Jobs in Wyoming: Part 2

Adding to yesterday's overview of the jobs trends in the private sector, here is a look at what is happening at the industry level. Before we get down there, though, let us review some comparative numbers on government and private employment and compensation.

Since the Bureau of Labor Statistics does not publish compensation data for government, we have to rely on the Bureau of Economic Analysis (BEA) for this part. As mentioned yesterday, Wyoming has the highest Government Employment Ratio (GER) of all states; without having reviewed the data, it is reasonable to assume that we also have the highest government payroll per $1,000 private-sector payroll dollars. One reason for this is that compensation for the 90 percent private-sector employees who are not in minerals, is relatively small. A more detailed review is in the works to confirm (or disprove) this point.

The BEA only publishes annual employment and compensation data at the state level. Using 2017 numbers, here is what we find:
  • The 209,803 employees in the private sector earned a total of $12.13bn in employee compensation;
  • The 61,695 state and local government employees earned a total of $4.31bn in employee compensation.
This comes out to a GER or 294 and a Government Compensation Ratio of 355, or $355 per $1,000 earned in the private sector. If we paid the compensation of government employees straight out of our private-sector employee compensation, it would come out to a 35.5 percent tax.

To make it clearer how the minerals industry creates a bias in private-sector earnings, let us deduct the ten percent who work here, and their compensation. In 2017,
  • There were 19,566 employees in the minerals industry, earning at total of $2.14bn in employee compensation;
  • There were 190,237 employees in on-minerals private industries, earning a total of $9.99bn. 
When we compare per-employee compensation in state and local government to the total private sector, it comes out to $69,793 in government and $57,837 in the private sector. This means that here in Wyoming, employees of state and local governments earn $1.21 for every $1.00 that people earn working for private businesses. However, if we deduct minerals, the remaining private sector pays $52,558, for a pay disparity of $1.33 to government.

This, again, includes benefits. If we deduct them the non-minerals private employee earns about $42,000. This is a higher number than we get from BLS, where the same number lands a bit north of $37,000; personally, I prefer the BLS methodology, but since they do not publish comparable data for government, we have to rely on the BEA in this particular case. The difference between the two agencies has to do with how they account for actual hours worked, but it does not affect the comparison between government and the private sector that the BEA numbers allow for.

Returning to the BLS numbers, we take a closer look at how the private sector is doing. Figure 1 reports the growth rate in employment and average weekly earnings, for the month of September, over the past ten years:

Figure 1




Source: Bureau of Labor Statistics

If we break these numbers down by industry, things get even more interesting. As Table 1 explains, Minerals topped employment growth in September (over the same month 2017), but the average earnings growth was stronger in construction:


Table 1
TTU is Trade Transportation and Utilities; LH is Leisure and Hospitality; EH is Education and Health
Emp
Avg earn
Tot earn
Mining
6.0%
6.2%
12.6%
Construction
5.3%
14.4%
20.4%
LH
5.1%
5.9%
11.3%
EH
3.2%
3.2%
6.5%
Biz. svcs
2.7%
0.1%
2.8%
TTU
1.5%
6.1%
7.7%
Other
-2.8%
12.6%
9.4%

As an interesting side note, consider the disparity between growth in employment and earnings in TTU. When earnings grow that much faster, the cause is very likely a capacity problem. In this particular industry I would guess that we are looking at a lasting truck-driver shortage problem.

Yesterday's article reported that over the past ten years, which have been uniquely challenging from a macroeconomic viewpoint, Wyoming has the worst private-sector jobs growth of all the 50 states. The positive numbers in Figure 1 and Table 1 give us hope for a better future, hope that could easily be squashed by a tax hike or two.

On a related note, we are often told that this-or-that industry is the largest in our state. Here is a breakdown:

Table 2; employment in thousands

Employment
Percent of total private
TTU
53.4
23.8%
LH
41.3
18.4%
EH
28.7
12.8%
Construction
22.0
9.8%
Mining
21.3
9.5%
Biz svcs
19.2
8.6%
Other
13.7
6.1%

To further highlight the point made earlier about the earnings disparity between minerals and non-minerals industries, here is the average weekly earning by industry, per $1.00 for the private sector as a whole:

Table 3

Parity to total private
Mining
 $         1.74
Construction
 $         1.30
Biz svcs
 $         1.03
EH
 $         0.92
TTU
$         0.89
Other
 $         0.77
LH
 $         0.46

There are politicians who will use these numbers to motivate more corporate-welfare spending. They suggest this will bring more high-paying jobs to our state and thereby balance up the earnings disparity between, in particular, minerals and the rest of the economy. However, corporate welfare works much like individual welfare: people will adapt their behavior to it. Businesses tend to stay in a place for as long as the government checks keep coming. Once the tax-paid faucet dries up, they move on. 

There are only three things that can bring sustained growth and lasting prosperity:

  • Low taxes
  • Deregulation
  • Structural reforms to government spending.

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