Opportunities and Challenges Presented to: Wyoming Associated Builders Annual Meeting February 29, 2008 Parkway Plaza Hotel & Convention Center By

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1 Opportunities and Challenges Presented to: Wyoming Associated Builders Annual Meeting February 29, 2008 Parkway Plaza Hotel & Convention Center By Doug Leonard Senior Economist Wyoming Department of Employment Research & Planning (307)

2 Today s Presentation Population and Workforce Trends National and Global Market Forces Housing Infrastructure Why discuss housing last? 2

3 Population and Workforce Trends 3

4 5.0% 4.5% 4.0% Figure: Over the Year Employment Change for W yoming, Neighboring States, and the US, Q3 Neighboring states include Colorado, Idaho, Montana, Nebraska, S outh Dakota, and Utah 3.5% 3.0% Over the Year Change 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% Q1 2007Q2 2007Q3-1.5% -2.0% Da t a S o u rc e s : Un it e d S t a t e s De pa rt m e n t o f Co m m e rc e, Bure au of Labor S tatistic s Year Wyoming Neighboring States US 4

5 Wyoming Needs Nonresident Workers! 5

6 Resident Labor Supply Exhausted! Domestic = Resident 6

7 On the Road in Wyoming Source: Casper Star Tribune 7

8 Figure: Top State of Origin Inflow s to W yoming for W orkers w ithout W yoming Driver Licenses 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Source: D. Leonard, Wyoming Commuting Pattern Data Model, Unpublished Run, February 21, Q4 2001Q1 2001Q2 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 Inflow Date WY CA CO TX UT MT SD ID MI NE

9 2007Q2 25% Over the Year Inflow Change for Workers Without Wyoming Drivers Licenses 20% 15% 10% 5% 0% -5% -10% 9 Over the Year Inflow Change 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 Date Top Ten States of Origin All Other States of Origin Source: D. Leonard, Wyoming Commuting Pattern Data Model, Unpublished Run, February 21, 2008

10 Nonresident Workers Come to Wyoming, But Don t Stay! 10

11 The $64 Question: Do we really want new workers to stay? Personal observations of the last boom Are nonresidents welcome in Wyoming? Does Wyoming appear to prefer disposable workers? Come in during the boom When it s over they leave Historically, Wyoming appears to only welcome certain types of workers which benefit existing industries We talk diversification, but do we really want it? What is diversification (define) allows us to manage risk (property values) Wyoming more vulnerable to ups/downs of energy markets What will it cost? 11

12 Number of 1992 Resident Worker Cohort Age Still Working in Wyoming 120, , ,000 80,000 94,658 84, % Loss of 44,253 workers in five years 76,875 71,583 68,065 60,000 40,000 EXODUS OF THE YOUNG! 20, Source: Nurses in Wyoming; Demand, Retention, & Supply ( 12

13 120,000 Number of 2000 Resident Worker Cohort Age Still Working in Wyoming 116,229 Loss of 45,127 workers in five years 100,000 96,162 80,000 85,572 78,899 74,719 71,102 60,000 40, % EXODUS OF THE YOUNG CONTINUES! 20, Source: Nurses in Wyoming; Demand, Retention, & Supply ( 13

14 Rapid Loss of Younger Workers What will future labor supply look like? Happy about Hath-Away? Students already game the system market response Use to recruit moms and dads? Students train for jobs not available in WY How do we RETAIN workers? Current strategies focus mainly on attraction No coordinated statewide strategies or policies for retention No coordinated statewide strategies or policies designed around family needs once workers arrive What do they want? Affordable health care/benefits, child care New labor sources Job Corps, corrections system Disabled, retired or near-retirement workers 14

