An Examination of the Fluid Nature of Wyoming's Labor Supply

An Examination of the Fluid Nature of Wyoming's Labor Supply

The following article is adapted from Research & Planning’s employment projections publication, Employment Outlook 2010. The complete publication is available in limited supply from our office or on our website at <http//doe.state.wy.us
/LMI/outlTOC/EmpOutlook2010.pdf>.

In a given year, many individuals who appear in Wyoming’s Wage Records¹ database enter Wyoming’s labor market from or exit to one of the states with which Wyoming has a Memorandum of Understanding (MOU). Thus, enumeration of Wyoming’s potential labor supply should extend beyond the resident population. Given that the available pool of labor extends beyond the governmentally defined borders of the state, projected population shortages relative to employment growth may not be as great a concern in Wyoming. A larger concern may be competition for labor in the regional or national market, particularly if the U.S. economy rebounds strongly in the near future.

The following analysis is based upon the Wyoming Wage Records database. Wage Records provides a dynamic, rather than static, examination of labor supply. Current Population Survey (CPS) and Census based estimates of labor supply produce a “snapshot” of available labor from household or residency measures.² Wage Records data come from firms or place-of-work measures. In both cases the state is the focus of analysis, meaning that estimates of labor supply are generally derived for the state as a whole.

Census estimates, because of the foundation in place-of-residency, are inherently limited in capturing the dynamic aspects of labor supply. To illustrate, if the Census indicates a resident population growth of 1,000 persons between 2000 and 2010 and separate employment projections indicate a growth of 2,000 jobs, we might assume there will be a shortage of 1,000 persons to fill the anticipated employment increase, thus restricting future employment growth. However, what if during the same time period we have an additional 1,000 nonresidents who either commute or temporarily relocate to Wyoming? If so, there is no labor supply shortage. Because of the static nature of the Census estimates and the fact that they are based upon place of residence, these estimates are unable to capture the additional 1,000 workers and include them as part of Wyoming’s labor pool. Although the Bureau of the Census respects state boundaries, individuals seeking employment opportunities may not. Alternatively, Wage Records data are not limited to the resident population because they measure employment at the place-of-work and capture employment in Wyoming regardless of an employee’s residency.

The following analysis of Wage Records does not produce or provide labor supply projections, although it may be possible for Research & Planning (R&P) to produce these in the future. R&P is in the process of developing the methodology to examine labor supply dynamics as part of the analysis of Wage Records. The current analysis is an examination of the entire set of 1999-2000 Wage Records data. It illustrates nicely what is hidden when analyzing labor supply by place of residence.

As shown in Table 1, 305,868 total persons appeared in Wage Records as working in Wyoming at any time during 1999. In 2000 there were 307,452 persons. This represents a net increase of 1,584 persons between the two time periods. However, this does not mean that there were only 1,584 new workers appearing in Wage Records.

Table 2 presents a change analysis over the same time period using 1999 totals as the comparison base. As shown in Table 2, 69,425 individuals appeared in Wage Records in 1999 but did not appear in 2000, a 22.7 percent loss.³ Conversely, there were 71,009 new individuals who appeared in 2000 who had not appeared in 1999, a 23.2 percent gain. The outcome of the churning within Wyoming’s labor market is that nearly one-quarter of Wyoming’s workforce exited and was replaced within the span of one year.

Some industries are comprised more of seasonal and short-term workers than are other industries. Of all industries, Construction and Services are the industries most dependent upon seasonal and short-term workers. For example, of all persons working in heavy construction in 2000, 38.4 percent did not work in Wyoming in 1999. Within Services, 42.3 percent of all who worked in 2000 in hotels & lodging places did not work in Wyoming the previous year. Eating & drinking places within the Retail Trade industry (with a 35.4% rate of replacement) are also highly dependent on workers with limited attachment to Wyoming’s labor market. Industries with the smallest concentration of workers with minimal attachment to Wyoming’s labor market are Government and Finance, Insurance, & Real Estate.

Of the individuals who appeared in Wage Records in 2000 but did not appear in 1999, some are residents entering employment for the first time or residents re-entering Wyoming’s workforce after being absent for at least one year. Others are nonresidents taking a job in Wyoming (e.g., college students moving into Wyoming, persons who begin commuting from MOU states, and persons temporarily or permanently relocating to the state). It appears that in 2000 there was a net gain of a mere 1,584 new workers. However, because of churning, Wyoming actually had 71,009 new workers (according to Wage Records), or roughly one-quarter of the 1999 total workforce. Given the magnitude of this number, it is not likely that all of the additions in 2000 are residents of the state.

