By RON FIELDS
Post News Network
On Friday, the Kansas Department of Labor issued its monthly unemployment report showing yet another drop in the jobless rate to 3.3 percent statewide in December. In Nebraska, the unemployment rate was a scant 1.2 percent in November.
In the more rural areas of western Kansas and Nebraska, there are only a handful of counties posting unemployment rates above 2 percent, another demonstration of the continuing worker shortage challenging communities.
Creighton University economist Ernie Goss said the worker shortage is among the top one or two concerns for most employers and cited three interconnected factors as the cause.
The COVID-19 pandemic, he said, is still top of mind for many who have dropped out of the labor pool entirely.
"There are individuals out there who just don't want to return to work," Goss said. "There is a low participation rate, where people are not counted as either employed or unemployed."
A dearth of daycare options is also forcing families to choose home over the workplace.
"A lot of families out there, they can't return to work until they can get their kids in a good daycare, and there aren't many options," he said.
And those families were the beneficiaries of unprecedented government payments since the pandemic's arrival.
"The federal government has sprayed the countryside with dollars .. and increased the money supply by 30 to 40 percent," Goss said. "There have been three packages that have put money in the hands of individuals that have made it less appealing to work. ... and they leave the labor force."
Unemployment rates well below the national average in Kansas and Nebraska are not unusual, he noted, but said the labor shortage is increasingly becoming an issue for businesses and communities.
"I don't see any end, at least looking forward, to any of those three elements improving so we can get the labor force back to pre-COVID levels," Goss said.
While COVID exacerbated the problem, data shows that the worker shortfall was looming prior to 2020.
"Currently, a lot of the rates are around where they were before the pandemic. Stateside, we were near historic lows prior to the pandemic," said Emilie Doerksen, labor economist with the Labor Market Information Services (LMIS) division of the Kansas Department of Labor. "We did see a gradual decline in the labor force prior to the pandemic, as workforces aged and baby boomers retired."
Kansas reached an all-time jobless rate low in 1978 at 2.9 percent, she said. In 2019, that rate was 3.1 percent, and at year-end 2021, the jobless rate was close at 3.3. percent. Those records have been kept since 1976.
Eric Brown, president and CEO of the Salina Area Chamber of Commerce, said the tight labor market is top of mind on the local level. Salina County posted a 2.2 percent jobless rate in December.
"It's the lowest that I have ever seen unemployment in the Salina market," said Brown, who has been with the chamber for more than a decade. He noted the Salina-area labor basin includes more than a dozen surrounding counties, all with jobless rates between 1.4 percent and 2.2 percent.
"That obviously is having an effect on our employers here in the community," he said. "We've had a lot of success in the last three years supporting our local businesses — manufacturing and advanced manufacturing have been growing by leaps and bounds. In the last three years, we've had over $675 million in capital investments on expansions, and those expansions are creating opportunities and jobs."
Those opportunities, however, have a trickle-down effect, Brown noted.
"It's pushing down to the indirect service providers — construction, electricians, HVAC, plumbers. All of those sectors are trying to hire folks," he said.
Some workers are also taking advantage of those new full-time opportunities, but leaving behind vacancies in two or three part-time positions as a result.
Those types of vacancies are pummeling the leisure and hospitality sector, Goss said.
"That sector is down significantly from pre-COVID levels," he said, noting Kansas has lost about 9,000 restaurant and hotel jobs in the past two years. Nebraska has lost 7,000 jobs in that sector.
"Particularly in some of our smaller towns, when your restaurant closes, some of those are just not going to open back up," Goss said. "That's a tragedy, and for our economy, certainly not good."
Doerksen said the largest decline in the Kansas workforce is in the 16- to 24-year-old range, with drops also noted in the 55 and older range.
She said the decline in the younger generation's participation and availability is a factor in the leisure and hospitality sector's struggle.
A new generation
Both Goss and Brown pointed to outmigration of younger workers to larger cities as a key issue — especially in rural counties already facing depopulation.
"Our best and most expensive export is our students," Brown said. "Career and technical education has been a mainstay of communities like Salina for decades. Salina Area Technical College has a 97 to 98 percent placement rate for their graduates. But as birth rates go down, that pipeline doesn't get filled."
He said communities need to do a better job of helping students understand all of the careers available locally.
"Take a hospital — it's its own little community. When students drive by, they may just think doctors and nurses, but there's everything from management to financial positions. Most hospitals have a clergy on staff, IT departments, maintenance ... there's opportunities that run the gamut."
But among young people staying in rural parts of Kansas and Nebraska, Goss said he's seeing a trend of fewer of them entering the workforce.
"Particularly for the rural areas, you normally see a high participation rate," he said. "But even in those parts of the country, participating rates have declined ... and the employment to population rate is declining."
That participation rate is dropping at the same time most rural counties are facing the issue of depopulation.
"Of the 93 counties in Nebraska," he said, "75 have fewer people in them now than they did in the 1930s. That trend is going to continue."
Economic growth
Fueled partially by pent-up demand and increased dollars in pockets from government payments such as the Child Tax Credit of 2021, most of the businesses Brown works with saw significant growth last year.
He said sales tax revenue — a key indicator measuring local economic activity — was up half a percent in Salina in 2020, and up a sizable 9 percent through November 2021.
"Anecdotally, for Main Street businesses, most of them said this was one of the best holiday seasons we've had in several years," Brown said.
But productivity is not keeping up with demand, Goss said.
"The savings rate went up significant during the pandemic and that was quite significant — no happy hour, no traveling," he said. "Individuals have those savings accounts and they see some cushion, and some aren't back to work yet."
Anticipated interest rate hikes and inflationary concerns will diminish that cushion for many, Goss said, noting fuel costs have driven family expenses up significantly.
Wages
While wages in many sectors have increased, "they're not where they need to be" to attract workers, Goss said.
"Individuals right now are not seeing the opportunities and so the participation rate comes down," he said. "Normally, you'd see them coming back into the workforce. But the fact is that what worked before at $12 an hour isn't going to work."
Goss said he has seen an uptick in programs designed not just to attract, but retain, employees, including vesting plans, retirement plans and improved health care options — and expects to see those offerings increase in an attempt to attract new, loyal employees.
Solutions
Brown said employers are increasingly reaching out to those they historically have not, including working with agencies serving the developmentally disabled, such as OCCK Inc. in Salina.
"(Employers) are doing a better job of working with these groups so (clients) are getting good opportunities and are stepping forward to take on some of these roles," he said.
Goss said retail centers such as North Platte or Salina likely will continue to grow, especially for those retiring off the farm in outlying rural counties.
"More and more retirement homes are being built closer to where the farmers farmed and where the rural residents lived," he said. "There will be more and more individuals remaining closer to home when they retire, especially in communities on the interstates."
Brown said communities need to increase their outreach to those who have outmigrated, especially as the trend of "de-densifying" continues in urban markets and larger cities.
"We all need to do a better job from a community level of inviting back these students and second-generation kids who have gone out and moved to a bigger community," he said. They're starting to realize that where they grew up isn't as bad as they thought when they were 18 years old."
Photo by Tim Mossholder on Unsplash