Kansas Business Review Abstracts

Vol. 22, No.1, Fall 1998

Demographic and Economic Trends in Kansas

by Charles Krider, Norman Clifford, and Fernando Conde, Institute for Public Policy and Business Research, University of Kansas.

Because population size and economic activity are closely related, and changes in population size are directly linked to employment opportunities, wage differentials, and a community’s overall quality of life, the Institute for Public Policy and Business Research recently conducted a review of essential economic and demographic trends for Kansas, examining Kansas population, population projections, employment, employment projections, earnings, and income. For the purpose of the report, the Institute divided Kansas counties into three categories: nine large metropolitan counties, 18 medium counties with a population greater than 20,000, and 78 small counties with a population of less than 20,000. The Institute found that overall the large metropolitan counties fared much better in population, earnings, and income than the rest of the state, and that the small counties have lost population, experienced slow employment growth, and have the lowest average wage per job.

The Structure of the Custom Cattle Feeding Industry: a Strategic Analysis with Implications for Kansas Agribusiness

by Jeffrey P. Katz, Department of Management, Kansas State University, Jason W. Maddox, Koch Industries, Inc., and Michael Boland, Department of Agricultural Economics, Kansas State University.

Agriculture is the largest segment of the U.S. economy and beef production is the largest segment of the U.S. agricultural economy. Beef is particularly important to the Kansas economy because Kansas is the second largest cattle state in the U.S., with over $4.5 billion in cash receipts and 38,000 cattle-related businesses. The hard times currently being experienced by beef producers as a result of record feed prices and decreasing cattle prices helps focus attention on the need to assess the impact of external factors inherent in the structure of this key Kansas industry.

In the short term, the main concern of the successful custom cattle feeder is being the low-cost provider of quality service. The most crucial factor driving the efficiency is feed conversion, which is a component of the genetic makeup of cattle, the processing of feed at the mill, health treatment programs and weather. All of these factors lead to an efficient "cost of gain" for the customer and profitability for the feed yard owner.

In the long term, being efficient is not going to be enough. In order to compete with the poultry and pork industry, beef production must become more efficient, allowing for a cheaper beef product to be put on the shelves than is currently the case. Much of the decline in per capita consumption of beef has come from the ability of the poultry industry to produce an efficient, satisfactory product at a reasonable price. Beef must do likewise if it is to regain consumer favor. This will entail cooperation throughout the beef production process.

Temporary Suspension of Unemployment Insurance Tax

by William H. Layes, Chief, Labor Market Information Services, Kansas Department of Human Resources.

Unemployment insurance taxes, or contributions, often represent a sizeable cost of doing business in any state. Naturally, most employers are eager to reduce tax rates through improved experience with unemployment. How is it possible to reduce employer taxes to zero, continue a zero tax on future unemployment insurance taxes, and yet continue to pay benefits? This article discusses these issues and comments on the future of the unemployment insurance moratorium in Kansas.

Without question the moratorium has had a positive effect on the Kansas business climate. It has allowed employer retention of significant amounts for other business uses and provided employers with the opportunity to increase employee fringe benefits which otherwise would have been impossible. It could be argued that providing additional employee benefits is especially important due to the current labor shortages which Kansas and most other states are currently experiencing. In fact, it may provide some competitive advantage with employer recruitment efforts. The ability of firms to increase employee benefits due to the moratorium could be viewed as an unofficial business incentive.

Location Quotients of Economic Activity for Kansas Counties

by Pooran Lall, Department of Agriculture, Central Missouri State University, and David Darling, Department of Agricultural Economics, Kansas State University.

The development plan for the state of Kansas explicitly outlines the development goals for the state. Based on this plan, the state of Kansas seeks to further develop the state’s strengths and correct its weaknesses. In particular, this plan seeks to support community planning and action programs that increase local and regional development capacity, coordinate business activities, enhance exports and, in general, strengthen and diversify the economic base of communities.

One method of measuring and tracking economic change is through the use of location quotients. A location quotient is an index which tells (1) the degree of self-sufficiency of a community in a particular industry, and (2) how important the industry is to the community’s economy. Location quotients also provide businesses, or potential businesses, with information which will help them identify potentially profitable opportunities.

This study determines location quotients based on one-digit SIC codes for each county in Kansas and provides information on industrial activity that will aid those conducting community and economic development programs.

The Outlook for Kansas and the Nation: 1998 Update

by Norman Clifford, Institute for Public Policy and Business Research, University of Kansas.

The national economy is expected to have another strong growth year in 1998, but a closer look at the data suggests that national economic growth is slowing, due to a decline in real exports and much slower growth in consumer spending. The slowdown in growth of the national economy will be seen in unemployment rates, which will begin increasing at the end of 1998.

The Kansas economy should complete another strong year in 1998, but some of the strength of the last three years will dissipate in 1999.

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