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Posted by on in Wyoming Issues

The latest employment data from the Bureau of Labor Statistics confirms that Wyoming is part of the national recovery. It was not until this past summer that there were clear and indisputable signs of a recovery in our state, but it looks like the national economic rebound has brought Wyoming onboard for the long haul.

Comparing October 2014 to the same month last year, Wyoming added a total of 4,700 jobs. This 1.6-percent increase is literally midpack, landing Wyoming 25th in the nation. The same is true for the 4,200-job expansion in the private sector. These are not excellent numbers: three of our neighboring states, Colorado, Montana and Utah, have higher private-sector job growth numbers, with Utah third best in the country. However, the job growth is evenly spread across the economy. Some highlights:

  • Construction has added 800 jobs with “specialty-trade contractors” leading the way;
  • Trade, transportation and utilities grew employment by 2.9 percent to a total of 56,400;
  • Under the “trade” category, retail expanded with 1,300 jobs, the biggest October-to-October expansion since 2007;
  • Professional and business services added 800 jobs; with a total of 10,100 employees this industry is now at an all-time-high in Wyoming.

On the government side, BLS reports a continuation of the small decline in state employment that has thus far characterized the Mead administration. October marked the 16th month in a row with a year-to-year reduction in state government employment.

At the same time, local government employment continues to grow, with 50,600 people on county, city, town and school board payrolls. This is 100 jobs short of an all time high.

With the contradicting trends in state and local government employment it is easy to understand why Wyoming has one of the absolutely lowest shares of private-sector jobs in the country. At 75.4 percent, Wyoming beats only Alaska (75 percent) and the District of Columbia (68.8). By contrast, Rhode Island and Pennsylvania have the highest private-sector share: 87.5 percent. They are followed by Nevada (87.4), Massachusetts (87) and Florida (86).

In other words, Wyoming remains a big-government state, a problem that will only be exacerbated by the state’s looming structural budget deficit. While there is no solid evidence at this time that local governments are facing a similar future, it is also a fact that they get about one third of their revenue, on average, from the state. Therefore, it would be wise of county and city councilmen as well as school boards to begin a review of their long-term cost and employment structure.

With all this in mind, it is important to notice the encouraging news in these employment numbers. A steady growth of retail jobs means consumer spending is healthy. That in turn means Wyoming families have regained hope for the future. The growth in professional and business-services jobs is also positive, as it expands the state’s better-paid, often college trained, high-skill workforce. As minerals-related job opportunities stagnate, our state needs this continued economic diversification. It brings new purchasing power to local economies and offers our children broader job opportunities after college.

If this economic recovery was a car it would not be a Golf GTI, but a Kia Optima. It is not going to knock our socks off, but it will reliably get us to a better tomorrow.

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Posted by on in Wyoming Issues

The Bureau of Labor Statistics has released its preliminary employment numbers for October 2014. It is good news for all Americans except those in Alaska: compared to October 2013 only the Frontier State has lost jobs. All other states added jobs.

It is particularly encouraging to see that the private sector is outgrowing government. In 46 states and – notably – the District of Columbia private-sector employment grew faster than total employment, displaying a relative decline in government employment. (Alaska, again, experienced a decline.) In three states, Oregon, South Dakota and Iowa, government employment increased faster than private-sector employment.

These good numbers verify the continued recovery of the U.S. economy. In general, government is being responsible enough to hold back on the employment side as tax revenues improve and unemployment filings return to more “normal” levels. This allows the private sector to continue to grow with less of a threat of higher taxes over its head.

As the recovery continues, confidence grows and investment and hiring plans in private businesses reinforce one another. For a number of reasons, this does not happen quite as forcefully as it should at the national level. However, some states have a private-sector job growth that hints of what things could look like at the national level:

  • In North Dakota, the private sector was responsible for almost 100 percent of the state’s new 22,400 jobs; private employers in the Peace Garden State had 5.9 percent more employees in October 2014 compared to October 2013;
  • In Texas, 91 of every 100 new jobs were created in the private sector; private sector employment was 4.2 percent higher in October 2014;
  • Utah gained 40,100 private-sector jobs, placing the Beehive State third in private job creation with a 3.7-percent year-to-year uptick.

At the bottom of the list, eight states saw their private-sector employment grow by less than one percent: Nebraska (0.97 percent), Maryland (0.9), Ohio (0.84), Iowa (0.76), Illinois (0.76), Virginia (0.53), New Jersey (0.48) and Mississippi (0.43).

