by Levi A. Russell
Originally published by the Ottawa Herald on June 26, 2019
Big changes are coming to the USDA and to the Kansas City metro area. Last week, Secretary of Agriculture Perdue announced that two major arms of the U.S. Department of Agriculture, the Economic Research Service (ERS) and the National Institute for Food and Agriculture (NIFA), would be moving to the Kansas City area this summer. What does this mean for the KC metro’s economy? What about Franklin County farmers?
To answer the first question, we have to look at what we know about the move. Roughly 600 employees will be relocating from Washington D.C. to the Kansas City area, though we don’t know which side of the state line they will call their new home. The General Services Administration has put out a call for proposals for buildings in the area and, of the 6 buildings that fit their specifications, the closest to Ottawa is the Sprint office building in Overland Park.
Certainly the broader Kansas City area will benefit from the additional jobs, larger tax base, and economic activity from support services provided to these new-to-Kansas-City federal workers. Additionally, the federal government estimates that there will be a $300 million in federal government budget savings over the next 15 years due to lower building rent and other advantages from the relocation.
NIFA allocates grant funding for the bulk of the grant programs the USDA provides each year. Due primarily to our world-class Land Grant University in Manhattan, Kansas receives tens of millions of dollars each year in research funds from NIFA for a range of research efforts including crop and animal agriculture, agricultural economics, natural resources, food science, health, and education. I don’t think NIFA’s location change will mean much for Franklin County agriculture; grant funds will flow into and out of NIFA just as they did when the employees were housed in D.C.
However, I think there’s a possibility that Franklin County agriculture will benefit from ERS’s move to Kansas City. ERS is an in-house research division within the USDA. It houses a gaggle of economists who are trained in analysis of markets, rural economies, farm management, food and nutrition assistance, food safety, international trade, and other issues related to agriculture.
What I’m about to say is not intended to be a jab at ERS employees. I’m sure all of them are fine people, and the ones I’ve met over my short career as an agricultural economist were sharp, knowledgeable people who really want to help U.S. agriculture succeed. However, I think it’s possible that living and working in D.C. has a stifling effect on one’s broader perspective of agriculture. There’s nothing wrong with boutique organic stores and high-overhead-cost hydroponics operations, but these niche businesses don’t represent the backbone of agriculture.
I’ve written in this column before about Franklin County agriculture. We have a lot of cattle, corn, and beans around here. I think it will be good for the economists at ERS to be a little bit closer to the agricultural producers who feed our nation and the world. It just might broaden their perspective and increase their focus. If it does, Franklin County producers will benefit from more effective government policy driven by the analysis of the fine folks at ERS. I hope all our new neighbors working at the USDA will feel welcome in northeast Kansas.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Showing posts with label Herald columns. Show all posts
Showing posts with label Herald columns. Show all posts
Tuesday, July 2, 2019
Thursday, May 30, 2019
China Tariff Battle Impacts Ottawa Kansas
by Levi A. Russell
This originally appeared as a column at the Ottawa Herald
When we read about the many aspects of the current trade war with China, it’s difficult to see how big international policy decisions affect us here in Ottawa. This week I’d like to discuss recent events in the trade war with China and how they might affect us. To do that, let’s take a big picture look at the trade war. Though there are many weapons in a trade war, tariffs are the primary weapon of choice for the Trump administration in its war with China. A tariff is a tax on an import, but as we will see, it’s a complicated tax.
Earlier this month, the U.S. Trade Representative imposed a 25% tariff on $200 billion worth of Chinese goods imported to the U.S. The 25% tariff is paid explicitly by importers of Chinese goods, but other parties are implicitly affected by the tax. In economics, we say that the incidence of the tax falls on the aforementioned importers, Chinese exporters, and U.S. consumers. The importer passes on some or all of the tariff in the form of higher prices for U.S. consumers. This higher price pushes down the quantity that consumers want to buy, resulting in lower revenue for Chinese exporters.
