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Monday, December 18, 2017

New Normal in County Business Data

Last week I reported on a slight improvement in the job market in Wyoming, but I also pointed out that it was combined with a negative trend in wages. Today, we are going to take a look at more county-level data and what it means for the near-term future of our state's economy.

To begin with, during the economic decline our state has seen a notable decline in private-sector business establishments.
This decline has been tough on most parts of the state, and as Table 1 shows, the decline continued throughout the first half of this year (the latest period for which there is available data) compared to the same period last year:

Table 1

Qtr 1 Qtr 2
Platte 0.9% 4.7%
Crook 2.3% 3.4%
Teton 0.7% 1.4%
Fremont 0.8% 0.6%
Johnson 3.0% 0.4%
Albany 1.0% 0.3%
Sheridan -1.9% 0.3%
Sublette -2.1% 0.2%
Lincoln -1.0% 0.0%
Park 0.0% 0.0%
Natrona -0.8% -0.1%
Carbon -0.5% -0.2%
Laramie -0.4% -0.3%
Campbell -0.4% -0.6%
Sweetwater -1.6% -1.3%
Uinta -2.8% -2.0%
Big Horn -3.3% -2.5%
Hot Spgs -0.9% -2.7%
Goshen -2.2% -3.9%
Washakie -2.7% -4.1%
Weston -4.1% -4.9%
Converse -6.4% -6.0%
Source: Bureau of Labor Statistics


When the number of active businesses is down in 12 counties in the second quarter, it is a clear signal of a weak tax base, primarily but not only the property tax.

Another sign of a retreating business sector is the average number of employees per active business. Table 2 reports this number by county, second quarter each year for the past ten years; the last column shows the change over the entire ten-year period. Numbers for 2017 that are in bold represent counties where businesses, on average, have reduced the number of employees in the past year:

Table 2

07 08 09 10 11 12 13 14 15 16 17 '07 to '17
Albany 8.6 8.6 8.2 7.8 7.9 8.0 8.1 8.0 8.0 8.0 7.9 -0.7
Big Horn 8.3 8.1 7.2 7.5 8.0 7.7 7.7 8.1 7.7 7.0 6.9 -1.4
Campbell 14.6 15.0 14.6 13.4 13.5 13.7 13.5 14.4 13.4 11.7 11.5 -3.1
Carbon 8.7 8.6 7.1 7.4 7.1 7.7 8.3 8.9 8.9 8.8 8.4 -0.3
Converse 8.0 8.4 8.1 8.1 8.0 8.3 8.3 8.7 8.7 7.6 7.9 -0.1
Crook 6.6 6.7 6.3 6.6 6.2 6.5 6.1 6.4 6.3 6.3 6.1 -0.5
Fremont 7.6 7.7 7.3 7.2 7.5 7.5 7.5 7.6 6.9 6.5 6.3 -1.3
Goshen 7.6 7.6 7.9 7.1 7.1 7.4 7.2 7.3 7.4 7.3 7.5 -0.1
Hot Springs 7.4 7.1 7.0 7.4 7.5 7.6 7.7 7.8 6.8 6.5 6.6 -0.8
Johnson 5.7 5.9 5.3 5.1 5.1 5.2 5.3 5.6 4.9 4.8 4.8 -0.9
Laramie 10.1 10.0 9.6 9.2 9.4 9.2 9.5 9.6 9.4 9.3 9.3 -0.8
Lincoln 7.3 6.5 6.1 5.8 6.3 5.5 5.4 5.5 5.6 5.6 5.7 -1.6
Natrona 11.0 11.1 10.6 10.4 10.7 10.8 11.1 11.2 10.6 9.6 9.4 -1.6
Park 7.7 7.8 7.3 7.3 7.4 7.7 7.6 7.7 7.5 7.4 7.4 -0.3
Platte 7.8 7.5 7.9 8.1 8.0 8.0 8.1 8.5 8.5 7.9 7.7 -0.1
Sheridan 7.8 7.8 7.4 7.3 7.3 7.2 7.2 7.6 7.6 7.5 7.4 -0.4
Sublette 7.8 7.7 7.5 7.8 8.3 8.1 7.3 7.5 6.7 5.8 6.1 -1.6
Sweetwater 13.4 13.3 12.1 12.1 12.5 12.7 12.7 12.6 12.0 11.6 11.7 -1.8
Teton 7.6 7.8 7.1 6.9 6.7 6.9 7.1 7.3 7.5 7.6 7.7 0.2
Uinta 9.9 10.5 9.5 9.1 8.9 9.4 9.1 9.1 9.0 8.6 8.6 -1.3
Washakie 7.5 8.0 7.5 7.3 7.5 7.3 7.1 6.8 6.7 6.3 6.4 -1.1
Weston 6.5 6.5 6.0 6.5 6.2 6.5 6.5 6.7 6.5 6.3 6.2 -0.4
SourceBureau of Labor Statistics


The last variable to look at is wages. As I explained last week, the development of wages has weakened: the growth in wages we saw in the first quarter (over last year) slowed in the second quarter. Here, we are going to compare the growth in wages per employee to the growth in wages per establishments. Figure 1 reports the change in per-employee wages (blue columns) and per-establishment wages (grey) in the first quarter of 2017, compared to 2016:

Figure 1

Source: Bureau of Labor Statistics


In the first quarter, there was not a strong correlation between per-employee and per-establishment wages. Such correlation would show resiliency in the economy, especially if there were a consistent trend upward in wages. 

The correlation is more pronounced in the second-quarter data, though as mentioned, the per-employee growth rates are not as strong as they were in the first quarter. Per-establishment growth is a bit more coherent, though the spread is also more established:

Figure 2
SourceBureau of Labor Statistics

In conclusion,
  • The number of active businesses shows, at best, entrepreneurial caution, at worst pessimism;
  • The size of active businesses, measured as number of employees, indicates the same entrepreneurial sentiment;
  • Growth in wages per establishment is not exciting, but confirms what we saw in the jobs-and-per-employee-wages data, namely that businesses are no longer in a concerted decline, but are in a state of fragile stability.
With this, Wyoming Prosperity will take a holiday break. Merry Christmas and see you back here on the 26th!

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