The Mining sector has played a vital role in the progress of Wyoming's economy in the past. However, future contributions are forecast to have less significance on Wyoming's overall economy and employment growth, as the state changes from a goods-producing to a service-producing economy. This change is indicative of the change in the national economy. Employment in the Mining sector is expected to decline 8.2 percent over the forecast horizon to the year 2008.
The Services sector has seen the major job growth within Wyoming's economy during the 1990's, with an average annual growth rate of 3.61 percent. Although the increase slowed the past three years to 1.3 percent in 1996, 1.9 percent in 1997, and 2.9 percent in 1998, employment growth in the Services sector has consistently been above the increase in total employment. The Services sector is the second largest employing sector in Wyoming’s economy and has the second fastest growth rate of the 1990's. Only the Construction sector has a faster growth rate. Except for a small decline in 1996, the health services sub-sector has experienced annual average job growth of 3.0 percent since 1990. A large portion of the increase in this sector is related to the aging of the population and an overall increase in the demand for health care.
The Services sector is the only sector forecast to increase at a rate of more than 2.0 percent through the forecast horizon. As a result of the high growth, the Services sector surpasses the Government sector in 2005 as the largest employing sector in Wyoming.
Employment growth in state government has been relatively flat in the 1990’s and is expected to decline slightly by the year 2000. Growth in the local and state government sectors is expected to remain flat throughout the forecast period, having an estimated 52,740 jobs by 2008.
Employment in the local education sector continues to grow at a slow but steady rate despite decreasing school enrollments. Student enrollment in primary and secondary schools during 1991 was approximately 98,226 and rose to 100,899 in the 1993-1994 school year. Enrollment has been declining since that time and during the 1998-1999 school year held at 94,420 statewide. It is likely that Wyoming's school enrollments will remain flat over the next few years. Employment in this sector is expected to grow by 1.0 percent per year, rising to 25,800 by 2008. Funding is a stronger driver of employment in local education than enrollments.
Population in Wyoming grew over 1.0 percent each year from 1991 to 1994, as the annual net in-migration exceeded 2,000 persons. The state has experienced net out-migration since 1995. Out-migration increased to over 2,500 in 1997. Net migration is forecast at a negative level each year from 1999 to 2008. This means that the number of people who leave the state is expected to exceed the number of people who move into Wyoming. The out-migration flows slow over the ten-year projection period (see Appendix C).
The main population segment participating in the labor force (age 25-44) gradually declined from 148,446 in 1990 to 134,480 persons in 1998. This age group is projected to continue declining at a decreasing rate through the forecast, and level off in 2008 at 126,560 persons. The
population ages 45-64 includes the early post-World War II baby boom. This segment posted a remarkable increase of 36.0 percent, making it the most rapidly growing population segment from 1990 to 1998. By the year 2008, this age segment is forecast to reach 134,100 persons. This represents an increase of 22.0 percent from the 1998 level. An increasingly older population will greatly impact many areas of our economy, from supply of labor force to demand of health and social services. Slow and steady population growth is expected throughout the ten-year forecast period
The number of employed persons is expected to increase by 22,560 individuals and nonagricultural wage and salary employment increases by 27,450 jobs over the forecast horizon (see Figure 1). In other words, the number of nonagricultural wage and salary jobs will grow much faster (11.4%) than the number of employed persons in Wyoming (6.3%). This is due to increased commuting into Wyoming, increased multiple job holding, and a decrease in self-employment and agricultural employment opportunities. The unemployment rate is expected to rise slowly from 4.6 percent in 1999 to 5.7 percent in 2008. Part of this increase is related to the different growth rates of industries. Construction, Retail Trade and Services are forecast to grow faster than average and are “high layoff” industries.
National Forecast Compared to Wyoming
The performance of the U.S. economy in the 1990's has been nothing short of astonishing and has been arguably the best decade in U.S. economic history. The questions become: what is driving the national economy, how long can it last, and will the Wyoming economy catch up? There are two main schools of thought on the national economy. First, the national economy's performance is mainly attributed to good luck. The luck argument cites lower import and energy prices due to overseas economic problems as the main reasons for the good economy and lower
inflation despite nationally tight labor markets. As Asia recovers and commodity prices rebound, the argument states, the good times experienced in the U.S. economy will end. However, even as energy prices have rebounded and the overseas economic problems have subsided, the U.S. economy has continued to perform quite well.
The second school of thought on the outstanding performance of the U.S. economy argues that the economy has undergone a structural transformation. Federal Reserve Chairman Alan Greenspan has dubbed these changes the "X-factors," which include an acceleration in the pace of technological change and the continuing globalization of the economy, with both of these factors helping to raise the economy's underlying rate of productivity. In addition, this has caused increased competitive pressures that have allowed the economy to expand at a quicker pace with low unemployment and without the usual accompanying inflationary pressures. If the "X-factor" school of thought holds true and there are no major shocks to the economy, the good times will continue to last.
