Weekly Economic Report: Trends in Private-Sector Employment

by Wyoming Liberty Group Staff

With reference to the recent job losses in Wyoming coal mines, this Report presents a review of employment trends in the private sector since 1990.

Main findings: 1) Job growth today is low by historic comparison. 2) In terms of employment, our economy is more diversified now than it was three decades ago.

News stories have highlighted the nearly 600 Blackjewel jobs that were hit by the company's bankruptcy, and the ramifications on the local economy. The losses of these jobs have attracted wider attention, including from elected officials concerned about lost tax revenue.

Without diminishing the pain associated with each individual job loss, this Report places the Blackjewel job losses in the perspective of how the labor market in Wyoming has fared since 1990, the year from which the Bureau of Labor Statistics provides industry-specific employment data. For the state as a whole the decline is not significant, but instead overshadowed by the decline in private-sector employment in general, and minerals in particular, in 2015 and 2016.

At the county level, however, a decline of 580 jobs in one industry is significant, especially in a high-paying industry such as minerals. In 2015 Campbell County experienced a loss of 639 jobs in the minerals industry, which came with a loss of $33.3 million in wages and salaries.

Historically, the minerals industry has been subject to high fluctuations in employment. However, the 2015-2016 decline was only the second major episode of lost jobs since the start of BLS industry-level state employment data in 1990; the previous one was the 2009-2010 downturn. Smaller single-year losses happened in 1992, 1995, 1999, 2002 and 2013.

Minerals jobs peaked in 2008 with 29,300 employees. This was close to a doubling from 15,800 in 1990. The lowest number since 2008 was in 2016 at 18,800. In 2018 there were 20,800 employees in the minerals industry in Wyoming.

In 2018 the minerals industry employed 9.5 percent of the private-sector workforce. This was down from a peak of 12.7 percent in 2008. The 2018 number ranks the minerals industry on par with construction as the fourth largest industry in Wyoming. If Trade, Transportation and Utilities are counted together – as they are in the BLS data – they become the largest industry at 24.1 percent of all employees. Leisure and Hospitality is ranked second at 16.7 percent of all private-sector employment, with health services in third place at 11.7 percent.

Trade, Transportation and Utilities is a hybrid super-industry sector. A more appropriate approach is to separate trade from infrastructure, i.e., transportation and utilities. With this separation, Leisure and Hospitality jumps ahead to become the largest industry in terms of employment, with retail trade second at 13.6 percent and health services in third place:

Source: Bureau of Labor Statistics

In the first two decades covered by BLS data, private-sector job growth in Wyoming was moderately positive: in 1991-2000 it averaged 2.23 percent per year and in 2001-2010 1.83 percent. By contrast, in 2011-2018 it essentially stood still at 0.27 percent per year, on average.

Figure 1 reports the growth numbers annually:

Figure 1

Source: Bureau of Labor Statistics

The strong increase in 2004-2008 was mainly driven by minerals, whose share of private-sector employment rose from 9.7 percent in 2003 to 12.7 percent in 2007. It remained relatively high until 2016 when it troughed at 8.8 percent (recovering modestly since then).

Over the long term, the Wyoming labor market is weak. The one spot where there has been some improvement over time is in the Government Employment Ratio (GER). Figure 2 reports its annual values from 1990 through 2018:

Figure 2

Source of raw data: Bureau of Labor Statistics

Despite a long-term decline in the GER, Wyoming still has the highest ratio in the country. It is also important to note that the decline in our state's GER should not be taken as an indication that the cost of government to taxpayers has declined.

Implications of the findings

The numbers presented in this Weekly Economic Report confirm what other economic data have shown for some time, namely that Wyoming has a structural problem with economic stagnation. The lack of meaningful growth in private-sector employment is symptomatic of an economy where GDP is not growing, an observation that demands political and policy attention.

As this Report has explained previously, there is a conspicuous correlation between slow growth and the state's economic-freedom score. A policy to advance economic freedom in Wyoming would be helpful toward stronger future job creation, across all industries.