Solid Growth Continues in Oklahoma in 2006



Economic Recovery Growth Patterns

in Oklahoma: 2003-2006

by Mark C. Snead and Suzette Barta

The Patterns of Recovery

The Oklahoma economy has enjoyed tremendous growth since the most recent national recession ended in mid-year 2003. The state continues to build on more than three years of a broad based economic expansion (see Figure 1), fueled in part by a revived energy sector, and has outperformed the nation in both job creation and income growth.

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However, economic growth is rarely distributed evenly statewide and state totals often mask any disparities in economic performance across the various regions of the state. Differences in industry mix can generate vastly different results in terms of job and income growth at the local level, and often the state’s overall performance relative to the nation is determined by a relatively small number of industries or geographic areas within the state.

This report provides a more detailed look at state performance since 2003 in order to better understand the degree to which the various industries and geographic areas of the state have contributed during the current expansion. The report also coincides with the first release of full-year 2006 county-level job and income data from the Quarterly Census of Employment and Wages produced by the Bureau of Labor Statistics. This database provides extensive industry level data on wage and salary employment and income at the county level and provides the latest glimpse of local growth patterns across the state.

The report first examines statewide job and income growth since 2003 at the aggregate level and by major industry sector, and then evaluates job and income growth at the county level. The county level data is used to gauge the relative performance of the state’s metropolitan, micropolitan, and rural areas. Finally, because the period largely coincides with the energy boom underway in the state, we examine the impact the energy industry is having on job and income growth at the local level.

State Outpaces Nation Since 2003

Statewide, from 2003 to 2006, the number of wage and salary jobs in Oklahoma increased at a 2.2 percent average annual pace (a total of 96,076 new jobs), exceeding the 1.6 percent pace at the national level by more than half a percentage point annually. The state matched the nation at 1.2 percent job growth in 2004 as the recovery started slowly in the state but then accelerated to gains of 2.7 percent and 2.8 percent in 2005 and 2006, respectively, outperforming the nation by roughly a full percentage point each year.

Growth in wage and salary income has been equally impressive, increasing by an average of 6.9 percent annually since 2003 and outperforming the national pace of 5.6 percent in the period. The state slightly trailed the nation in income growth in 2004 (4.7 percent versus 5.4 percent) before outperforming the nation in both 2005 (6.0 percent versus 5.2 percent) and 2006 (10.2 percent versus 6.3 percent). The 10.2 percent gain for 2006 represents the fastest annual growth in state wage and salary income since the end of the oil boom in 1982.

The results for the current expansion through 2006 compare favorably to state performance in the previous expansion period spanning 1988 to 2001 when annual wage & salary job and income growth averaged 2.2 percent and 4.9 percent, respectively. The state has matched the strong job gains in the prior expansion and exceeded the income gain by two percentage points annually.

State Industry Employment Trends

Table 1 details state employment growth by major industry sector and illustrates the broad based nature of the current expansion. Total state employment expanded 6.8 percent in the period with all but four major industry sectors posting jobs gains.

