By MICHAEL AUSTIN
Kansas Department of Revenue Economist
As a first-time parent, there are times that I truly love to take in with my two-year-old son. Our favorite time of the day, by far, is bath time. As an economist, noticing his excitement as he retrieves his bath toys, I can’t help but to see similarities between the mechanics of bath time and the mechanics of labor markets.
A state’s labor market can behave very much like the water rushing in and out of a bathtub. Water rushing in to fill the tub is like the state seeing job growth and its population finding work. Job loss, intuitively, is like water flowing out of the drain. When job growth remains larger than the job losses, the state is closer to being “full.”
From the worst of the recession to now, private sector jobs in Kansas have grown on average more than 10,000 a year. This led to 2016, in which the state hit an all-time high in jobs and saw the lowest number of unemployed Kansans in 15 years.
Critics have argued that the Kansas job growth rate is slowing relative to other states, or to its previous years. While both statements are accurate, they are not comprehensive.
Understanding labor markets akin to drawing a bath can easily reconcile the state’s performance and these two critiques.
If water rushing from the faucet is to symbolize job growth, then it should be easily understood that the closer the water gets to a satisfactory level, the less water I allow to enter the tub. A state cannot experience robust job growth on to infinity. For a state labor market to be full, job growth must slow.
As for state comparisons, I present this question. Is the water level that my son enjoys at our home, the same water level at yours? Probably not, as the bathtubs in our homes are likely different and so a different water level and flow may be needed to achieve the same satisfaction. In a sense, what works in our bathtub, likely only works in our bathtub.
There is no state that is the exact copy of Kansas. No state that has the exact same industry makeup, worker/unemployed demographics, and/or income distribution, to name a few. The conditions that come together to dictate how and when the labor market is full in Kansas, isn’t easily transferrable to any other state.
Like my son at bath time, Kansans should be proud that our state is reaching a stage in the labor market, where those who want a job can easily find one. This does not mean Kansas is without room for improvement. To be sure, nearly every night my wife tells me the water level in the tub could be just a little higher.