© Copyright 2004 by the Wyoming Department of Employment, Research & Planning

Economic Recovery and Labor Availability in Wyoming

by: Craig Radden Henderson, BLS Program Supervisor

map prepared by: Brad Payne, Economist

"Subsequent to the 2001 national recession, the Wyoming economy appears strong. Wyoming’s economy also has momentum in the state’s plans for construction of many public infrastructure projects. However, Wyoming employers will require access to sufficient qualified labor outside the state, and their ability to secure this labor will be driven by the pace of economic recovery elsewhere in the region. This report compares various measures of economic activity from March 2001 to May 2004 for the U.S., Wyoming, and selected Intermountain West states including employment and wage trends, and detailed employment comparisons in the Construction industry. While Wyoming seems uniquely poised to take advantage of Colorado and Utah’s generally weaker economic positions, other states in the region, including New Mexico and Nevada, seem equally well positioned. In addition to regional competition, the Construction industry will also face in-state competition for labor from the growing Mining industry."

The National Bureau of Economic Research (NBER) determined that the most recent national recession began in March 2001 and reached its trough in November 2001. In announcing its decision in July 2002, NBER “did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. . . . The announcement of a trough simply marked the end of a declining phase and the start of a rising phase in the business cycle” (National Bureau of Economic Research, p. 1).

During the national and regional expansion, since November 2001, the varying effects of the national recession spared no state entirely. Many states (e.g., California, Connecticut, Kansas, and New Jersey) struggled with serious revenue shortfalls and difficult legislative choices. In January 2003, nine months after the official end of the national recession, only Wyoming and New Mexico showed state budget surpluses and demonstrated better employment and wage growth than the region.

In 2004 an outgrowth of increased state revenue, driven in large part by higher international energy prices, spurred construction of Wyoming schools, prisons, and local business parks. This economic expansion appears to bode well for Wyoming’s Construction industry. However, to compete for and finish these building projects in a timely and cost-effective way, Wyoming employers will require access to sufficient qualified labor. Their ability to secure this labor will be driven by the pace of the regional economic recovery and the higher rates of compensation offered by other industries within Wyoming.

We compare various measures of economic activity from March 2001 to May 2004 for the U.S., Wyoming, and selected states in the Intermountain West. Colorado and Utah are included in the comparison because their larger populations are an obvious and often-tapped source of experienced and skilled labor for their smaller neighboring states. These two states, as well as Montana (though much smaller), have sizeable urban populations in close proximity to Wyoming and interstate access to neighboring states, facilitating the movement of labor and supplies across state lines. Idaho was included in this analysis because 2000 decennial Census commuting patterns identify it as a significant source of Wyoming labor, particularly for Teton County (U.S. Census Bureau).

New Mexico and Nevada were substituted for Nebraska and South Dakota (stalwarts in most regional comparisons published by Research & Planning). Given their comparatively higher rates of population and economic growth in the region, New Mexico and Nevada are more likely to compete for the skilled workers in Colorado and Utah than the states on Wyoming’s eastern border. Additionally, the largest population and economic centers of Nebraska and South Dakota (e.g., Lincoln, Omaha, and Sioux Falls) are more commonly associated with the labor markets of the Midwest than the Intermountain West.

The Map shows state comparisons of 2002 employment and wage data including:
l average annual employment.
l average annual wage.
l average weekly wage.

Average annual employment in the U.S. (see the Map and Figure 1) decreased by 1,401,881 jobs (-1.0%) in 2002. In the Intermountain West, Colorado lost 47,522 jobs (-2.2%) and Utah lost 8,967 jobs (-0.9%). Laid off workers in Colorado and Utah can be viewed as potential labor, particularly if these states recover from the national recession more slowly than their neighbors. In comparison, Wyoming gained an average of 2,337 jobs (1.0%), significantly higher than both Idaho (555 jobs or 0.1%) and Nevada (1,264 jobs or 0.1%). Wyoming was not alone in the region with a job gain. Montana and New Mexico’s average annual employment grew by 1.1 percent. Outside of the Intermountain West, only Alaska (1.5%) showed average annual employment growth exceeding 1.0 percent.

In 2002 Wyoming’s average weekly wage ($557) reflected an increase of $18 over its 2001 level. Nevada ($654; change of $17), Montana ($500; change of $15), and New Mexico ($566; change of $14) all experienced similar increases. Utah ($588) and Idaho ($542) showed lower over-the-year growth at $10 and $8, respectively, but maintained regionally competitive wages. Colorado’s average weekly wage ($731), the region’s highest, increased by only $1 during this period. While wage growth in Wyoming was a positive indicator during 2001, Wyoming’s average weekly wage still lags Nevada and New Mexico. In the regional competition for the skilled construction labor in Colorado or Utah over the next two years, Wyoming employers may find themselves having to compete against less seasonality in the Construction industry (Gallagher, 2002) and higher wages in Nevada or New Mexico.