|Table 1. Oklahoma Non-Farm Wage & Salary Employment by Sector |

|Sector |2003 |2004 |2005 |2006 |%Chg |Chg |

| | | | | |2003-06| |

|Local Government |165,059 |169,661 |178,841 |185,193 |12.2% |20,134|

|Administrative and Waste |88,013 |92,211 |98,584 |101,999 |15.9% |13,987|

|Serv | | | | | | |

|Mining |28,755 |31,000 |36,129 |41,884 |45.7% |13,129|

|Health Care and Social |156,535 |158,704 |162,728 |166,682 |6.5% |10,148|

|Assist. | | | | | | |

|Accommodations & Food |113,215 |115,365 |118,434 |121,576 |7.4% |8,360 |

|Serv | | | | | | |

|Construction |63,262 |62,686 |66,118 |70,411 |11.3% |7,149 |

|Manufacturing |142,842 |142,417 |144,752 |149,310 |4.5% |6,468 |

|Prof and Technical |57,052 |57,708 |59,574 |61,405 |7.6% |4,353 |

|services | | | | | | |

|Wholesale |54,882 |54,518 |56,749 |58,978 |7.5% |4,097 |

|State Government |79,750 |81,070 |82,376 |83,336 |4.5% |3,587 |

|Arts, Entertainment, |13,257 |13,703 |14,442 |15,667 |18.2% |2,410 |

|Recreation | | | | | | |

|Transportation & |41,335 |41,049 |41,865 |43,320 |4.8% |1,986 |

|Warehousing | | | | | | |

|Real Estate |22,590 |23,278 |23,960 |24,415 |8.1% |1,825 |

|Finance and Insurance |55,367 |56,120 |55,375 |56,211 |1.5% |844 |

|Educational Services |12,885 |13,827 |13,770 |13,651 |6.0% |767 |

|Retail |169,472 |169,087 |169,982 |170,172 |0.4% |700 |

|Management of Companies |12,182 |12,475 |12,407 |12,601 |3.4% |419 |

|Agriculture, Forestry, |7,240 |7,191 |7,379 |7,419 |2.5% |179 |

|Fishing | | | | | | |

|Federal Government |46,108 |46,085 |45,891 |45,778 |-0.7% |-330 |

|Other Serv. exc. Public |36,951 |36,242 |36,059 |36,168 |-2.1% |-783 |

|Admin | | | | | | |

|Utilities |10,756 |10,717 |9,543 |9,911 |-7.9% |-845 |

|Information |32,471 |31,747 |30,214 |29,902 |-7.9% |-2,569|

|Unclassified |950 |758 |799 |1,011 |6.4% |61 |

|Non-Farm W&S Employment |1,410,92|1,427,61|1,465,96|1,507,00|6.8% |96,076|

| |7 |8 |9 |3 | | |

In terms of actual jobs, the top five fastest growing sectors in the period are local government (20,134 jobs), administrative and waste services, (13,987 jobs) mining (13,129 jobs), health care and social assistance (10,148 jobs), and accommodation and food services (8,360 jobs). These five industries generated two of every three new jobs in the state between 2003 and 2006.

Local government is the largest single sector with more than 185,000 jobs statewide and contributed the largest number of jobs by expanding at nearly twice the state rate.

In terms of growth rates, the fastest growing sector is mining with a 45.7 percent gain from 2003 to 2006. The state’s energy companies added more than 13,000 wage and salary workers in the three year period.

The arts, entertainment, and recreation sector is the second fastest growing sector in percentage terms (18.2 percent), but represents only 2,410 new jobs.

The state’s manufacturing sector defied persistent weakness at the national level, adding nearly 6,500 jobs statewide in the period. Temporary employment in the manufacturing sector is the driving force behind a large portion of the job gains in the administrative and waste services sector, the second largest source of job gains. Of the 13,987 reported new jobs, 6,258 are temporary jobs and largely reflect the surprising strength in the manufacturing sector in 2005 and 2006. With temporary jobs removed, this sector’s job growth would be 7,729, which would move it to fifth in terms of net new jobs added and likely move manufacturing among the leaders.

The significant expansion of the housing sector is visible in the hiring strength in the construction (7,149 jobs) and real estate (1,825 jobs) sectors.

Retail is the second largest industry sector but added only 700 jobs in the period due to ongoing efficiency gains from automation and distribution channel improvements which constrain the need for hiring in the sector.

The health care sector has long been a leading source of new high wage jobs at the state and national levels, creating more than 10,000 jobs since 2003, but trailed the overall rate of state job growth in the period.

The four industry sectors losing jobs in the period (federal government, other services, utilities, and information) are all small in relative size, are not generally considered growth industries, and have not served as a significant source of net job gains at either the state or national level much of the past decade.

The growth in state government hiring trailed both local government gains and the overall rate of job growth statewide. Federal government hiring has not provided net new jobs the past decade.

County Growth Patterns

A summary of the total gain in wage and salary jobs by county is shown in Table 2 while Figure 2 provides a state map detailing growth patterns at the county level. A more detailed breakdown of county level wage and salary employment and income in the 2001 to 2006 period for each county along with rankings is available in Appendices 1 and 2.

As shown in Table 2, the county with the fastest growing employment from 2003 to 2006 is Love County with a growth rate of 49.6 percent. Love County’s growth is due almost entirely to the “local government” sector, which is heavily influenced by Chickasaw Nation hiring.

Other counties with total job growth exceeding 20 percent in the period are Murray County (43.8 percent), Cotton County (26.9 percent), Woodward County (23.2 percent), Lincoln County (21.7 percent), and Bryan County (20.1 percent). Within this group, only Woodward County would be considered an ‘energy’ county.

