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Kansas City Ahead of the Services Curve

April 15, 2013

by Jeff Pinkerton

It is no secret that the U.S. has been moving from a goods-producing economy to a service-providing economy for a long time. A recent article by Richard Florida looks at which metro areas might be better at adapting to this transition.

Nationwide, services’ share of economic output (as measured by GDP) exceeds goods production by a 3-to-1 ratio.

In Kansas City, our services-to-goods ratio is 5.35-to-1, ranking eighth overall out of the largest 50 metros.

So is this a good thing or a bad thing? It’s probably a good thing. On the plus side, this high ratio seems to indicate that the Kansas City economy has adapted well to the service economy. But “services” is a broad category. It includes highly skilled jobs like engineering and IT as well as less-skilled jobs like food services and hospitality.

The Kansas City area has experienced growth at both ends of the spectrum — high and low skilled services — in recent years.

Typically, we’d rather see more growth in the higher-skilled (and higher paid) jobs in the region. But, as we noted in our last post, employment growth has been a concern here in the Kansas City area.  Lesser-skilled service jobs are better than no jobs at all.

So for now, we’ll call it a positive that our region seems to be well-structured for the service economy.

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