The tariffs will be applied to over 5,000 different products; some are consumer goods (i.e. goods we buy and consume directly) and others are intermediate goods, which are used by U.S. manufacturers to make other products. Some examples of goods that will be taxed under this tariff are grain, candies, pasta, beverages, minerals, ores, slag, ash, mineral oils, inorganic chemicals used in manufacturing, fertilizers, soaps, plastics, rubber, wood, fabric, stone, ceramics, flax, cotton, wool, aluminum, furniture, clocks, ships and boats, electronics, and many other goods. We can expect that the prices of many of the consumer goods listed here will increase here in the U.S. and the prices of other goods made from the intermediate goods will also rise to some extent (though not likely a full 25%).
A few days after the U.S. Trade Representative announced the 25% tariff, China retaliated with a promise to increase tariffs on $60 billion worth of goods exported to China. These tariffs will directly impact importers in China, but will also affect industries in the U.S. that export to China, as well as Chinese consumers. The broad categories of goods that will fall under these higher tariffs are food products, building materials, furniture, bedding, footwear, clocks, light fixtures, musical instruments, parts for locomotives, boats and yachts, electronics, and chemicals.
Here in Ottawa, the U.S. tariffs will likely have a bigger impact than the Chinese tariffs. Like the rest of the country, we will likely see a rise in the prices of many consumer goods. Some of the manufacturing and construction businesses in Ottawa will likely see an increase in their costs, especially if they buy raw materials or intermediate products directly from China. They will either have to pay higher prices for these inputs or find other sources either in the U.S. or another country.
Even though I am an economist, I will not try to tell you all of this is bad. The expected reductions in employment and GDP in the U.S. are mild, though they will likely be felt to a greater degree in specific areas of the country. These economic costs might be worth it if they result in policy changes that are favorable to U.S. interests. For all its improvements in the past few decades since it slaughtered tens of millions of its own people, China is still a Communist country. They still send Christians and Muslims to “re-education camps,” micromanage their citizens’ lives with an authoritarian social credit system, and support North Korea, which actively tortures its own people. China has repeatedly stolen our intellectual property and is increasing its spying efforts in the U.S.
The use of the term “trade war” is apt. The tariff battles may impact the economy in the short run, but winning the war is the goal. It’s up to us and our elected officials to determine whether the economic costs are worth the strategic and security-related benefits.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
This originally appeared as a column at the Ottawa Herald
When we read about the many aspects of the current trade war with China, it’s difficult to see how big international policy decisions affect us here in Ottawa. This week I’d like to discuss recent events in the trade war with China and how they might affect us. To do that, let’s take a big picture look at the trade war. Though there are many weapons in a trade war, tariffs are the primary weapon of choice for the Trump administration in its war with China. A tariff is a tax on an import, but as we will see, it’s a complicated tax.
Earlier this month, the U.S. Trade Representative imposed a 25% tariff on $200 billion worth of Chinese goods imported to the U.S. The 25% tariff is paid explicitly by importers of Chinese goods, but other parties are implicitly affected by the tax. In economics, we say that the incidence of the tax falls on the aforementioned importers, Chinese exporters, and U.S. consumers. The importer passes on some or all of the tariff in the form of higher prices for U.S. consumers. This higher price pushes down the quantity that consumers want to buy, resulting in lower revenue for Chinese exporters.
The tariffs will be applied to over 5,000 different products; some are consumer goods (i.e. goods we buy and consume directly) and others are intermediate goods, which are used by U.S. manufacturers to make other products. Some examples of goods that will be taxed under this tariff are grain, candies, pasta, beverages, minerals, ores, slag, ash, mineral oils, inorganic chemicals used in manufacturing, fertilizers, soaps, plastics, rubber, wood, fabric, stone, ceramics, flax, cotton, wool, aluminum, furniture, clocks, ships and boats, electronics, and many other goods. We can expect that the prices of many of the consumer goods listed here will increase here in the U.S. and the prices of other goods made from the intermediate goods will also rise to some extent (though not likely a full 25%).
A few days after the U.S. Trade Representative announced the 25% tariff, China retaliated with a promise to increase tariffs on $60 billion worth of goods exported to China. These tariffs will directly impact importers in China, but will also affect industries in the U.S. that export to China, as well as Chinese consumers. The broad categories of goods that will fall under these higher tariffs are food products, building materials, furniture, bedding, footwear, clocks, light fixtures, musical instruments, parts for locomotives, boats and yachts, electronics, and chemicals.
