (including public schools), which shed an estimated 2,300 jobs and sank to 99,400 from August 2010 to August 2011.The only bright spot in the local jobs report was the continued job gain in the private education and health care sector. That sector added an estimated 4,600 jobs and reached 133,000 over the 12 months. Most of the gains were in health care services.Lenk pointed out that the bureau’s statistics would be revised. It won’t be until January 2012 that all the data for 2010 are settled, and 2011 estimates are subject to even further revision.Nonetheless, the employment trend lines are troublesome.Chris Kuehl, an economist with Armada Corporate Intelligence, said: “A contributing factor may be the completion of some of the big construction projects, such as the Performing Arts Center, with nothing else big in the pipeline. That’s left several thousand construction and related workers maybe with no other project to go to right away.”Kuehl said the dismal data also might indicate that some of the area’s biggest companies — which survived the recession by cost cutting — continue to get by with “much smaller versions of themselves.”Economist Jeff Pinkerton, at the Mid-America Regional Council, proposed another theory about the area’s lack of job creation: It’s largely a branch office, or back office, town for corporations that have headquarters elsewhere.“In a downturn, the back office support jobs may be the jobs headquarters looks to cut,” Pinkerton said.That would help explain, for example, the 10,100 (0.8 percent) job gain from last August to this August for the St. Louis area, which has far more corporate headquarters than Kansas City.St. Louis showed strong job gains in manufacturing, services and trade, transportation and utilities, which more than offset losses in government and information sectors.St. Louis now has registered 13 consecutive months of year-over-year job growth. Pinkerton’s research finds that August-to-August employment in the Kansas City area’s administrative service sector fell 6.5 percent, while that sector nationally grew 3.5 percent. Professional and technical service jobs fell 2 percent here but grew 3 percent nationally. Finance is down 4.5 percent here but flat nationwide.Also, “the Kansas City area is particularly invested in the information sector,” Pinkerton said. “Nationwide, information jobs are down 2.9 percent while locally they went down 6.6 percent.”Sprint might be “the center of that universe locally,” but there are lots of other companies in that sector, Pinkerton said. “So there are lots of ripple effects from a Fortune 500 company.”
A big hole for the metro
67,700Estimated number of jobs lost since December 2007, when recession began12,600Estimated number of jobs lost from last August to this August19,100Estimated net job gain next year under MARC’s best-case outlookINSIDE
Outgoing Fed chief Tom Hoening says Kansas City would do well to replace its earnings tax. | A12
67,700Estimated number of jobs lost since December 2007, when recession began12,600Estimated number of jobs lost from last August to this August19,100Estimated net job gain next year under MARC’s best-case outlookINSIDE
Outgoing Fed chief Tom Hoening says Kansas City would do well to replace its earnings tax. | A12
More from Labor Department report
In August, 100 metro areas reported jobless rates of at least 10 percent, down from 119 a year earlier, and 74 areas posted rates below 7 percent, up from 55 a year earlier.•Highest jobless rate: 32.4 percent in El Centro, Calif.•Lowest jobless rate: 3 percent in Bismarck, N.D.Among the 49 metro areas with a Census 2000 population of 1 million or more:•Highest jobless rate, 14.2 percent in the Las Vegas area.•Lowest jobless rate, 5 percent in the Oklahoma City area.
In August, 100 metro areas reported jobless rates of at least 10 percent, down from 119 a year earlier, and 74 areas posted rates below 7 percent, up from 55 a year earlier.•Highest jobless rate: 32.4 percent in El Centro, Calif.•Lowest jobless rate: 3 percent in Bismarck, N.D.Among the 49 metro areas with a Census 2000 population of 1 million or more:•Highest jobless rate, 14.2 percent in the Las Vegas area.•Lowest jobless rate, 5 percent in the Oklahoma City area.
@ Go to KansasCity.com for Frank Lenk’s complete jobs forecast.