To explore this possibility, R&P tracked both the losses and additions to Wage Records into states with which we have data sharing agreements (MOU states), specifically, Colorado, Idaho, Nebraska, New Mexico, South Dakota, Texas, and Utah. Table 2 indicates that of the 69,425 workers who left Wyoming’s workforce between 1999 and 2000, 17,533 (25.3%) re-emerged as workers in one of these seven states. Of those new to the 2000 Wyoming workforce, we know that 15,600 (22.0%) previously appeared in the Wage Records of the MOU states. Given these findings it appears that a significant portion of labor supply is shared jointly between Wyoming and the MOU states. However, until we secure data sharing agreements with additional states, we cannot identify the origins of a large segment of Wyoming’s workforce.

Another way of examining the dynamic nature of labor supply is to estimate the number of individuals working in Wyoming who are not likely to be residents of the state. One way to do this is by examining the number of individuals appearing in Wyoming’s Wage Records database but for whom we do not have demographic information (i.e., age and gender). Missing demographic information can be explained in the following ways. First, when individuals do not appear in Wyoming Wage Records long enough (i.e., four quarters) to have sufficient historical information we are not able to impute (a statistical method for assigning demographic characteristics) their demographic characteristics. Second, workers who do not obtain a Wyoming driver’s license do not appear in the Driver’s License database obtained from the Wyoming Department of Transportation (i.e., age and gender are recorded when the license is obtained). Either of these factors would seem to indicate that these individuals are nonresidents.⁴ However, even though they may not reside in Wyoming or only temporarily reside in the state, they do form part of Wyoming’s labor pool and theoretically they should be included in estimates of the available labor pool even if their “availability” is more tenuous than that of residents. The initial question, however, is what proportion of the labor pool is made up of nonresidents and from what states do they primarily come.

Table 3 presents data on individuals whose primary employer (i.e., the employer that paid the largest proportion of an individual’s wages) was in Wyoming but who have missing demographic information for the fourth quarter of 1999 (1999Q4). This quarter was chosen for illustrative purposes and the general findings apply across other quarters. For 1999Q4 a search of Wage Records indicates that 9,144 individuals (4.0%) out of 228,413 have no demographic information. A search of additional Wyoming Wage Records data indicates that only a fraction of these individuals appear in the data six quarters prior and subsequent to the reference quarter (1.2% and 2.8%, respectively). A number of these individuals can be located in the Wage Records data of states with which we have data sharing agreements (again, indicating that Wyoming’s labor pool extends well beyond state boundaries in all directions). Specifically, looking backward and forward six quarters from the reference period, we can locate 1,139 (12.5%) and 1,274 (13.9%), respectively of the initial 9,144 individuals.

We currently seek data sharing agreements with Montana and Oklahoma and with these will be able to locate even more of the additions and losses to Wyoming’s labor supply. Montana is an important source of Wyoming labor, particularly for the coal bed methane and coal mining industries in northeastern Wyoming and the tourism industry in the northwestern corner of Wyoming. Oklahoma is also an important oil and gas producing state. Obtaining these data sharing agreements will improve our ability to track individuals in a multi-state labor market and understand the labor supply framework.

In sum, it would appear that a large portion of persons in Wage Records enter or exit in a given year and that many of them come from MOU states. This illustrates the fluid nature of Wyoming’s labor supply and shows that the consideration of labor supply has to extend beyond static snapshots of resident population in the state. Thus, projected population shortages relative to employment growth may not be a great concern in Wyoming. A larger concern may be competition for labor in the regional or national market particularly if the U.S. economy rebounds strongly in the near future. As such, analyses of labor supply should extend beyond the borders of Wyoming.

¹Wage Records is an administrative database. Each employer in the state that has employees covered under Unemployment Insurance, by law, must submit quarterly tax reports to the state showing each employee’s Social Security Number and wages earned. Research & Planning uses the data for statistical analysis.

²The U.S. Bureau of the Census conducts the Current Population Survey (CPS) each month as a sample of 50,000 households. The Census is conducted once every ten years.

³This 22.7 percent loss on an annual basis is another way of examining the issue of turnover. In most circumstances turnover is measured in terms of worker exits from an employer with multiple exits possible (see Tony Glover, “Turnover Analyses; Definitions, Process, and Quantification,” <http://doe.state.wy.us
/LMI/staff/Turnover.pdf>, especially Table 1). The current chapter defines exits in terms of persons leaving the market entirely.

⁴Sylvia Jones, “Defining Residency for the Wyoming Workforce,” Wyoming Labor Force Trends, November 2002, pp. 1-9.

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