Here in Ottawa, the U.S. tariffs will likely have a bigger impact than the Chinese tariffs. Like the rest of the country, we will likely see a rise in the prices of many consumer goods. Some of the manufacturing and construction businesses in Ottawa will likely see an increase in their costs, especially if they buy raw materials or intermediate products directly from China. They will either have to pay higher prices for these inputs or find other sources either in the U.S. or another country.
Even though I am an economist, I will not try to tell you all of this is bad. The expected reductions in employment and GDP in the U.S. are mild, though they will likely be felt to a greater degree in specific areas of the country. These economic costs might be worth it if they result in policy changes that are favorable to U.S. interests. For all its improvements in the past few decades since it slaughtered tens of millions of its own people, China is still a Communist country. They still send Christians and Muslims to “re-education camps,” micromanage their citizens’ lives with an authoritarian social credit system, and support North Korea, which actively tortures its own people. China has repeatedly stolen our intellectual property and is increasing its spying efforts in the U.S.
The use of the term “trade war” is apt. The tariff battles may impact the economy in the short run, but winning the war is the goal. It’s up to us and our elected officials to determine whether the economic costs are worth the strategic and security-related benefits.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, February 19, 2019
Ottawa's Economy on the Upswing
by Levi A. Russell
I’ve addressed Ottawa’s employment situation fairly recently, and things are still humming along quite well. The unemployment rate is still at historic lows and the labor force continues the growth it has had the last couple of years. Growth in the labor force has tracked pretty consistently with overall population growth in the county. This, combined with the low unemployment rate, indicates that most people who are looking for a job are able to find one. Certainly this is a good thing and is consistent with Hawks’ informative piece from last week.
Two reliable indicators of poverty are poverty line statistics and the number of people enrolled in the Supplemental Nutrition Assistance Program (formerly called food stamps). I could only find data on the percentage of the population below the poverty line since 2012, so I can’t say much about the 2009 Recession’s effect on this statistic. In 2017, roughly 12.4 percent of Franklin county residents earned income below the federal poverty line. This is relatively low compared with the percentage of the population below the poverty line in recent years. Roughly 13.5 percent of the population was below the poverty line in 2014 and 2016.
The food stamp data is much more informative. I found food stamp data going back to the 1990s, which allows me to talk about the aftermath of the recession, 2012, and where we are today relative to that. From 2003 to 2006, roughly 7.5 percent of Franklin county residents received food stamps. This number began to tick up after 2006 and by the official end of the Great Recession in 2009, roughly 12 percent of the population received food stamps. It continued to rise until 2012, peaking at nearly 15 percent. Since then, things have improved dramatically and, as of 2016 (the latest data I could find) roughly 9 percent of Franklin residents receive food stamp benefits. Given the improvement in the local economy since then, especially the continued decline of the unemployment rate since 2016, it is likely that this number is even lower now.
So far I’ve discussed factors that contribute to short-term financial security. Income and employment are important, but they fluctuate over time. Families can receive food stamp benefits for a time and then leave the program when their financial situation improves. Home values are more significant indicators of longer-term financial security. For Franklin county residents an appreciation in their home value does several things: decrease their risk of bankruptcy, improve access to credit for times of financial stress, improve their financial situation after retirement, and other benefits.
Before the recession, home values in Franklin county peaked around the year 2007. As the recession drew near, home values fell, ultimately bottoming out about 15% below the 2007 peak in 2014. Since then, home values have been rising and have surpassed the previous 2007 peak. While some economic commentators are worried about rising interest rates quashing home value growth, continued increases in business formation and a stable job market will likely keep Franklin county in a good place to continue the growth we’ve enjoyed the last few years!