Only ten counties in the state reported net job losses from 2003 to 2006. Nearly all are small counties with fewer than 5,000 wage and salary workers; the exception is Creek County which is ranked fifteenth in size. For the most severely impacted of these counties, Kiowa County, the job losses occurred heavily in the health services sector and in manufacturing. Surprisingly, two of the counties, Creek and Pawnee are components of the Tulsa metropolitan area and were not buoyed by the strong growth across the broader Tulsa region.

|Table 2. Total wage & Salary Employment Growth (2003-06) by County,|

|Ranked |

|Rank |County |2003-06 |Rank |County |2003-06 |

| |

|Region* |2003 |2004 |2005 |2006 |% Chg |Chg |

| | | | | |2003-06| |

|Northeast |544,321 |549,518 |567,655 |584,195 |7.3% |39,874|

|Northwest |498,672 |506,272 |516,416 |528,638 |6.0% |29,966|

|Southwest |206,858 |211,074 |217,789 |224,525 |8.5% |17,667|

|Southeast |131,858 |133,229 |139,787 |146,488 |11.1% |14,630|

|Unclassifi|29,218 |27,526 |24,322 |23,157 |-20.7% |-6,061|

|ed | | | | | | |

|State |1,410,92|1,427,61|1,465,96|1,507,00|6.8% |96,076|

| |7 |8 |9 |3 | | |

|*Regions based on the Oklahoma Corporation Commission’s |

|service districts |

The northeast’s growth rate of 7.3 percent is slightly above the state average, and this region contains the metropolitan counties of Lincoln, Creek, Okmulgee, Tulsa, Wagoner, Rogers, Osage, and Pawnee.

The workforce in the southwest quadrant includes the metropolitan counties of Cleveland, McClain, Grady, and Comanche and expanded by 8.5 percent in the three year period.

Performance by Region Size

Research evidence produced the past couple of decades has supported the idea that larger economies have a built in competitive advantage through economies of scale and greater amenities for residents relative to smaller regions and should be expected to outperform smaller regions. The strong performance of the state’s metro areas and the lagging performance of many of the rural areas of Oklahoma since the oil bust have been largely consistent with this theory.

However, the current recovery has been highlighted by relatively stronger economic performance in the non-metropolitan areas of the state. Figure 3 provides a map of the counties comprising the state’s metropolitan, micropolitan, and unclassified regions of the state. Non-metro areas comprise both micropolitan counties and non-classified counties.

Although metropolitan counties continue to provide greater total numbers of jobs, the 8.6 percent growth rate for the non-metropolitan counties in the state outpaced the 6.9 percent gain for the metropolitan counties since 2003.

As shown in Table 4, it is the micropolitan counties that account for the bulk of the non-metropolitan growth. Of the 36,637 new jobs in non-metropolitan counties, 25,883 occurred in micropolitan counties.

Between the Oklahoma City and Tulsa MSAs, Tulsa’s employment grew slightly faster at 7.2 percent compared to 6.5 percent in the Oklahoma City MSA. The metro area performance largely reflects the results for the core county in each of the two major MSAs.

Table 4 also shows the often uneven employment growth rates among the component counties of the state’s metropolitan areas. Within the Tulsa MSA, Rogers County grew the fastest (19.7 percent) while Tulsa County added the most actual jobs (22,318). Creek County and Pawnee County both struggled with slight job losses. Within the Oklahoma City MSA, Lincoln and McClain Counties both posted high growth rates (21.7 percent and 19.5 percent, respectively) while Oklahoma County added the most jobs (20,996). While none of the counties in the OKC MSA experienced job losses, the two slowest growing counties, Grady and Logan Counties (2.1 percent and 3.1 percent, respectively), posted less than half the state average job gain.

