Jobs and Wages Update, Part 1

Time for another update on jobs and wages in our great state. There has been a lot of talk recently about our state's economy getting stronger, measured primarily in the form of rising tax revenue. I recently cautioned against this optimism, pointing to GDP numbers that suggest we are just out of another short growth spurt.  

Today's review of jobs data lends some credence to that cautionary recommendation: we are not back in a downslope again, but it looks increasingly as though the minerals-driven uptick in jobs and economic activity that we have seen since early 2017 is coming to an end. The review of earnings data, which I will publish in a couple of days, may provide definitive evidence. 

So far this year, average private-sector employment has been 5.3 percent lower than it was in 2008. This means, in plain English, that whatever recovery our state has seen has not even replaced all the jobs lost in the past ten years. By contrast, the national average private-sector jobs growth since 2008 is 9.8 percent.

Not only have we not caught up with ourselves a decade ago - we have fallen 13.5 percentage points behind the nation as a whole. 

That is not to say we have not seen a jobs recovery. We have, but it has been too weak and too short (remember our double-dip recession in 2015-16?) and too concentrated to a segment of one industry. Figure 1 reports the jobs trend in Minerals since January 2016; it is striking how the addition of jobs has been almost entirely concentrated to support functions:

Figure 1
Source: Bureau of Labor Statistics

The big spike in 2017 in support-function jobs for oil and gas extraction has only very recently paid off in a minor increase in employment. This is positive, of course, but with oil prices at their peak for this business cycle (all other things equal, of course) the small and very recent addition of new jobs in oil-and-gas extraction may be most of what we will see before the next downturn.

Overall, despite the increase in support-function jobs, the minerals industry has 28 percent fewer employees in 2018 than it had ten years earlier. 

Figure 2 begins our look at other private industries, comparing Minerals to Construction, Manufacturing and Wholesale Trade: 

Figure 2
Source: Bureau of Labor Statistics

Macroeconomic theory would suggest that the spike in minerals employment has had multiplier effects on other industries, and that the increases in jobs in Construction, Manufacturing and Wholesale Trade is evidence of this. I am inclined to agree, but I would also caution against too much reliance on the multiplier. The minerals industry is a small share of our economy, at least from a jobs-related perspective; only 9.7 percent of all private-sector jobs in Wyoming are in minerals. 

Bluntly: the effect of Minerals on the state budget is significantly bigger than it is on the Wyoming economy as a whole. That is not to say it is unimportant, quite the contrary, but it is important to keep the right perspective on our economy.

Next up, in Figure 3, we look at the jobs trends in Retail, TWU (Transportation, Warehousing, Utilities - a.k.a., infrastructure operations), Information and Financial Activities:

Figure 3
Source: Bureau of Labor Statistics

Retail has not done very well, having eight percent fewer employees now than ten years ago. Information and Financial Activities are also down over the decade. By contrast, TWU has at least marginally increased its overall employment - not much to write home about, but good by comparison. 

Next up we have another industry that sends an early signal of an end to the current growth period. Professional and Business Services have clearly peaked for this period, and since this industry fills a consulting function - broadly defined - to other businesses, the end to its jobs growth (Figure 4) suggests other businesses are reducing costs they can spare and get rid of in short notice:

Figure 4
Source: Bureau of Labor Statistics

It is positive that Leisure and Hospitality has seen a recent rise in employment. They are now consistently above their 2008 numbers, although the margin has slimmed somewhat in recent months, despite the good year-over-year numbers. 

Again: the private sector as a whole has not yet recovered all the jobs it has lost since 2008. This is not an economy that can bear a higher tax burden. We will get more details when we review industry-based income data, but it would be a big surprise if those numbers point anywhere else except toward a peak of the current growth period, with another downturn ahead of us.

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