As for Alaska, it is worth noting that the Frontier State’s 0.64-percent private-sector job loss came despite a small gain of 800 jobs in the minerals industry. Those jobs ostensibly went to the North Slope and other oil-drilling hot spots, while the rest of the private sector contracted. The reasons are not entirely clear, but this is the second year in a row with declining private-sector employment in Alaska, and the third consecutive month with a year-to-year reduction.

The Alaska numbers would normally not be worth mentioning, but they do have some relevance to Wyoming. The Alaskan economy is even more lopsidedly dependent on natural resources than Wyoming; if the decline in Alaska job numbers is concentrated to industries that are ancillary to the natural resources industry, then this could be a sign of looming pessimism in natural-resources related activity overall. If so, Wyoming needs to pay attention.

Speaking of the Cowboy State, stay tuned for a blog specifically analyzing our state’s job numbers.

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Posted by on in Wyoming Issues

As this week’s Open Air question the Casper Star Tribune asks whether or not the state should spend a portion of its reserve funds.

This is a highly relevant question. We are near Governor Mead’s annual budget presentation; the legislative session opens in less than two months; and as I explained two weeks ago, Wyoming is heading for a structural budget deficit.

The Tribune motivates its question with the fact that the state’s rainy day fund is now at $2 billion, implying that at some point “enough is enough”. This is a fair point, especially since a government cash fund directly or indirectly is the result of excess taxation. By definition, to run a budget surplus and thereby have money to set aside, government has to take more money from taxpayers than it gives back in the form of spending.

Excess taxation is never good for the economy. Government in general is an inefficient user of resources, a fact that is well established in economic literature (this paper by three reputable European economists is a good start). When it takes in more resources than it spends, the inefficiency in its resource usage increases exponentially.

At the same time, proponents of budget surpluses make compelling arguments. A budget surplus is often motivated by the virtue of paying down government debt, a point especially applicable to the federal government. As for Wyoming, the rainy-day fund argument has more relevance: after the fiscal equivalent of a near-death experience a quarter-century ago the state legislature did not want to end up in a squeeze again. A variety of funds have seen the light of day since then.

In other words, the answer to the Tribune’s Open Air question depends in part on whether or not the efficiency loss from building the rainy day fund – over-taxing Wyoming households and businesses – is a reasonable price to pay for the financial security that stems from having, as of today, $2 billion in the bank.

The value of that financial security includes the ability to keep government spending programs going in times of revenue shortfalls, i.e., to spend down part or all of the rainy-day fund. Viewed strictly from a macroeconomic viewpoint, the answer to the Tribune’s Open Air question is conditionally affirmative: under some circumstances there can be economic value in spending some of the rainy-day fund. If the alternative is an uncontrollable, panic-style rollback of programs essential to the poorest among us, then the answer is that it is better to spend the money than not to do it.

That, however, does not mean that spending from the rainy day fund is the best option in that situation. It is merely the better of these two specific alternatives. A far better, third option is to spend the money from the rainy-day fund as down payment on a structural reform the purpose of which is to significantly reduce or entirely eliminate entitlement programs.

However, when the Tribune asks about spending from the rainy-day fund, they do not have any of these alternatives in mind. Theirs is simply a question of whether or not to add more spending to the state budget – and to pay for it out of the rainy-day fund.

When the Open Air question is put this way, the answer has to be negative. There are two important reasons for this, the first of which is based on the inefficiency point made earlier: taking more of taxpayers’ money – whether fresh from their pocket or stashed away in a fund – to spend through government programs merely increases the total inefficiency in the use of economic resources.

The second point is more elementary but in no way less important. Even if the rainy-day dollars would go toward one-time projects, that spending would cater to the legislative habit of increasing spending under all conditions. With a structural deficit opening up in just a few short years, Wyoming legislators would be well advised to break with that habit. It is, simply, more difficult to reduce spending from a higher level than from a lower level.

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Posted by on in Wyoming Issues

Our introductory blog on this topic focused on the premises of graduate criminal justice fellow Brice Hamack’s recent article in the Wyoming Law Review. It is important to clarify that while Mr. Hamack’s general concerns are well founded, Wyoming’s juvenile justice system has uniquely entrenched problems unique from and, in many ways, worse than those in the rest of the country.

Tagged in: Juvenile Justice
Posted by on in Wyoming Issues

Yesterday I explained the economic conditions for privatizing K-12 education in Wyoming.  Today, attention is on health care, a topic that has been discussed at length in many different directions over the years. Every politician wants to have a say on health care, and - frankly - too many pundits have weighed in over the years without making a contribution of substance to the issue.

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