Private Job Growth: The Reality about Raw Numbers vs Rate

May 14, 2015

Proponents of Kansas’ unprecedented tax policy changes talk a lot about the creation of private sector jobs in Kansas.  The conversation may lead you to believe their claim that the state is seeing success as a result of the tax cuts.  Kansas’ private sector job growth reveals that upon closer examination of the tax policy changes, they have not lived up to expectations.

Look at Growth Rate
If you look only at the number of jobs created, it is impossible to compare Kansas to other states, except for those with roughly the same number of people.  The only way we can compare our growth to a state the size of California or Texas or any other state is by looking at the growth rate.

For example, Kansas has created over 42,000 private jobs since the tax changes went into effect (January 2013).  That may sound like a lot, but it’s misleading.  For example, Idaho created over 38,000 private jobs in the same period, so it looks like Kansas outperformed them.  But Idaho only has 1.6 million people, while Kansas has 2.9 million. When you put the number of jobs in the context of the number of people living in the state, Idaho’s private sector job growth rate is an enviable 7.5% while Kansas’ is only about half that at 3.8%, showing that growth rate is the most important way to compare states.

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Comparing Kansas to another state with a similar population can also help illustrate why growth rate is important. Utah’s population is roughly the same size – about 2.9 million residents. Since the unprecedented tax changes in Kansas, Utah has created 88,500 private sector jobs – well over double our rate of creation, which is reflected in their job growth rate of 8.4%.

Make Regional Comparisons
It’s also helpful to make regional comparisons, which show our neighbors getting the better deal. Kansas continues to trail in private sector job growth and is experiencing record revenue loss since the tax cuts took effect while the rest of the region beats us in private job growth, is seeing increasing revenue and is getting back to investing in schools, roads, and other necessities for our state’s economy.

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Consider Impact of Tax Changes
And it’s important to remember that when comparing Kansas to Idaho and Utah, these states have achieved high job growth rates without cutting income taxes on their wealthiest residents, which many in Kansas claim is the only way to grow the private sector.

What’s more, both Idaho and Utah have such strong job growth while having a higher tax on their wealthier residents than we do in Kansas. Clearly, these states have found a way to grow their economy without handing out big tax breaks that hurt our schools and other vital services the way Kansas did.

It’s time Kansans stop pretending that the unprecedented tax changes are helping our economy. The raw number of new jobs may lead you to believe we are on a prosperous path, but the job growth rate never lies.

ClayPrivate Job Growth: The Reality about Raw Numbers vs Rate