Please join Gwartney Institute and Ottawa University faculty for an engaging discussion on important issues at “Ottawa Minds and Wine!” Our first event is Thursday, February 7th at 5:15 PM at UnWined. We will have a brief 20 minute talk and will be around for discussion afterward.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, February 12, 2019
Economics of the Federal Government Shutdown
by Levi A. Russell
What does the shutdown cost us? Is there irreversible damage to the economy? Is it worth it to create a shutdown to get the funding President Trump wants for the border wall or, from the other perspective, to keep the wall from being built?
The most recent estimate I could find of economic losses from a government shutdown is from a 2013 Office of Management and Budget report. The report indicates that the 16-day shutdown in October of 2013 reduced fourth quarter 2013 GDP growth by $2 to $6 billion. In the private and government sectors combined, 120,000 fewer jobs were created during the first two weeks of that October as a result. These sound like very large numbers, but the reduced GDP growth only amounted to 0.2% to 0.6% lost growth. In December of 2018, 312,000 jobs were created in the U.S. economy, which easily makes up for any lost job growth the shutdown may have caused. This suggests that there is not much in the way of irreversible damage to the U.S. economy as a result of even a long government shutdown.
The term “government shutdown” is bandied about in the media regularly, but it’s difficult to justify this term in my opinion. Most of the largest agencies in the federal government are still humming along, including social security, medicaid, medicare, food aid, food inspection, law enforcement, investigations, and veterans’ benefits. Some government employees in these agencies are currently working without pay, but they will receive back pay when the shutdown ends.
Other functions have partially or fully closed operations for the duration of the shutdown and furloughed employees. Those employees may or may not receive back pay. Agencies that have closed are the IRS (no tax refunds will be processed during the shutdown, but you still have to pay taxes), national parks and museums, the US Department of Agriculture’s rural home loan approval system, and other “non-essential” services that aren’t currently funded.
Certainly the shutdown has a negative impact on a segment of the population. Tens of thousands of federal employees have to work without pay for a period of time and others are laid off and won’t receive pay. As a former state employee, I have a little different point of view on this. Federal government jobs are typically well-paid and very secure. The richest counties in terms of household income surround our nation’s capital. In effect, federal employees trade higher pay and lower risk of being laid off or fired in general for higher political risk. Most of our jobs are dependent on our ability to add value to the company, owners’ and managers’ ability to keep the company in business, and our customers’ preferences; federal employees’ jobs avoid a lot of that risk but have to deal with political risk.
Ultimately, this shutdown is political in nature. It isn’t about large segments of the budget, the maximum allowable amount of debt the federal government can incur (debt ceiling), or a big piece of legislation like Obamacare (the cause of the 2013 shutdown). The $5 billion price tag on the border wall is a drop in the bucket when compared with the proposed $4+ trillion budget. Put another way, the fight over the border wall funding is less than 0.12% of the proposed budget. I won’t pretend to know the benefits or drawbacks of the existence of a stronger border wall, but the shutdown itself will only have lasting impact on a relatively small group of federal employees. Most of us won’t even notice it.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, February 5, 2019
2018 Farm Bill and Franklin County
by Levi A. Russell
To answer this, we first need to ask: What does agriculture in Franklin county look like? For those of you who drive around our gravel roads regularly, it won’t surprise you that roughly one third of the land area of Franklin county is planted to corn and soybeans. These are the two major crops in this county and in much of eastern Kansas. Last year, over $54 million of corn and soybeans were planted in the county. While corn and soybeans are the primary crops in the county, farmers here also plant wheat and sorghum. Animal agriculture is also important in Franklin county. There are 44,500 cattle in the county, which means there are 1.7 cows, bulls, heifers, and steers for every person!
The 2018 Farm Bill and others like it in the past provide funding for three general program areas: agriculture, conservation, and nutrition assistance. Agricultural funding is primarily used to provide subsidies for crop insurance and income assistance to farmers when prices or yields are low, commonly referred to as the commodity title. Crop insurance for the primary crops in Franklin County hasn’t changed much in over a decade, but the 2014 Farm Bill made significant changes to the commodity title. These changes included a major shift in the program away from direct payments to farmers which occurred regardless of production conditions or prices to a risk-based commodity assistance program. Farmers were given the choice between two programs, one that focused on prices and the other that focused on total revenue for the crop. When prices or revenue fell below a certain level, payments were triggered.