15 Source: Outlook 2010 Revisited: Wyoming s Labor Market at Mid-Decade ( Distribution of Employment Growth by Typical Education/Experience Level for All Industries in Wyoming, 2012 Master's degree Bachelor's plus 2.1% work experience 4.7% Bachelor's degree 7.6% Associate's degree 4.8% Postsecondary vocational award 5.0% Doctoral degree 0.1% First professional degree 1.6% Short-term on-thejob training 34.4% Experience in a related occupation 6.6% Long-term on-thejob training 8.1% Moderate-term onthe-job training 25.0% 79.1% of new jobs created in Wyoming between 2002 and 2012 will not require a college degree 15

16 The Demographic Sledgehammer! Source: U.S. Census Bureau ( 16

17 What About the Infirmed and the Elderly? (from Nurses in Demand: A Statement of the Problem) Demographic Sledgehammer Medical needs increase with age More chronic illness/expensive treatments Geography works against us Dispersed health care delivery Shortage of Registered Nurses to care for patients Where do we go from here? 17

18 National and Global Market Forces: Wyoming is NOT immune to their effects 18

19 Food for Thought: Who influences Wyoming s economic destiny? 19

20 INDIA CHINA 20

21 Spot Natural Gas Price ($/MMBTU) $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 Figure: Monthly Average Opal and Henry Hub Spot Natural Gas Prices and Wyoming Rotary Rig Counts Rotary Rig Count Data Source: Baker Hughes International Small price differential Large price differential Hurricane Katrina Hurricane Rita Rotary Drilling Rig Count $0 0 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Dec-02 Apr-03 Aug-03 Dec-03 Apr-04 Aug-04 Dec-04 Apr-05 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Price Data S o urce: Interco ntinental Exchang e 10 xgro up ( m/marketdata/nanaturalgas/nanatgashisto ry.jsp) Date Opal Hub Spot Gas Price Rotary Rigs Henry Hub Spot Gas Price 21

22 Energy Regulation Environmental/Safety Concerns Coal-fired power plant construction scuttled Access to California energy markets Go Nuclear? Alternative energy Fuel Economy Standards (C.A.F.E.) Electric cars where do they get power? 22

23 Consequences of High Energy Prices Food Stocks Wheat: from $3/bushel - $10/bushel Corn (ethanol) cheaper imports from Brazil not allowed Livestock Soybeans and other crops (bio-diesel) Auto Industry Layoffs at Ford, GM and Chrysler Commodity Competition Alaska Natural Gas Pipeline 4Bcf/day twice the capacity of Rockies Express Liquefied Natural Gas Imports (Russia, etc.) >economies of scale to compete with domestic suppliers 23

24 Housing Infrastructure 24

25 Figure: W yoming Average Housing Prices, Average Home Sale Price $190,000 $170,000 $150,000 $130,000 $110,000 $90,000 Wyoming s Median Household Income in 1999 was $37,892 or 37.3% of median home price. Wyoming s Median Household Income in 2006 was $47,041 or 25.0% of median home price $115,183 $91,714 $119,843 $96,906 $122,857 $101,517 $130,457 $111,437 $132,601 $116,469 $135,765 $121,140 $145,429 $132,708 $152,089 $142,501 $164,930 $159,776 $187,869 Source: Wyoming Housing Database Partnership, "A Profile of W yoming Economics and Housing", August 2007, Tabl e I.20 Inflation-adjusted housing prices cal cul ated using Consumer Price Index for All Urban Consumers (CPI-U) from the Bureau of Labor Statistics $70, Year Wyoming Average (Nominal Dollars) Wyoming Average (2006 Dollars) Median Income Source: Census Bureau Table H-8. Median Household Income by State: 1984 to 2006 and Table DP-3. Profile of Selected Economic Characteristics:

26 Housing Infrastructure Issues What can be done to address the housing issue? Current strategy appears to be make hay while the sun shines What if nonresidents stop coming (regional labor competition energy markets)? Not only need housing but also Once they get here, why stay? Who bears the risk? 26

27 Summary Opportunities We See Increased revenues/budget surplus New schools Population growth Employment and wage growth Challenges We Face International competition Young and highly educated people exit the state We can recruit but we cannot retain Rapidly aging population Nursing shortage Urban planning/housing 27

28 Questions? 28