The Kansas City economy is growing at a rapid but unsustainable rate, according to an economic forecast report released Friday by the Greater Kansas City Chamber of Commerce.
Cranes dot the skyline and construction contracts have jumped by half since this time last year, but despite a building boom, Kansas City’s economy is not keeping pace with either the national economy or similarly sized cities, according to the report.
“There are lots of good things happening,” says Frank Lenk, Director of Research Services at the Mid-America Regional Council (MARC.) “There is over $5 billion worth of construction under contract in the region and over 70 million square feet being constructed."
Falling behind despite economic growth
Kansas City's top industries are manufacturing, professional and technical services, healthcare and transportation. Cerner is growing in south Kansas City. Garmin is expanding in Olathe to accommodate more than 2,600 new jobs and Burns and McDonnell plans to hire hundreds of people in the next couple of years.
Still, Kansas City ranks 26 out of 31 peer metropolitan areas in economic growth, according to the report. The area is expecting to lose 800 jobs when the Harley Davidson closes its factory in Platte County next year. In addition, Proctor and Gamble plans to shut down its Kansas City, Kansas, plant by 2020, costing the area another 280 full-time and 100 contract jobs.
The information industry, which has traditionally been important to the area, is also in decline. Overland Park, Kansas-based Sprint, for example, has lost thousands of jobs in recent years. That hurts us, says Lenk.
“If you look at why we aren’t growing,” says Lenk, "it’s that one of our major industries is not doing well, and it is doing well elsewhere.”
Kansas City has seen gains in technology and healthcare fields, but so have other cities, says Lenk.
Too few qualified workers
One of the biggest challenges Kansas City businesses are facing is a labor shortage, exacerbated by the city's building boom. Construction wages outpaced the average wage in Greater Kansas City at the end of 2018 by almost double, according to the Chamber forecast.
The city’s planned $1.3 billion airport project is expected to put more pressure on the already limited labor supply. Lenk says the largely outside money to build a new airport terminal will stimulate the economy.
“In order to sustain that, we will need to do other things,” Lenk says. “One of the biggest things is to work on labor force issues.”
The Greater Kansas City Chamber is addressing this problem through a collaboration with civic and economic development agencies known as KC Rising.