A matter of degrees; Highly educated work force gives Johnson County an edge

Educated people appear to be flocking to Johnson County in droves, and companies and businesses are eager to tap into that college-educated market.

That is a key reason why Johnson County is more resilient in weathering economic downturns compared to other parts of the country, said Jacqueline Michael-Midkiff, regional economist in the U.S. Bureau of Labor Statistics Kansas City, Mo., office.

According to research figures in one of her latest surveys, 90 percent of Johnson Countians have a high school education; 51 percent have a college education with a bachelor’s degree or higher.

“That’s much higher than the national average – significantly higher. The nationwide figure is only 27 percent,” Midkiff said. “That’s good for businesses and good for the (Johnson County) economy.

“That is one of the things that amazed me and certainly helped to explain all the job growth in Kansas and particularly Johnson County; there’s a group of people there who are desired by high-skilled companies.”

Doug Davidson, president of the County Economic Research Institute, said he “wholeheartedly” agreed with Midkiff’s data and said although there are several reasons educated people and Johnson County are synonymous, the main reason is the quality of schools here.

“Educated people want high quality schools for their children because education is important for them and so they tend to locate here and remain here,” Davidson said. “It is a little bit of the chicken and the egg thing; is it that our high quality schools developed because we had an educated adult population who were concerned about those things and insured that our schools developed in that manner or is it that those schools attracted educated adults?

“I think it’s a little bit of both.”

As a result, Davidson said, Johnson County has become a leader not only in population growth in the past 15 to 20 years, but also in employment growth.

“We’ve really been adding more jobs than we have population,” he said. “Go back 20 to 25 years and we were a net exporter of labor in those days; more people left Johnson County to go to work than commuted into the county to work. That’s no longer the case and hasn’t been for quite some time now. We’ve created so many jobs, there are more people commuting into Johnson County to go to work than are leaving, commuting out of the county to work.”

He said the main reason for that is businesses want to locate where they have access to a highly educated work force, and the addition of the Johnson County Education and Research Triangle will only increase that desire.

Midkiff researched the growth rates in the Kansas City metropolitan area from 1990 to 2008. During that period, private employers added a net 118,323 jobs in Johnson County. That translates into 71.4 percent private-sector job growth.

Midkiff said she would expect development of the Johnson County Education and Research Triangle to continue adding college-educated people to the population as well as attracting the kinds of businesses seeking their expertise.

The good news, said Midkiff, is the diversity of the growth.

“It’s broad; it’s just all over the place,” she said. “The most jobs gained over that period were in professional and business services, and also education and health services. But there were job gains everywhere and (Johnson County) did better than Jackson County (Mo.) in every industry of the super sectors, which is a high-level of industry that breaks down into about 10 or 11 groups.

“Johnson County outdid Jackson in every one except for in (residential and commercial) construction.”

Midkiff said there are several areas to look at in determining how regions are faring economically.

“If you specifically look at unemployment rates, in August, Johnson County was at 6.4 percent – a lot less than the national rate and quite a bit less than the Kansas City rate as a whole, which was at 8.8 percent,” she said. “Overland Park was at 6.6 percent in August, so it was very close to the Johnson County rate.

“But there’s a huge difference between the Missouri side and the Kansas side for the metropolitan area as a whole. Missouri was 10.1 percent and on the Kansas side it was 7.1 percent.

“Why? It’s hard to say, but what I can say is the Kansas side is experiencing so much more growth than the Missouri side.”

Johnson County has long been tabbed as the economic engine for the state of Kansas. Midkiff stopped short of calling it the economic engine of the Kansas City area.

“I think Johnson County is the place to watch within the metropolitan area,” she said. “Johnson County certainly has helped to sustain the metropolitan area through past recessions; it looks like it may do so again.

“Is it the economic engine for the metropolitan area? In terms of growth, absolutely.”

Jackson County (Mo.) has long held that title. But, according to Midkiff’s data, that crown could be passed to Johnson County in the near future if the rate of job growth continues to increase here.

During the 18-year study period, private employers created 118,323 jobs in Johnson County while 2,528 private-sector jobs were added in Jackson County.

“I can’t make projections,” Midkiff said. “But I think it’s clear, if you look at the numbers, that if that trend continues, there’s no doubt Johnson County is gaining so much employment and somehow encouraging businesses to locate there and Jackson County is not doing that.”

As in the past, in order for Johnson County to continue to grow and to sustain its economy during periods of recession it must attract a wide range of businesses, Midkiff said.

“That’s the really good news for Johnson County right now, that all the eggs aren’t in one basket,” she said. “And that’s in every industry there; it’s all over the place.

“I think Johnson County is greatly diversified in the businesses it has and the employment opportunities that it has. It has a very educated population and so it’s got a great skill-set for high-skilled jobs and higher-paying jobs, and with the growth it’s seeing, if that growth continues, it certainly will respond well to coming out of the (current) recession.”

But Davidson cautions that the recession continues to affect Johnson County’s economy.

“The recession has definitely had its impact here,” he said. “We may be coming out of the recession, but when you hear those reports, keep in mind that what they are referring to is the technical definition of recession, and that is measured by the output of GDP (Gross Domestic Product).

“The GDP may be growing, but that has yet to translate into an increase in employment. We’re still seeing a decline in employment (in Johnson County) and we’ll continue to see that unemployment rate inch upward at least a year before we see significant improvement in the employment situation.”

In CERI’s monthly report tracking Johnson County’s economy, although the unemployment figure for August is 6.4 percent, down from July’s 7.1 percent, Davidson said it was a seasonal adjustment rather than a trend.

“With school starting, college students drop out of the labor market and go back to school, so the biggest reason our unemployment rate went down is not because of an increase in employment but rather a reduction in the number of people in the labor force,” he said.

The only real positive from the latest CERI figures is an uptick in the resale residential market that Davidson attributes to tax incentives for first-time buyers as part of the federal government’s stimulus package.

“But until the employment situation starts to improve, I don’t see the other things we’re tracking improving,” he said. “As more people become employed and those people who are employed become less concerned about their employment situations and the potential for being laid off, that will help the housing market and also help retail sales, which are down.

“A lot rides on the consumer and how secure they are in their employment situation, which determines how freely they’re willing to spend and able to spend.”

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