As an additional regional comparison of wage trends, Figure 1 shows that Montana (3.2%) and Wyoming (3.3%) showed a higher percent change in average annual wages between 2001 and 2002 than other states in the Intermountain West. Wyoming’s wage increased from $28,048 to $28,975. Montana’s wage increased from $25,195 to $26,001. Nevada (2.6%), New Mexico (2.5%), and Utah (1.7%) showed wage growth above the U.S. level (1.5%). Colorado, experiencing some of the worst effects of the recession, showed only a 0.1 percent change in average annual wage, though the wage still exceeded the U.S. wage ($36,764) and led the region at $38,005 in 2002.

Wyoming’s recent state budget surplus made possible the school facilities construction efforts that are underway. However, we are beginning to see indications of strong regional competition for construction labor. For example, Nevada (12.0%) showed a much higher percent change in seasonally adjusted Construction employment than other states in the region (see Table 1 and Figure 2). This increase potentially positions Nevada employers to draw some skilled labor from Utah, which grew by only 2.8 percent in the same industry between May 2003 and May 2004. New Mexico (5.3%), Idaho (3.8%), and Montana (3.4%) also demonstrated Construction employment growth within the region. Colorado (-3.7%) and Wyoming (-2.1%) showed a decreasing in percentage change in Construction employment over the year.

With the Mining industry expanding in Wyoming, particularly coal bed methane development, the attraction of higher wages and the transferability of skills draws workers from the lower-paying Construction and Services industries. Table 2 shows that 23.0 percent of the new individuals working in the Mining industry previously worked in Services Providing industries, while 11.1 percent came from Construction. So, in addition to substantial regional competition for workers, the Construction industry in Wyoming must compete with other industries inside the state for labor.

Managing and reducing the underlying turnover within the Construction industry is the ongoing challenge of Wyoming employers. For example, the average annual number of jobs in the Construction industry in 2003 reported by the Current Employment Statistics program was 19,500. However, according to Wyoming Wage Records, the actual count of individuals who worked in Construction at any time during 2003 totaled 35,356 (See “Updated Mean Annual Earnings for Persons by Age, Gender, and Industry Tables”). Managing employment turnover is probably Wyoming’s best option for attracting and keeping a skilled workforce necessary for completing larger construction projects. Smaller projects in more rural areas will continue to pose additional challenges. Once again, compensation comparable to the Mining industry, including the offer of health or other benefits, may prove a key component for meeting labor needs.

With some variation among states, current economic data support the idea that the Intermountain West’s overall employment situation is recovering from the effects of the national recession. While Wyoming seems uniquely poised to take advantage of Colorado and Utah’s generally weaker economic positions, particularly as employers in Wyoming’s Construction industry seek to attract skilled labor from larger states to compete for public infrastructure projects, other states in the region seem equally well-positioned. As the pace of economic recovery begins to re-ignite the larger economic engines of New Mexico and Nevada, reinforce the secure advantages of higher wages offered by employers in Colorado and Utah, and strengthen the competition from Idaho and Montana, the window of opportunity for recruiting new workers to Wyoming will narrow. In the face of tremendous opportunities, Wyoming’s Construction industry also faces serious intrastate competition for labor from a growing and higher-paying Mining industry. Together, these forces may act as a damper on Wyoming’s ability to meet construction demands.


Manager’s Note:
General questions of adequate labor supply have concerned Wyoming employers and policy makers for several years. In 1997, the Casper Star-Tribune reported that “the labor force has been shrinking at a low but steady rate for several months” (“Unemployment,” 1997, p. A1). Since that time, many press reports have lamented the exodus of Wyoming’s youth. In May 2000, general observations had given way to more targeted inquiries by the state. Research & Planning provided data to the Legislative Service Office for its report on turnover and retention among technology staff, highway patrol officers, correctional officers, and family service caseworkers. (Wyoming Legislative Service Office).


References

Gallagher, T. (2002). Introduction and selected findings. In Murray, S (Ed.), Market Dynamics From Administrative Records (pp. 1-4). Retrieved June 21, 2004, from <http://doe.state.wy.us/LMI/w_r_research/MarketDynamics1202.pdf>

National Bureau of Economic Research. (2003, July 17). [Meeting Report of Business Cycle Dating Committee]. Retrieved on June 1, 2004, from <http://www.nber.org/cycles/july2003.html>

Unemployment rate - and labor force - decline. (1997, October 23). Casper Star-Tribune, p. A1.

U.S. Census Bureau. (2000, April). Residence county to workplace county flows for Wyoming. Retrieved on June 23, 2004, from <http://www.census.gov/population/cen2000/commuting/2KWRKCO_WY.xls>

Wyoming Legislative Service Office. (2000, May). Turnover and retention in four occupations. Retrieved on June 30, 2004, from  <http://legisweb.state.wy.us/progeval/reports/2000/turnovr/toc.htm>
 

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