Thursday, August 29, 2013

Kansas seeing job growth but still lags behind pre-recession levels

By SCOTT ROTHSCHILD, The Lawrence Journal-World

TOPEKA, KAN. — The Kansas economy is improving but still lags behind pre-Great Recession levels, and it will take several years to determine if Gov. Sam Brownback's cuts in income and business taxes will create jobs, Kansas Department of Labor officials said today.

In 2012, employment increased from 2011 by 18,100 jobs or 1.4 percent, Labor Secretary Lana Gordon said.

"This is the highest job growth the state has seen in the past 5 years and the first time since 2007 that job growth has been above 1 percent," Gordon said during the annual State of Labor report.

Kansas per capita personal income increased 2.3 percent to an average of $41,835, and the unemployment rate was 5.7 percent, down from 6.5 percent in 2011. It was the lowest unemployment rate since 2008.

But Kansas continues to have about 20,000 fewer jobs than it did before the recession started taking its toll.

"In most of all, or almost all of the labor market indicators, we are still catching up to the pre-recession levels," said Inayat Noormohmad, director and chief economist for the agency. "We are still climbing out of the hole, slowly but steadily," he said.

Noormohmad and Tyler Tenbrink, senior labor economist, said Kansas is keeping up with other states in the general national recovery.

The economists, however, said it was too early to tell if the tax changes made by Brownback and Republicans in the Legislature are having an effect on job growth. Noormohmad said it might take up to five years to determine the impact of those changes on the employment picture.

Brownback has signed into law income tax rate cuts and income tax exemptions for the owners of 191,000 partnerships, sole proprietorships and other businesses. He also has decreased income tax deductions and the standard deduction for married couples and single parents and increased the state sales tax.

Brownback has argued that the income tax cuts will boost the economy and create jobs, while Democrats and some Republicans have said the cuts will benefit mostly the wealthy and cause drastic reductions in state funding of education, health care and other services.

The Labor Department economists said government budget cuts and worldwide economic events could have an impact on Kansas' recovery.

"There is a lot of talk in local, state and federal government about budgets and cutting budgets, and when things like that happen we see employment going down," Tenbrink said. He said local governments and school districts are a significant contributor to the economy.

Noormohmad said economic slowdowns in China and India and other international events can also affect Kansas. "We are not immune from some of these external shocks," he said.

Meanwhile, the Working Kansas Alliance criticized the state Labor Department, saying the agency had become a “staging ground” for anti-labor bills.

“Despite Secretary Gordon’s economic hyperbole, Kansas workers are facing a very hostile State of Labor that is reflected in this administration’s policies and priorities” said Working Kansas Alliance President Terry Forsyth.

He cited recent laws that will reduce unemployment benefits and changes to the workers’ compensation system that labor groups have said will make it more difficult for injured workers to receive benefits.