The Wyoming Legislature begins its biennial session in just a few days. With a large crop of new lawmakers joining, the Legislature is bound to see shifting priorities. New members will bring their views to the table, including views on what are the most important issues for the body to address.
Economic diversification — and how Wyoming can better achieve it — should top the priority list. Even though we have all heard talk of it before, this Legislature would do well to devote time and effort to make meaningful strides toward diversification.
Wyoming is at a crucial point in its history. We have spent much of our time as a state supported by the extraction industry. Severance taxes and federal mineral royalties are a major part of our state budget, not to mention the impact that extractive industries have on sales and property taxes. Oil, gas and mineral extraction have provided jobs and supported communities. It will undoubtedly remain a major industry in Wyoming for the foreseeable future.
However, the natural resource market is a global market, and that market is changing. Demand for coal is declining — especially in the United States — and we have limited access to overseas markets. Even as extractive industries remain major players in Wyoming’s economy, they are likely to decline relative to where they have been in the past.
As a result, economic diversification efforts are more important than ever. We have talked about it for decades, though all the clamor hasn’t resulted in much success. It’s gotten to the point where many of us have grown jaded and dismiss the talk of economic diversification as a pipe dream.
This is understandable. But just because we have not made progress doesn’t mean we should give up. The problem has not receded just because our efforts to address it have been lackluster. The day is still coming when Wyoming will need new industries to support our population.
At the same time, we must also remember that government itself cannot diversify the economy. It can only set the conditions. Private enterprise is the actual source of economic diversification. The state can create favorable tax rates and infrastructure that allows business to thrive, but new industries require entrepreneurs and risk-takers to make the difference.
This is not the time for lawmakers to waste their time on topics that do not set Wyoming up for future challenges.
Perhaps the biggest obstacle to economic diversification is the need for more entrepreneurs to undertake the actual work of growing new businesses. Wyoming’s population migration statistics cast a daunting shadow in this regard and deserve careful consideration. In the most recent census, more people moved out of Wyoming than moved in. This does not bode well for economic diversification. Even worse, the population that moved out of state tended to be significantly younger than the population that moved in. Wyoming is a favorable place for retirement, but an unfavorable place for ambitious young people. This trend has to change for the good of our state.
A healthy future for Wyoming is going to require adjustments to how we currently do things — and some might be painful. Economic diversification will require, for instance, a change to how our state sees itself with relation to the extractive industries. They have carried the load for a long time, providing the tax income Wyoming needs to function, and that won’t last forever. With an older population base, we will see a higher demand for government services but a generally lower tax base to pay for those services. Barring major reforms, the only solution on the horizon is a change to our tax system. Preparation now as to what that looks like will pay major dividends in the future.
Our state has its share of both challenges and advantages. We are geographically large, but with a small population. Our costs are high, but our tax base is low. At the same time, we have an advantageous tax climate and plenty of room for growth and for ambitious individuals and companies to make their mark.
The Legislature must weigh these pros and cons and think long term as it sets its priorities. This is not the time for lawmakers to waste their time on topics that do not set Wyoming up for future challenges. The time is too limited. Instead, the Legislature must focus on putting our state in the best position to thrive for the decades to come. A major part of that is Wyoming’s economic future.
Even though our progress has been slow, we have no choice but to keep trying.
We’ve been talking about economic diversity for decades. Unfortunately, no real answers are provided here — answers that will work both politically and economically. In this decade.
Meanwhile, Utah, Idaho, and Colorado’s economies have exploded. Putting them in the top 3 spots nationally according to a US News report (https://www.usnews.com/news/best-states/rankings/economy)
Wyoming sits at # 45. Only 5 away from the worst which happen to include three coal or oil states.
And industrial tourism isn’t the answer. Every city in the world does tourism. That low-hanging fruit is low hanging for a reason. A quick look at job openings in Riverton for a Hotel Front Desk position shows it paying $8/hr. More than likely, it’s an ad only published so that the hotel can do the legal paperwork to import labor instead of actually contributing to the economic success of residents struggling in Fremont County by providing them with a fair wage.
