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The Effective Labor Force in Kansas: Employment, Unemployment, and Underemployment - Executive Summary

prepared for Kansas, Inc.

by Robert H. Glass, Assistant Scientist

and Charles E. Krider, Professor, School of Business
Director, Institute for Public Policy and Business Research

and Kevin Nelson Director, Survey Laboratory

This report and the study it is based on is in response to a request by the Kansas legislature to estimate the extent of underemployment in Kansas. We defined the underemployed as: 1) discouraged workers, 2) part-time workers who want full-time jobs, 3) temporary workers who want permanent jobs, and 4) workers whose skills are underutilized in their current job. In order to provide some context for evaluation and understanding, we also estimated the number of employed and unemployed workers. A major consequence of our research is a statistical description of the effective labor force in Kansas: the employed, the unemployed, and the underemployed.

The estimation was done by using a random telephone survey of 2,517 households in Kansas. The survey instrument used for the survey was based on the latest version of the Current Population Survey instrument which is used by the Bureau of Labor Statistics (BLS) to estimate national labor force statistics such as the unemployment rate. Based on our survey, the Kansas unemployment rate was estimated to be 4.0 percent (54,500 workers), slightly less than the Kansas Department of Human Resources estimate of 4.4 percent (60,000 workers) for the same time period. Because of this result and other reliability tests, we have concluded the survey has successfully measured the effective labor force in Kansas. The underemployment rate was estimated at 6.3 percent (85,100 workers). The proportion of the labor force in each of the four categories of underemployment was:

Because of significant overlap among the last three categories of underemployed, the total percentage of underemployed is less than the sum of the categories of the underemployed.

To put our estimates of Kansas underemployment into context, we compared our estimates with two other sources of underemployment data: BLS and The Nebraska Underemployment Study. For the period comparable with our survey, the BLS national estimates of discouraged workers (0.3 percent of the labor force) and of part-time workers who wanted full-time jobs (2.3 percent of the labor force) were nearly the same as our estimates for Kansas. The Nebraska Underemployment Study found that 21.7 percent of their part-time workers wanted full-time jobs while we found that only 16.7 percent of Kansas's part-time workers wanted full-time jobs. The Nebraska study found that 58 percent of their employed workers felt they were over qualified for their jobs while we found 24.0 percent of Kansas workers felt their skill were underutilized in their current job. Further, we found that only about 2.4 percent of these Kansas workers were definitely underutilized in their current job. The difference between our estimates in Kansas and the Nebraska estimates is in large measure due to our additional questions and analysis of the respondents.

Specific Empirical Conclusions

1. The low rates of unemployment (4.0 percent) and underemployment (6.3 percent) indicate the Kansas Labor Market is efficiently matching workers with jobs.

2. Unemployment is highest for metropolitan women (5.5 percent), next highest for metropolitan men (4.7 percent), relatively low for non-metropolitan women (3.6 percent), lowest for non-metropolitan men (2.1 percent).

3 Underemployment is highest for non-metropolitan women (8.3 percent), next highest for metropolitan men (7.2 percent), relatively low for metropolitan women (5.0 percent), and lowest for non-metropolitan men (4.6 percent).

4. Underemployment in Kansas is about equally divided between part-time workers who want full-time jobs, 2.1 percent (28,300 workers; temporary workers who want permanent jobs, 2.1 percent (28,300 worker; and mismatched workers 2.3 percent (31,300 workers).

5. The majority of those who might have been underemployed are not underemployed: 28,600 out of 171,300 part-time workers want full-time jobs, 28,300 out of 46,600 temporary workers want permanent jobs, and 31,300 out of 324,700 workers who claimed to be underutilized were convincingly underutilized.

6. Education and employment are directly correlated. The employed have more formal education and special training than the unemployed.

7. The underemployed have more education than the employed. Of the underemployed group, the mismatched workers have the most education and the part-time workers who want full-time jobs have the least education. While the underemployed have more formal education, they have less special training than either the employed or the unemployed.

8. Many in the labor force are currently getting more training. At the time of the survey, slightly more than 11 percent of the labor force was in either school or getting special job training which translates into about 140,000 workers getting trained. Of that group, 100,000 are full-time employees.

Policy Implications

Because of the nature of the research supporting this report, we do not have any specific recommendations for the addition or removal of particular programs. Instead, this report suggests that the basic strategies for two policy areas economic development and job training might need to be reviewed in light of our empirical results.

Economic Development: Kansas workers are not demanding low wage jobs. This is true of both urban and rural Kansas workers. In fact, the combined unemployment and underemployment rate in non-metropolitan Kansas is less than in metropolitan Kansas. An implication is that there is no compelling labor force need to attract low skill/low wage jobs to Kansas in order to provide some employment to Kansans who otherwise would be unemployed or underemployed. Instead, Kansas should choose an economic development strategy aimed at bringing high skill/high wage jobs into the state. The strength of the Kansas's human capital is not in its numbers but in its willingness to work hard and in its willingness to get more schooling and training.

Job Training: Currently, the Kansas labor force is efficiently being utilized. For an economic development strategy of bringing high skill/high wage jobs to Kansas to be successful, the skills of the existing Kansas labor force must be improved. This situation argues for both an increased investment in human capital and for extensive cooperation between economic development and job training activities.

Our study indicates that at any particular point in time, about 100,000 full-time workers are in school or getting formal special training. This suggests that institutions that provide either schooling or job training should consider full-time employees as an important part of their clientele. This also suggests that a sizable portion of Kansas workers recognize the need for better skills and are willing to put in additional effort to improve their skills. A state policy of encouraging increased schooling and job training is consistent with the current behavior of many of Kansas's full-time workers.

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