By MICHAEL AUSTIN
Kansas Department of Revenue economist
I must admit, I never truly understood the value of “why” until I became a parent of a toddler. While being the target of his incessant questions, I admire his quest to understand why a certain event exists, and if there is a problem, where do we start in fixing it. The Kansas economy is no exception. Agriculture and oil are vital to the state, and yet in recent years, they’ve been dragging its growth.
The importance of these two industries cannot be overstated. These two sectors take a larger slice of the Kansas economy than at the national level. In fact, it was because of agriculture and oil that Kansas weathered and recovered from the Great Recession better than the nation as a whole. So, it’s disappointing to see that since 2014, slow growth in agriculture and oil is impacting growth for Kansas. I can hear my son now, “but why?”
Imagine if your earnings dropped by more than 10 percent every year for the last three years. That’s been the case for Kansas workers in oil or agriculture. In 2015 average net farm income was $4,568, a 96 percent drop from $128,731 in 2014. It’s getting harder for these Kansas families to make ends meet. But this doesn’t just touch our rural communities. Underperforming agriculture and oil in Kansas are like throwing stones in a pond; it creates ripples. Falling income for farmers means less income for crop delivery workers, translating to lower income for food processors, and even lower income for restaurant owners and their employees.
If these industries performed well, then the entire Kansas economy would benefit. Whether tied to the agriculture and oil markets directly or indirectly, Kansans’ wages would even grow at faster levels.
By referring back to our “toddler learning” and asking “why” we can understand that strong growth in the farm and oil sectors help all Kansans. And with that knowledge, we become more aware of what types of policies can develop and foster that income growth, and what types of policies can stymie or reverse it.