Source: Wyoming at Work Site:
Front Desk Clerk, Occupation: Hotel, Motel, and Resort Desk Clerks
Location: Riverton, WY – 82501 Positions available:Â 2
Job #: 2824481 Work At Home option: No
Updated: 1/6/2023 Expires: 2/5/2023
$8/hr
Obviously, many lawmakers are hoping for something to appear out of nowhere and save the day. Nuclear is certainly a shot in the arm to the tune of 4 to 8 billion just in Kemmerer. There’s talk of more. Add rare-earth metals, uranium, etc and that may keep us above water. Oil and gas isn’t going away anytime soon. Neither is wind and solar. So there is still hope for an energy and extractive ‘renaissance’, just with a different mix of products. But it doesn’t diversify our economy, or the State’s revenue stream. And they come with costs. And no guarantees.
Even during boom times, we let our problems simmer because investments in financial instruments were considered more important than investments in residents. You can see that with the issue over expanding medicaid, affordable housing, social services, etc.
I used to be a “naysayer” on the Wyoming economy, but most of the state IS NOT in some big struggle. There isn’t an empty building available in Pinedale. Sheridan, Cheyenne, Star Valley, Jackson, Bridger Valley, Cody, Powell. Even Casper is now an outdoor recreation “town”. These are all pretty vibrant small towns. Rock Spring has a new gun company coming to town. Green River is getting more trona jobs over the next few years. Are some towns struggling? Yes, but for the most part, the state is transitioning into new industries and economies pretty well from it’s dependence on oil and gas.
The author has missed the crucial fact concerning economic diversification. The one thing that is critical to understand is that the state of Wyoming cannot hope to economically diversify without a parallel fiscal diversification.
Econometric models consistently show that, with our state tax structure, any new industry expansion results in seriously increasing the state’s structural deficit – rendering such expansion not affordable to the state.
Our concentrated fiscal dependence on mineral production and the over-reliance on the taxes they produce has produced a tax structure that exempts other industries from paying their way. This condition is totally unlike most other states and why our annual death rate is higher than our birth rate.
Mr. Madden, I have always learned a great deal from your economic analysis of Wyoming. I was born in Ohio. Living in another state is like living in another country as you get to experience what Rod Miller describes as the “laboratories of democracy” in action.
Ohio is sold as the” Heart of it All” which was true to me in so many ways. When I came to Wyoming, the selling point was much bolder – The Equality State. I spent considerable time trying to find any expression of equality in this state.I finally did find it and I was shocked.
It was an economic policy: Wyoming’s funding of public education at the state level is the reason Wyoming can call itself the Equality State.
Due to equitable education funding across the State of Wyoming, along with high education standards set by the legislature, Wyoming educates youth that are too polite to say the truth to elders and those their peers are fleeing the state,
As Khale articulates, “Even worse, the population that moved out of state tended to be significantly younger than the population that moved in.”
Ohio and Wyoming do have one thing in common – a backward social policy that most youth find off-putting. Ohio is a net exporter of educated youth too, but its funding model is a legacy of systemic racism.
The retired that move here are instituting policies that drive their kids and grandkids away who go on to thrive in blue states and cities across the USA.
I agree with all your points Khale. You have, very succinctly laid out the future prospects for Wyoming’s economy and the barriers it has faced for two generations. The only thing I would add is that we need to identify in granular detail what has worked in the past and apply those principles to the future. Wyoming is a peculiar place and it will require innovative thinking to move the economy into the next phase, whatever that is going to be.
Good op-ed piece, appreciate the hopeful tone for the long-term perspective. In my home state of Florida, we’ve historically sought additional tax revenue through tourism dollars- for example, on the local level, our budgets benefit from a hotel room tax. Just another idea to help along with what Wyoming is already trying to do in this arena.