The 2018 Farm Bill continues these commodity assistance programs with some notable exceptions. With the 2014 Farm Bill, farmers had to choose between the price program and the revenue program once and for all when they signed up in 2014. The new Bill allows farmers to choose again in 2019 for 2019 and 2020 and then choose annually between the two from 2021 to 2023. This change gives farmers more choice in the program and will allow them to choose the program that they believe will best mitigate the risks they will face that year. Farmers will also be able to update their yields on which the program payments are calculated. Both of these changes will likely result in more flexible support for agriculture in Franklin County over the next 5 years.
Another program within the commodity title is the commodity loan program. This is a very old component of the Farm Bill designed to provide additional assistance when prices are very, very low. The 2018 Farm Bill includes the first update to this program in 16 years, increasing loan rates (the base level of price support) by 12.8% for corn and 24% for soybeans.
There are two major changes to environmentally-focused programs in the 2018 Farm Bill. First, crop insurance has been changed to accommodate the use of cover crops. Cover crops are beneficial to soil health and help reduce erosion after the primary crops are harvested. Legislators hope that changing crop insurance to accommodate the use of cover crops will increase farmers’ adoption of this environmentally-beneficial practice.
The Conservation Reserve Program (CRP) is another long-standing component of the Farm Bill. This program allows farmers to take land out of crop production and receive “rental” payments from the government. These rental payments designed to incentivize the maintenance of habitat for wildlife. CRP contracts typically last 10 years. The 2014 Farm Bill allowed up to 24 million acres to be put into CRP, but the 2018 Bill increases this to 27 million by 2023. I couldn’t find detailed data for Franklin County, but, currently, there are somewhere between 10,000 and 25,000 acres in CRP in the county.
Nutrition assistance is always a contentious subject in Farm Bill debates among legislators. This component of the Bill typically represents about 75% of the total funding in the Bill and goes to support the Supplemental Nutrition Assistance Program (SNAP), formerly called food stamps. Though several controversial changes were proposed — for example, expanding and enhancing work requirements for participation in the program — none of them made it into the final bill. Funding for SNAP is expected to increase $98 million total over the 5 year life of this Bill.
Overall, the 2018 Farm Bill did not make dramatic changes to agricultural policy for 2019-2023. However, the changes that were made will likely improve the safety net for farmers, incentivize better environmental stewardship, and increase funding for one of the more efficient government food assistance programs.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Tuesday, January 29, 2019
Ottawa's Employment Situation
by Levi Russell
This article originally appeared in the Ottawa Herald.
At the end of each month, the Bureau of Labor Statistics releases a report detailing the number of jobs added to the U.S. economy during the previous month. The November report, released on the 7th of this month, was a bit of a disappointment. Economists had expected 198,000 additional jobs to be added in November, but the report indicated only 155,000 were added. One bright spot, the transportation sector, added 25,000 jobs nationwide.
The relatively good performance of the transportation sector made me think of all the new intermodal jobs being added in our area. This prompted me to look at Franklin County’s employment situation over the last few years. Franklin County’s labor force participation rate has been increasing steadily since the recovery from the 2009 recession. Labor force participation is the number of people in the labor force divided by the population aged 16 to 64. What does it mean to be “in the labor force?” Isn’t that just everyone with a job?
Not really. The labor force is defined as people who are working or actively seeking work. My wife Lana, who spends the majority of her waking hours as the primary caregiver of our children, is not in the labor force. Don’t get me wrong, she works very hard, but she would not part of the labor force. She just isn’t interested in working outside the home right now and so isn’t actively seeking work. Other people between the ages of 16 and 64 might leave the labor force when, after seeking work for a long time, simply give up and find another arrangement to provide for themselves.
So it’s good to see that, along with several years of population growth (with the exception of 2015), Franklin County’s labor force participation rate has increased. More people call Franklin County home, and a higher percentage of the total population of the county have been entering the labor force over the last several years. Another good sign for Franklin County’s economy is a very low unemployment rate. Currently, the unemployment here is at 3%, which is the lowest it has been since 2003. From the recession in 2009 to 2017, unemployment steadily declined here in Franklin County. Once the unemployment rate started approaching 3% in late 2017, unemployment has been relatively flat.