It is likely that both schools of thought are at least partially correct. The national economy has undoubtedly benefited from the Asian crisis and the accompanying decline in commodity prices, but Wyoming’s economy has suffered from these same changes. There is also evidence that productivity growth in the U.S. has increased, and just as the country is reaping the benefits of the information technology revolution, Wyoming will also benefit from the technology revolution. However, even with the increase in productivity, the recent torrid rate of growth in the national economy is not sustainable. In short, the national economy will slow in the future, as will Wyoming's economy after 2000 for the forecast period.
Relationship Between the National Economy and Wyoming's Economy
The relationship between Wyoming's economy and the national economy is quite weak. In fact, the Wyoming economy differs the most of any state from the national economy.2 We estimated that only 3.0 percent of the change in employment in Wyoming is related to changes in employment at the national level.3
Given the reliance on commodities both mineral and agricultural, within Wyoming’s economy, this conclusion is not startling. If commodity prices for goods are high, Wyoming’s economy benefits while the national economy suffers. Conversely, low commodity prices hurt Wyoming’s economy while they benefit the national economy. In fact, much of the demand for Wyoming's commodities is influenced by worldwide developments such as the recent Asian economic crisis.
Despite the seemingly small impact of the national economy on Wyoming's economy, it is important to understand what is occurring with the national economy as a background against which our economy can be compared. Direct impacts on Wyoming’s economy from the national economy can occur through things such as interest rates, financial markets, population migration, and tourism. For instance, during the national recession of the early 1990's, a large number of people migrated from California and other states to Wyoming, which boosted the state's population growth rate considerably. Since the national economy has recovered, migration has turned negative which has, in turn, hurt the growth rate of Wyoming's economy.
Gross Domestic Product and Gross State Product
Gross Domestic Product (GDP) identifies the value of goods and services produced within the U.S. GDP grew by 3.9 percent in 1998 to $7.6 trillion, and is expected to grow by only a slightly lesser amount (3.7%) in 19994 in real dollars (see Appendix A). Year 2000 GDP growth is forecast at only 1.7 percent, picking up to almost 3.0 percent in 2001. Total employment in 1999 is expected to grow by 1.8 percent to 128.1 million, and year 2000 total employment is forecast at 129.4 million, an increase of 1.1 percent. The U.S. unemployment rate was 4.5 percent in 1998 and is expected to be 4.3 percent in 1999 and 4.7 percent in the year 2000. U.S. citizens saw personal income grow at a pace of 5.0 percent in 1998. Personal income is forecast to grow at a rate of 4.9 percent in 1999 and 4.8 percent in the year 2000.
Gross State Product (GSP) is defined by the U.S. Bureau of Economic Analysis (BEA) as the sum of gross state product originating in all industries in the state or the value of all goods and services produced. In concept, an industry's GSP, or "value added," is equal to its gross outputs (sales or receipts and other operating income, commodity taxes, and inventory changes) minus intermediate inputs (consumption of goods and services purchased from other industries or imported).
Because of the normal delay in releasing GSP data, 1997 is the most current year available. GSP for Wyoming in 1997 was $18.3 billion (see Table 1). Real dollar GSP (adjusted to 1992-dollar terms) was $16.8 billion. For 1998, the forecast puts GSP at $18.8 billion, an increase of 2.7 percent from 1997. Real GSP for 1998 is expected to increase 2.6 percent to $17.2 billion. GSP is forecast to increase 3.5 percent to $19.4 billion in 1999, and real GSP is forecast to climb by 2.7 percent to a level of $17.7 billion (see Figure 2). Year 2000 GSP is expected to reach $20.0 billion, an increase and peak growth rate of 2.9 percent, while real GSP is expected to grow by 1.4 percent to $17.9 billion. For the remainder of the forecast, GSP grows at an average annual rate of 4.4 percent, and is expected to reach $28.2 billion in 2008. Real GSP is expected to grow at an average annual rate of 1.9 percent and is forecast to hit a level of $20.8 billion in 2008.
2 Tim R. Smith, "The Relationship between the Tenth District Economy and the National Economy", Federal Reserve Bank of Kansas City Economic Review Fourth Quarter 1996, 81, no. 4 (1996): 77-90.
3 State Edition, Regional Forecast Analysis 6, no. 12 (1999).
4 U.S. Bureau of Economic Analysis, Gross Product by Industry for the U.S. and States, (June 1999).
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Labor Market Information |
Economic Analysis Division
1 Wyoming Department of Employment, Wyoming Office of Workforce Development, The Wyoming Unified Title I Plan..