Spirit AeroSystems has announced plans to lay off 2,800 workers due to uncertainty of the production of the Boeing 737 Max. All 2,800 employees work in Wichita, Kansas.
Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University, discusses the economic impact of the layoff.
Economic impact of the layoff
NOTE: The following assumes the layoff is permanent and that there is not a rehire within the next twelve months. This is the most extreme scenario.
- The loss of 2,800 aerospace jobs would have a total employment impact of just under 5,800 jobs on the Wichita economy. Included in the impact are jobs lost within supply chain and reduction of spending from household consumption.
- The average aerospace worker makes $81,000 annually. The direct loss of the 2,800 jobs accounts for a total wage of $220 million. The impact on the Wichita economy would be less, as unemployment insurance will be available for the affected workings. Additionally, some of the affected workers will likely find another job within twelve months.
Long-term impact on Spirit Aerosystems
It is important to note the Spirit Aerosystems is a critical player within the aerospace market. This company has a great track record and deep knowledge of the supply chain. Given that global demand for commercial aerospace has not declined, this company is still positioned to grow in the long run. The company will need time to adjust.
Impact on affected workers
The regional market will likely absorb some of the affected workers in a few of the other aerospace companies. Other sectors of the economy are unlikely to absorb all of the 2,800 workers; however, some occupations like management and production will have more opportunities locally.
Given that the national labor market is extremely tight, one would expect that some of the workers would likely migrate to take jobs outside of the Wichita metropolitan area.
Impact on Wichita and Kansas
NOTE: The following assumes the layoff is permanent and that there is not a rehire within the next twelve months. This is the most extreme scenario.
- The biggest concern for the Wichita economy is that some of the workers might migrate out of the region for other job opportunities. The loss of skilled labor would likely impact regional long-term growth.
- The largest direct impact will be on the supply chain, which includes other aerospace companies, machinery manufacturing, transportation, and other business support sectors.
- The retail and other entertainment sectors will likely see the second-largest impact from the layoff.
- Fiscal impact
- City of Wichita - $1,250,000
- Sedgwick $617,000
- Kansas $102,790,000
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Jeremy Hill, Director, Center for Economic Development and Business Research
Wichita State University
316-213-3673
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