This isn’t necessarily a bad sign. There will always be some unemployment in a dynamic economy. People change jobs and might be unemployed for a short period between them. Some people’s skill sets become obsolete and they have to find training to get them into a new job. Looking at data on the unemployment history of Franklin County, it makes sense that unemployment leveled off here around 3%. This seems to be Franklin’s natural rate of unemployment.
But, similar to the labor force participation rate, the unemployment rate is complicated. People might enter or leave the labor force for good or bad reasons, and the unemployment rate may go up or down for good or bad reasons. The unemployment rate can go down — which sounds like a good thing in general — because some people give up looking for work and, by definition, leave the labor force! This may be a good thing, my wife is certainly happy being outside the labor force, but it may also represent people in very bad situations.
The takeaway point here is that you should always look beyond the headline unemployment number. Has the population grown? Has the labor force grown or shrunk? Has anyone looked into the reasons some people are either leaving or entering the labor force in greater numbers than before? Answers to these questions help us understand what is driving that headline unemployment number.
For example, if the population is growing and the labor force participation rate is growing because investors are creating many new jobs and people are able to get the skills to fill those jobs, the unemployment rate might actually tick up for a short period of time while people leave their current jobs, get trained, and move into better-paying jobs! We might think an increase in the unemployment rate is bad, but in this case it’s a small price to pay for a long-run benefit.
We might also see what appear to be negative effects on employment data when good things are happening. If innovation is driving the cost of the goods we buy every day lower — relative to the wages we earn — we may see people leave the labor force because their spouses can earn adequate income for the family. A decrease in labor force participation from a lack of opportunity over a long period of time is a bad thing, but people might also leave the labor force by choice.
In terms of overall employment, Ottawa is doing well and has been steadily improving since the end of the most recent recession. A larger percentage of the population are in the labor force and fewer people in the labor force are having trouble finding work. Next time I will discuss the economics of federal policy changes coming soon for agriculture, one of the county’s most important industries.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
This article originally appeared in the Ottawa Herald.
At the end of each month, the Bureau of Labor Statistics releases a report detailing the number of jobs added to the U.S. economy during the previous month. The November report, released on the 7th of this month, was a bit of a disappointment. Economists had expected 198,000 additional jobs to be added in November, but the report indicated only 155,000 were added. One bright spot, the transportation sector, added 25,000 jobs nationwide.
The relatively good performance of the transportation sector made me think of all the new intermodal jobs being added in our area. This prompted me to look at Franklin County’s employment situation over the last few years. Franklin County’s labor force participation rate has been increasing steadily since the recovery from the 2009 recession. Labor force participation is the number of people in the labor force divided by the population aged 16 to 64. What does it mean to be “in the labor force?” Isn’t that just everyone with a job?
Not really. The labor force is defined as people who are working or actively seeking work. My wife Lana, who spends the majority of her waking hours as the primary caregiver of our children, is not in the labor force. Don’t get me wrong, she works very hard, but she would not part of the labor force. She just isn’t interested in working outside the home right now and so isn’t actively seeking work. Other people between the ages of 16 and 64 might leave the labor force when, after seeking work for a long time, simply give up and find another arrangement to provide for themselves.
So it’s good to see that, along with several years of population growth (with the exception of 2015), Franklin County’s labor force participation rate has increased. More people call Franklin County home, and a higher percentage of the total population of the county have been entering the labor force over the last several years. Another good sign for Franklin County’s economy is a very low unemployment rate. Currently, the unemployment here is at 3%, which is the lowest it has been since 2003. From the recession in 2009 to 2017, unemployment steadily declined here in Franklin County. Once the unemployment rate started approaching 3% in late 2017, unemployment has been relatively flat.
This isn’t necessarily a bad sign. There will always be some unemployment in a dynamic economy. People change jobs and might be unemployed for a short period between them. Some people’s skill sets become obsolete and they have to find training to get them into a new job. Looking at data on the unemployment history of Franklin County, it makes sense that unemployment leveled off here around 3%. This seems to be Franklin’s natural rate of unemployment.
