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The Myth of the Wyoming Migration Boomerang
August 29, 2024
By Eric Protzer There is a popular concept in Wyoming known as the “boomerang” effect, which posits that people leave the state at high rates but often return later in […]
Pathways to Prosperity in Wyoming
This project leverages frameworks of growth diagnostics and economic complexity to address varied statewide challenges, while working collaboratively with stakeholders across the state to improve outcomes in housing, workforce access, local spending, and growth of energy opportunities.
Project Dates
August 2022–January 2026
Supported By
State of Wyoming
The State of Wyoming has experienced a sustained loss of jobs and a weakening of key drivers of growth for more than a decade. Whereas the Mountain West region has seen diversified growth and neighboring states have recovered quickly from COVID-19 job losses, Wyoming’s economy continues to lag. Looking to the future, the state’s economy will continue to face declining demand for resources that have long supported income levels and the state’s finances — coal, oil, and gas. As a largely rural state with a dispersed population and without a large urban agglomeration, Wyoming faces disadvantages in the modern economy. In this project, the research team is working in partnership with the Wyoming Business Council, numerous state agencies, local government offices, and Wyoming-based research institutions to develop stronger pathways to sustainable prosperity across the State of Wyoming.
Key Findings
As discussed in the project’s Growth Perspective, Wyoming does not have one single economy but rather many disconnected local economies, with different dynamics and capabilities. Many of the state’s economic realities have deep roots in its geographic circumstances, which impacted its low population growth over time. Reliance on natural resources has subjected the state to boom-and-bust cycles for much of its history. However, just as Wyoming is diverging from the national economy, local and regional economies across the state have also diverged. Some parts of the state are growing and narrowly diversifying and are bumping up against constraints that limit their pace of growth. In several growing cities, firms face a constraint in the workforce size, which is exacerbated by slow growth in housing supply. Meanwhile, many more rural parts of the state have experienced continued population decline as they have lost sources of tradable income and consequently sources of jobs and opportunities.
Economic strategy, public spending, and creative initiatives must respond to varying local issues if Wyoming’s high quality of life and economic mobility are to continue. Wyoming’s growing cities and regions are facing some constraints that have long undermined their full potential alongside new challenges that come with change. Meanwhile, contracting towns face fundamental issues that threaten their long-term viability and threaten to erode living standards. The project is providing analytical work and building capabilities to address these varied challenges across the state. This project is ultimately about enabling local economic resilience. It is leveraging frameworks of growth diagnostics and economic complexity while working collaboratively with stakeholders across the state to improve outcomes in housing, workforce access, local spending, and growth of energy opportunities.
Affiliated Publications
Web Articles
Lagging Regions: What Can Policymakers Learn from Wyoming?
Despite an abundance of valuable raw materials and breathtaking natural beauty, the western US state of Wyoming lags its neighbours in terms of economic performance. This is largely due to […]
Despite an abundance of valuable raw materials and breathtaking natural beauty, the western US state of Wyoming lags its neighbours in terms of economic performance. This is largely due to a lack of substantial urban centres, driven in part by excessively restrictive regulations on housing.
Reports
Childcare Supply in Wyoming
This white paper summarizes Growth Lab research on the childcare market in Wyoming, where supply of childcare slots systematically falls short of demand. This nationwide problem is prevalent across Wyoming, […]This white paper summarizes Growth Lab research on the childcare market in Wyoming, where supply of childcare slots systematically falls short of demand. This nationwide problem is prevalent across Wyoming, including in both its larger population centers and smaller communities. The low population of many Wyoming communities adds to the challenge. Research that is summarized in the white paper identify differential constraints affecting childcare centers and home-based childcare facilities. Centers make up most childcare slots in the state and are plagued by a staffing challenge derived from low business margins and low wages that centers can afford under “reasonable” fee structures for the market, which cause many to operate below capacity despite widespread wait lists and demand. Home-based providers, which are particularly important for lower-population settings in Wyoming that cannot support larger centers, face operational challenges typical of very small businesses and new providers face a few solvable start-up hurdles.
Through collaboration with an interagency working group in Wyoming, this white paper identifies a set of targeted initiatives for enabling business entry and childcare slots through both centers and home-based facilities. The focus of these initiatives is on expanding supply as opposed to subsidizing demand through subsidies to parents and families. Though an expansion of funding in this form would be useful, and the state government dramatically underspends on early childhood education in comparison to its longstanding focus on high K-12 spending, the focus is on low-cost and impactful ways to enable the market to better expand supply to meet high expressed demand.
The following diagram summarizes the diagnosis and key strategies. Over the second half of 2024, the interagency working group and partners across Wyoming have focused on implementing a subset of these action points.
