Kansas Economic Overview
Kansas is part of America’s "grain belt" and is one of the most agriculturally productive states in the country. With a population of only about 2.8 million, the state is a leading producer of wheat, sorghum, and sunflowers and in 2008 produced $10.8 billion in revenue from its livestock industry.
Kansas also has a growing aerospace industry, with revenues in excess of $8 billion each year. Some of the largest aerospace companies in the country have manufacturing facilities in the state, including Boeing, Cessna, Bombardier, and Hawker Beechcraft. Additionally, it is the eighth largest oil and natural gas producer in the United States. With a gross state product (GSP) of $122.7 billion in 2008, Kansas ranked 32nd in the country. Per capita personal income in the same year was just over $35,000.
Kansas became a state in 1861, after many immigrants had poured into the American Midwest to participate in the agricultural boom taking place in the area. In 1854, the Kansas-Nebraska Act determined that Kansas would be a "free" state, and Kansas' status as a non-slave state attracted eastern businessmen interested in agricultural and livestock opportunities. Kansas became, and has remained, an important agricultural center in the United States.
The Union Pacific and the Santa Fe railroads spanned the state by 1872, with additional routes bringing more settlers through the 1880s. Agriculture received a boost in the 1870s, when winter wheat was introduced to the state. The demand for wheat increased considerably during World War I, when vast areas of the Kansas prairies came under cultivation. This prosperity lasted only until a prolonged drought coincided with the Great Depression in the 1930s, during which Kansas was characterized as part of the "Dust Bowl."
During World War II the manufacturing sector grew rapidly, and Wichita became an important aircraft-producing center. By the early 1950s the manufacturing of transportation equipment had exceeded processed food as Kansas’s biggest earning sector. Today, the state’s economy is diversified among the agriculture, mining, manufacturing, and service industries. Livestock, meatpacking, and dairy products are important sectors.
In 2007, $12 billion was generated from Kansas' agriculture, with $3.8 billion worth for the export market. Kansas farmers produce more wheat than those in any other state–$2.5 billion in 2008. The state’s corn industry brings in about $900 million annually, contributing nine percent of the GSP. Sorghum earned an additional $690 million, and, with annual revenues of approximately $280 million, Kansas is the sixth largest alfalfa producer in the country.
Livestock, specifically cattle, generates 60 percent of the state’s total agricultural production. The meat industry boasts revenues of $10.8 billion and is responsible for over 19,000 jobs. Another 51,000 people are employed as suppliers or in other ancillary services. Twenty-two percent of the country’s beef originates in Kansas. The state has 17.5 million acres of pasture that are unsuitable for raising cultivated crops but perfect for providing grazing land for livestock.
Aquaculture plays a small role in the Kansas economy. While plans are in place to expand development in this field, this industry raises less than $5 million annually in the state.
BANKING AND FINANCIAL SERVICES
In 2006, the financial services industry contributed approximately $11.7 billion to the Kansas GSP of $99 billion and paid taxes in excess of $22 million. The banking industry came under increasing attack during the worldwide economic crisis of 2008–2009 due to the failure of many institutions and the federal bailout programs that ensued.
Kansas was 13th in the nation in communications manufacturing employment in 2007, with 3,100 jobs, and 16th in communications services employment, with 27,800 jobs. The Sprint Nextel Company, the largest wireless broadband company and the third largest wireless communications manufacturer in the United States, has its headquarters in Overland Park, the second most populous city in Kansas. The company boasts annual revenues in excess of $40 billion and generates $56 million in local and state taxes.
There are about 7,300 construction firms in Kansas, most with fewer than 10 employees. More than 64,000 people in the state are employed in the industry and in aggregate earn more than $2.3 million annually. In 2007, their average salary was $41,000. Direct construction spending in the state contributed a total of $12 billion (10 percent) to the Kansas GSP of $117 billion. The construction sector slumped in 2008 and 2009 because of the world financial crisis, but federal stimulus packages were expected to lead to increased nonresidential construction spending by $1 billion and add about $2.2 billion to the GSP.
Kansas is home to 27 colleges and universities, including Kansas State College of Technology and Aviation and its distance education program. There are also another 44 two-year community colleges and vocational/technical institutes. Teachers in the public school sector have an average annual salary of $39,100, which is far below the national average of $47,800. State funding to education has been cut in recent years.
Kansas produced $2.37 billion worth of oil in 2007 from the 12,000 wells that dot the state. The gas and oil industries employ some 9,100 people who generate $4.3 billion of the Kansas GSP annually. The fastest growing energy sector in Kansas is renewable energy. Legislation before Congress is expected to add almost 3,100 jobs in an effort to build wind turbines throughout the state. Landowners who build wind generators on their property will be paid $19 million annually and the revenue generated for the government through taxes is expected to reach $20.8 million annually. Though only a one-time boom, this increase in generator construction and related services is expected to generate approximately $4 billion.
Although Kansas is not a state famous for its entertainment venues, the sector still generates $694 million in annual revenues and employs over 13,000 people. The 1,029 establishments in this industry provide almost $180 million in wages each year. The state is home to the Kansas Speedway, where the NASCAR Sprint Cup Series takes place every year. The raceway pays $24.3 million in annual sales tax. Dozens of feature films have been produced in Kansas, bringing in some $230 million in production spending since 1982. To encourage the industry, the state provides a 30 percent income tax credit for production expenditures in Kansas.