But, similar to the labor force participation rate, the unemployment rate is complicated. People might enter or leave the labor force for good or bad reasons, and the unemployment rate may go up or down for good or bad reasons. The unemployment rate can go down — which sounds like a good thing in general — because some people give up looking for work and, by definition, leave the labor force! This may be a good thing, my wife is certainly happy being outside the labor force, but it may also represent people in very bad situations.
The takeaway point here is that you should always look beyond the headline unemployment number. Has the population grown? Has the labor force grown or shrunk? Has anyone looked into the reasons some people are either leaving or entering the labor force in greater numbers than before? Answers to these questions help us understand what is driving that headline unemployment number.
For example, if the population is growing and the labor force participation rate is growing because investors are creating many new jobs and people are able to get the skills to fill those jobs, the unemployment rate might actually tick up for a short period of time while people leave their current jobs, get trained, and move into better-paying jobs! We might think an increase in the unemployment rate is bad, but in this case it’s a small price to pay for a long-run benefit.
We might also see what appear to be negative effects on employment data when good things are happening. If innovation is driving the cost of the goods we buy every day lower — relative to the wages we earn — we may see people leave the labor force because their spouses can earn adequate income for the family. A decrease in labor force participation from a lack of opportunity over a long period of time is a bad thing, but people might also leave the labor force by choice.
In terms of overall employment, Ottawa is doing well and has been steadily improving since the end of the most recent recession. A larger percentage of the population are in the labor force and fewer people in the labor force are having trouble finding work. Next time I will discuss the economics of federal policy changes coming soon for agriculture, one of the county’s most important industries.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Wednesday, January 23, 2019
Intro Column: A look into Ottawa's economy
by Levi Russell
Originally published in the Ottawa Herald, 11/29/2018
Since joining Ottawa University this August, I have heard a lot about the connection between the University and the Ottawa and Franklin County communities. I hope that this column will be a positive contribution to that relationship. In this first installment, I will introduce myself, my role at Ottawa University, and give a brief preview of the issues I hope to discuss every other week in this column.
I was born and raised in southeast Kansas and graduated from Chanute High School in 2005. My father’s family had been farmers in the area since the 1800s and my mother’s father was a country preacher. In the fall of 2005 I entered Kansas State University and graduated in 2009 with a bachelor’s degree in finance. The market for finance grads was pretty thin on the heels of the housing market crash and financial crisis going on at the time, so I considered other options.
Graduate school was my choice and I began my second 4-year term at Kansas State in 2009 as an economics student. During this time I met my wife (who is a native of Ottawa), got married, and had our first child. I completed the PhD in 2013 and we moved to Corpus Christi, Texas. My 4 years as a student in K-State’s Agricultural Economics department had prepared me well to combine my love for rural life and my interest and education in economics to Texas A&M’s Agricultural Economics programs. In Corpus Christi, I served as a professor and Extension economist working primarily with farmers and other agribusinesses along the Texas coast.
After a few years in Texas, during which time our second child was born, we took an opportunity to move back to a college town. I joined the Department of Agricultural and Applied Economics at the University of Georgia in 2016, again serving as an Extension economist and professor. We enjoyed our time there and I gained valuable experience that I continue to use today.
In the summer of 2018 I ran across an ad for a job at Ottawa University. The Gwartney Institute had been recently established earlier in the year by economics professor Dr. Russ McCullough. The Institute is named after a Kansas native and Ottawa University graduate, James Gwartney who is an economics professor at Florida State University. Dr. Gwartney has built a reputation in the profession as an innovator, best known for creating the Economic Freedom of the World Index. This Index uses publicly-available data to rank countries around the world based on things like the ease of starting a business, the stability of the currency, and other economic indicators.