Working Papers
How Wyoming’s Exodus of Young Adults Holds Back Economic Diversification
A missing ingredient to Wyoming’s diversification efforts is keeping young people and families in the state. By the time people born in Wyoming reach their thirties, nearly two thirds have left – one of the highest rates in the country. Without access to this workforce, it is exceedingly difficult for the Wyoming economy to diversify.Wyoming is a rural Mountain West state with a high Gross State Product (GSP) per capita, foremostly driven by its fossil fuel sector. The state’s longstanding strengths in resource extraction provide much of its livelihood, including both its private earnings and public finances. Its other industries are comparatively much smaller, but Wyoming would benefit from their expansion in order to smooth out resource-related shocks going forward. Importantly, Wyoming should think on a big scale when considering such opportunities. Middling, business-as-usual growth in its non-resource sectors will not fundamentally do much to insulate Wyoming’s economy against resource busts. One category of diversification opportunities to consider are those in industries tied to the natural endowments of the land. Wyoming generally does well in these sectors, but prospects of further expansion are either highly uncertain or limited in scale. Some of the most promising opportunities are in new energy and critical minerals, but these carry significant technological uncertainty and/or modest income potential. Transformative growth in agriculture is likely to be difficult because Wyoming faces hard constraints on its water consumption, and its tourism income per capita is already among the very highest of any US states. Adding value to raw materials is a commonly-discussed strategy that, in practice, does not work well in the modern economy because raw materials are often easily traded over long distances. While it is therefore vital for Wyoming to pursue economic activities related to its natural endowments, it must also look to its advanced services and manufacturing sectors. Wyoming is a severe laggard in these industries versus other states, and serious action is needed to generate the large pools of skilled labor that they need to succeed. There is widespread recognition that Wyoming is behind on this matter, and the state has made critical investments in education to bridge this gap. The missing ingredient, however, is keeping young people and families in the state. By the time people born in Wyoming reach their thirties, nearly two thirds have left – one of the highest rates in the country. Without access to this workforce, it is exceedingly difficult for the Wyoming economy to diversify. Empirically, young Wyomingites and families overwhelmingly leave the state in favor of larger cities. University of Wyoming graduates especially are attracted to large cities a few hours’ drive away from Laramie, Wyoming (where the University of Wyoming is located). These destinations include Fort Collins and Denver. Even if it wanted to, Wyoming could not wave a magic wand to create a large urban metropolis overnight, and it is therefore necessary to understand what specifically attracts young adults and families to these big cities instead of Wyoming towns so that the latter can compete better. The evidence shows that housing is a surprisingly important factor related to migration decisions on which Wyoming underperforms. Young adults fresh out of university often prefer to live in centrally-located apartments, so that they are close to jobs, restaurants, and friends. Wyoming towns, however, lack dense multi-family housing in their downtown cores as compared to other US towns with very similar overall population. This lack of dense downtown housing suitable for young people contributes to an overall housing supply deficiency, thereby driving up housing prices across the board. It also entails depressed foot traffic in downtowns, leading to fewer customers for local businesses and ultimately fewer urban amenities like restaurants versus Colorado communities – a key result given that surveyed University of Wyoming students report that restaurants are their top desired urban amenity. The main reason there is not denser housing in Wyoming downtowns is because strict regulations have illegalized them. A plethora of restrictions exist around issues like minimum lot sizes, maximum building heights, minimum parking space requirements, maximum dwellings per unit of area, and more. Studies show that Wyoming is more overregulated than other communities when it comes to restrictions on housing density. Other places successfully leave these decisions to the free market rather than government, and Wyoming could remove these restrictions to increase its supply of housing for young people at no cost. There is additionally a lack of funding for arterial infrastructure in Wyoming, such as water and sewage lines, which drives up development costs. A general lack of funding for community assets arguably also affects young peoples’ and families’ migration decisions. There is evidence that community demand for investment outstrips supply in water and transport infrastructure, and that many counties use allotted sales tax expansions (“Penny Taxes”) very frequently. One way Wyoming could direct more funding to its local communities is via an expanded grants management system; Wyoming gets less federal grant funding per person than other rural US states, and based on interviews this is tied to a lack of dedicated staff who can navigate the significant overhead associated with following and applying for grants. Overall, while Wyoming is currently a laggard on advanced service and manufacturing industries there are concrete steps it could take to compete better by retaining more of its young people. Wyoming’s Pathways to Prosperity economic development project has already enacted a number of changes to support that outcome, but more can be done. With denser downtowns and more funding for community assets, Wyoming would bolster both its economic and cultural vitality by keeping its young people and leveraging them to obtain growth in new industries. Related project: Pathways to Prosperity in WyomingWorking Papers
Diagnosing Wyoming’s Workforce Challenges