|Table 4. Employment Growth 2003-2006 by Metro vs. Non-Metro |

|Region |2003 |2004 |2005 |2006 |% Chg |Chg |

| | | | | |2003-06| |

|Metropolitan |954,953 |967,593 |992,912 |1,020,45|6.9% |65,500|

| | | | |2 | | |

| OKC MSA |515,826 |524,492 |536,867 |549,391 |6.5% |33,565|

| |21,362 |22,074 |23,589 |24,392 |14.2% |3,030 |

|Canadian Co | | | | | | |

| |63,986 |65,657 |68,653 |70,630 |10.4% |6,644 |

|Cleveland Co | | | | | | |

| Grady |12,626 |12,738 |12,961 |12,884 |2.1% |259 |

|Co | | | | | | |

| |5,818 |6,354 |6,910 |7,078 |21.7% |1,260 |

|Lincoln Co | | | | | | |

| Logan |6,491 |6,563 |6,460 |6,690 |3.1% |199 |

|Co | | | | | | |

| |6,047 |6,303 |6,709 |7,224 |19.5% |1,177 |

|McClain Co | | | | | | |

| |399,497 |404,803 |411,586 |420,493 |5.3% |20,996|

|Oklahoma Co | | | | | | |

| Tulsa MSA |381,359 |384,108 |396,089 |408,653 |7.2% |27,294|

| Creek |17,291 |17,250 |16,804 |16,947 |-2.0% |-344 |

|Co | | | | | | |

| |9,565 |9,548 |9,862 |10,004 |4.6% |438 |

|Okmulgee Co | | | | | | |

| Osage |5,627 |5,760 |5,899 |6,135 |9.0% |508 |

|Co | | | | | | |

| Pawnee|3,391 |3,542 |3,383 |3,378 |-0.4% |-13 |

|Co | | | | | | |

| Rogers|19,915 |21,196 |22,983 |23,837 |19.7% |3,921 |

|Co | | | | | | |

| Tulsa |319,214 |320,476 |330,556 |341,532 |7.0% |22,318|

|Co | | | | | | |

| |6,355 |6,335 |6,602 |6,820 |7.3% |465 |

|Wagoner Co | | | | | | |

| Lawton MSA |38,612 |39,455 |39,582 |40,426 |4.7% |1,815 |

| Fort Smith |19,157 |19,538 |20,374 |21,983 |14.8% |2,826 |

|MSA | | | | | | |

| Le |10,968 |11,351 |12,043 |12,760 |16.3% |1,792 |

|Flore Co | | | | | | |

| |8,189 |8,187 |8,332 |9,223 |12.6% |1,034 |

|Sequoyah Co | | | | | | |

|Non-metropolitan|426,757 |432,500 |448,735 |463,394 |8.6% |36,637|

| |278,561 |282,669 |293,733 |304,444 |9.3% |25,883|

|Micropolitan | | | | | | |

| |148,195 |149,831 |155,001 |158,949 |7.3% |10,754|

|Non-classified | | | | | | |

|Unclassified |29,218 |27,526 |24,322 |23,157 |-20.7% |-6,061|

|Statewide |1,410,92|1,427,61|1,465,96|1,507,00|6.8% |96,076|

| |7 |8 |9 |3 | | |

The two counties that represent the Oklahoma portion of the Fort Smith MSA, Le Flore and Sequoyah Counties, posted a combined growth rate of 14.8 percent, which is faster than either the Tulsa MSA or the OKC MSA. The growth in these two counties represents 2,826 jobs, or roughly 3 percent of total state job growth in the period.

As shown in Table 5, the smaller, more rural regions of the state have generally outperformed the metro areas since 2003. For example, the rate of job growth in the smallest half of counties exceeded that in the largest half by 1.4 percent in the period, while a combination of Tulsa County and Oklahoma County was outperformed by the rest of the state by 1.6 percent. Similarly, the six counties with more than 25,000 jobs were outperformed by all three categories in Table 5 with total wage and salary employment between 5,000 and 25,000 jobs.

|Table 5. Oklahoma Non-Farm Wage & Salary Employment by County by Workforce|

|Size |

|Sector |2003 |2004 |2005 |2006 |%Chg |Chg |

| | | | | |2003-06| |

|Statewide |1,410,927|1,427,618|1,465,969|1,507,003|6.8% |96,076|

| | | | | | | |

|Largest Half |1,283,207|1,300,456|1,338,135|1,376,773|7.3% |93,567|

|Smallest Half |98,503 |99,636 |103,512 |107,073 |8.7% |8,570 |

| | | | | | | |

|Oklahoma & Tulsa Co.|718,711 |725,279 |742,142 |762,026 |6.0% |43,314|

|Rest of State |692,216 |702,339 |723,826 |744,978 |7.6% |52,762|

| | | | | | | |

|Size by Job Range: | | | | | | |

| >25,000 jobs |883,007 |891,841 |914,168 |937,109 |6.1% |54,102|

| 15,000-25,000 jobs|215,240 |219,903 |229,235 |238,459 |10.8% |23,219|

| 10,000-15,000 jobs|97,320 |100,107 |103,128 |105,832 |8.7% |8,512 |

| 5,000-10,000 jobs |112,203 |114,035 |118,380 |123,813 |10.3% |11,610|

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