There are 3,517 insurance companies employing 52,000 people in the state. More than 2,000 of these firms employ between five and nine workers. The field generates an annual payroll of $2.1 billion, and the average annual salary is $36,000. State Farm, Allstate, and Progressive are the top three national insurance companies conducting business in the state.
The manufacturing industry accounted for 13.8 percent of the state’s total employment in 2008, exceeding the national average of 10.2 percent. The nearly 3,200 Kansas manufacturing firms enjoyed sales in excess of $18 billion in 2008, and their almost 188,000 employees enjoyed annual compensation of about $63,000, which is $15,000 higher than the average Kansas salary.
Kansas manufacturing enjoyed steady growth until the world economic crisis of 2008–2009 and is expected to rebound quickly. This growth will likely be kick-started by the increased demand for aerospace parts from industry-related companies in the state and across the country. The aerospace industry, along with food products, chemicals, machinery coal, rubber, metal, computers, and petroleum products, account for 88 percent of manufacturing in the state.
MINING AND EXTRACTION
By the turn of the 21st century Kansas was producing nonfuel minerals worth some $640 million. Kansas is the leading producer of crude helium–about 59 million cubic yards (45 million m3) a year, worth nearly $50 million–and top grade helium (85 million cu m, worth $170 million). The state ranks fifth in salt production 3.4 million tons (3.1 million metric tons), worth $120 million). Coal was mined throughout the eastern part of the state for 150 years, until most deposits were exhausted. For the past quarter century, Linn County has been the state’s only county still operating coal mines.
Only 2,600 people out of a total state labor force of 1.3 million are employed in the mining industry in Kansas, even though almost every county in the state has some kind of mineral production. Petroleum and natural gas are the most important mined products in the state. Other mined products include gypsum, portland cement, limestone, and crushed stone. The sector generates almost $27 million in tax revenue.
There are 11,445 registered nonprofit organizations in Kansas, with the largest concentration of 1,342 in Wichita. About 6,000 are religiously affiliated organizations, and almost 2,500 Kansas nonprofits provide individual and family social services. Average salaries range from $31,000 for a youth pastor in a local church to $59,000 for an executive director, but, as is true in most states, some nonprofit executive directors earn more than six figures annually. Nearly 40 percent of Kansas nonprofits have an annual operating budget of less than $1 million, while more than 27 percent have a budget of less than $500,000. In addition, the 2,100 charitable organizations in neighboring Kansas City, Missouri, have annual revenues of nearly $10 billion.
The Kansas retail industry generates annual sales of some $27 billion and pays the state nearly $100 million in yearly taxes. Its more than 11,300 establishments employ about 150,000 people and pay out annual wages amounting to approximately $3.2 billion. Kansas retail is dominated by national giants such as Walmart, Home Depot, and Target. Workers’ average annual salaries range from $17,000 for a sales consultant to $49,000 for a district manager. Kansas retailers are considered a major force in the state’s economic performance despite the recent worldwide recession. Retailers helped boost the Kansas GSP by 2.2 percent, compared to real GDP growth in the United States of 0.7 percent.
Kansas ranks first in the nation in the growth of its high-tech industry. According to the 2009 Cyberstates Report by TechAmerica, new jobs were added by Kansas high-tech companies at a rate of 8.1 percent in 2007. The addition of 4,300 high-tech jobs brought the industry total to 58,200 employees, who earned a $4.2 billion payroll. The average technology industry wage in 2007 was $71,700, 91 percent higher than the average private sector wage in the state and the ninth highest differential in the nation. Kansas’s nearly 300 IT and 550 software companies generate some $3.7 billion for the local economy.
During 2006, tourism generated $2 billion for the state of Kansas, of which $47 million was state tax revenue and another $15 million in local tax revenue. Kansas’s five casino hotels are the largest tourist attractions in the state, generating over $1.2 billion in annual revenue. The Kansas Cosmosphere and Space Center are also popular tourist destinations. In addition, 1,290 farms reported income from agritourism. This is a small but growing field, where farmers and other residents of rural communities open up their homes so that tourists can see working farms, ranches, and wineries.
The Kansas transportation industry has more than 2,100 firms with 16,000 employees and pays annual wages of $490 million. With more than 1,700 companies, trucking represents the largest segment of the state’s transportation industry. The average annual wage in this sector is $30,625 and annual revenues exceed $3.9 billion. Kansas does not have any international airports, but is home to 22 domestic-service airports, including Wichita Mid-Continent Airport, which produces annual tax revenues of about $200 million. US Airways has the greatest number of flights in and out of the state of any major carrier.
There are 86 aerospace companies in Kansas, which employ about 157,000 people. Considering that there are some 2.8 million people in the state, this means one in every 18 people is employed in the industry, which generates $5.5 billion in annual sales. The industry forecast predicts growth of three percent into the second decade of the century.
Kansas aerospace relies primarily on commercial aviation parts manufacturing, defense aerospace manufacturing, avionics manufacturing, and general aviation manufacturing. Its prominent companies include Spirit AeroSystems, Boeing Integrated Defense Systems, Garmin International, Honeywell, Raytheon, Bombardier, and Cessna.