The Gwartney Institute’s motto is Freedom, Justice, Human
Flourishing. Dr. McCullough and I believe that economic freedom informed
by Christian principles of justice can lead to human flourishing. Our
primary theme right now is poverty and our programs are centered around
that. Our program offerings are split into three groups: OU student
outreach, high school student education and recruiting, and outreach to
the Ottawa and Franklin County communities. This semester we hosted
three events and provided free travel for OU students to several area
events related to our mission. We also started a podcast entitled Faith
and Economics and screened a documentary for community members. We have a
lot more planned for OU students, high schoolers around the state, and
the Ottawa community in 2019! For more information about our mission,
programs, events, podcast, blog, and research, check out
GwartneyInstitute.org.
Now that you know my history and my current work, you’re probably wondering what I’ll be addressing in this column. As the title suggests, I hope to use my training in economics to shed light on economic and government policy issues that matter to the residents of Ottawa and Franklin County. These will include, but not be limited to, taxation, agriculture, transportation, education, and many other economic and policy issues at the state and national levels that affect life in Franklin County.
Though I have lived far from home the past five years, I have been watching a lot of the economic issues going on in Kansas such as the tax debate and the health of Kansas’ major industries. This will inform my perspective on current economic issues and enrich my commentary. I hope you find this column interesting and thought-provoking. I look forward to your feedback on my column as well; you can email me at levi.russell@ottawa.edu. Ottawa is a great community and I’m proud to be a part of it.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
Originally published in the Ottawa Herald, 11/29/2018
Since joining Ottawa University this August, I have heard a lot about the connection between the University and the Ottawa and Franklin County communities. I hope that this column will be a positive contribution to that relationship. In this first installment, I will introduce myself, my role at Ottawa University, and give a brief preview of the issues I hope to discuss every other week in this column.
I was born and raised in southeast Kansas and graduated from Chanute High School in 2005. My father’s family had been farmers in the area since the 1800s and my mother’s father was a country preacher. In the fall of 2005 I entered Kansas State University and graduated in 2009 with a bachelor’s degree in finance. The market for finance grads was pretty thin on the heels of the housing market crash and financial crisis going on at the time, so I considered other options.
Graduate school was my choice and I began my second 4-year term at Kansas State in 2009 as an economics student. During this time I met my wife (who is a native of Ottawa), got married, and had our first child. I completed the PhD in 2013 and we moved to Corpus Christi, Texas. My 4 years as a student in K-State’s Agricultural Economics department had prepared me well to combine my love for rural life and my interest and education in economics to Texas A&M’s Agricultural Economics programs. In Corpus Christi, I served as a professor and Extension economist working primarily with farmers and other agribusinesses along the Texas coast.
After a few years in Texas, during which time our second child was born, we took an opportunity to move back to a college town. I joined the Department of Agricultural and Applied Economics at the University of Georgia in 2016, again serving as an Extension economist and professor. We enjoyed our time there and I gained valuable experience that I continue to use today.
In the summer of 2018 I ran across an ad for a job at Ottawa University. The Gwartney Institute had been recently established earlier in the year by economics professor Dr. Russ McCullough. The Institute is named after a Kansas native and Ottawa University graduate, James Gwartney who is an economics professor at Florida State University. Dr. Gwartney has built a reputation in the profession as an innovator, best known for creating the Economic Freedom of the World Index. This Index uses publicly-available data to rank countries around the world based on things like the ease of starting a business, the stability of the currency, and other economic indicators.
Now that you know my history and my current work, you’re probably wondering what I’ll be addressing in this column. As the title suggests, I hope to use my training in economics to shed light on economic and government policy issues that matter to the residents of Ottawa and Franklin County. These will include, but not be limited to, taxation, agriculture, transportation, education, and many other economic and policy issues at the state and national levels that affect life in Franklin County.
Though I have lived far from home the past five years, I have been watching a lot of the economic issues going on in Kansas such as the tax debate and the health of Kansas’ major industries. This will inform my perspective on current economic issues and enrich my commentary. I hope you find this column interesting and thought-provoking. I look forward to your feedback on my column as well; you can email me at levi.russell@ottawa.edu. Ottawa is a great community and I’m proud to be a part of it.
Dr. Levi A. Russell is the Gwartney Institute Professor of Economic Education and Research at Ottawa University
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