Wyoming is facing two distinct labor market challenges: in the short-term low workforce availability is a constraint while in the long-term job and wage growth have stagnated. Currently, Wyoming’s labor […]Wyoming is facing two distinct labor market challenges: in the short-term low workforce availability is a constraint while in the long-term job and wage growth have stagnated. Currently, Wyoming’s labor market is characterized by tightness and employers are struggling to fill positions. However, the current tightness of the labor market is not a phenomenon that is specific to Wyoming but instead is prevalent across the country. What sets Wyoming apart is the lack of growth in employment and wages over the long-term. Understanding these differing dynamics is important because policy responses may attempt to address the short-term issue without considering the underlying structural causes of the long-term dynamics. This will likely be ineffective and not lead to lasting change. For lasting change, the structural issues of the long-term dynamic need to be addressed. An often-discussed solution is to increase the supply of training and education – this has merits in its own right but will not solve the long-term labor market challenge facing Wyoming. Only 38% of all jobs in Wyoming require tertiary education, the second lowest of any US state. Additionally, our analysis shows that the returns to a tertiary degree in Wyoming are significantly below those of its peers. Unsurprisingly, the lack of demand for tertiary-educated workers leads many young Wyomingites with a tertiary degree to leave the state. Overall, however, Wyoming has become an exporter of well-trained young people. Increasing the supply of tertiary education will not address the underlying structural issues facing the labor market. A main driver of Wyoming’s lagging performance has been the comparatively low labor productivity in the state. Most of Wyoming’s industries have a lower output per worker than the respective national industry and pay lower wages on average. Industries that fall into this category cover 82.8% of all employment in Wyoming. The few industries in which Wyoming is more productive than the rest of the US are mostly related to natural resource extraction. Wage dynamics of occupations in the state exert a similar pattern where STEM-related occupations have not seen much growth, indicating low demand in the state. To address the long-term issue, Wyoming needs to create the conditions for a more complex economy that can use the potential of its human capital instead of excessively relying on its natural resources. The challenge is to attract and grow competitive companies in industries with strong demand. A critical factor in doing so is scale. Many more knowledge-intensive industries tend to develop in places that are larger urban agglomerations. Wyoming should focus on the positive forces of agglomeration to develop these industries and make use of the productive potential it has. Creating the conditions for this includes place-based investments and an enabling regulatory framework. In Wyoming, housing regulations have been an important barrier preventing further agglomerations, but efforts are underway to address this barrier. In the short-term, solutions that are focused on increasing the available labor pool within the state appear most promising in easing the current constraint. This is especially true when they address structural barriers that could persist after the labor market cools off. Our work documents specific recommendations within the areas of childcare, justice-involved individuals, higher education, and out-of-state workers (Section 3.2) that aim to increase the participation from these labor pools in Wyoming’s workforce. These are labor pools that are significant in size and have underutilized potential in terms of labor force participation within the state. Related project: Pathways to Prosperity in WyomingWorking Papers
Grants in Wyoming: Constraints and Solutions
Wyoming communities are reliant on grants to fund local priorities, yet the grants system is not effectively meeting the needs of many communities across the state. This problem is central […]Wyoming communities are reliant on grants to fund local priorities, yet the grants system is not effectively meeting the needs of many communities across the state. This problem is central to the growth challenges of many rural economies across the state. Although this problem pre-dates the recent expansion of federal grant programs, the importance of this problem has grown in the last several years as the scale and complexity of federal grant opportunities — particularly discretionary grants — has increased. Wyoming communities are struggling to navigate and benefit from these federal funding opportunities. As of late 2023, the state is significantly underperforming many comparator states in the number of federal grants received and the distribution of federal grants across the state. Grant writers and administrators face a sometimes impossible task in navigating an ever-shifting grants landscape. This is a challenge for local governments across the country but may be especially important in Wyoming due to narrow local tax bases and the rural nature of the state.
Through an eight-month effort combining research and action, we have explored the causes of this problem to inform potential solutions. We have identified four principal constraints that are most to blame for Wyoming’s underperformance: (1) Lack of relationships between communities and funders; (2) Inability to follow changing grant opportunities (esp. federal); (3) Shortage of prioritized community needs and “grant ready” project plans; and (4) Overreliance on “local heroes” – especially for smaller communities. We argue that these challenges are “principal constraints” because they are binding for the largest number of communities, especially smaller communities. However, there are additional constraints that are critical for other communities, especially those that have more experience with accessing state and federal grants. This note summarizes key evidence we have found on each of these principal constraints. These constraints occur early in the grants process, meaning many potentially promising grant opportunities are never pursued. We find that many federal grant programs and discretionary award processes are inconsistent with the realities of scarce staff, resources, and bandwidth of local governments, especially in small communities. However, we find widespread examples and evidence that these constraints can be overcome through actions to enable a strong state-wide network that supports local leaders and grant administrators. Examples of success within the state and in other states show that building the capabilities of the network and enabling all communities to access the knowhow of the network can lead to much better grant outcomes.
The note closes with a discussion of how to target a network-enabling response to the grants problem. We outline a first-best option that centers on establishing regional officers who would be responsible for a set of tasks that would respond directly to the principal constraints identified. This approach would require annual funding, but preliminary analysis shows the return on investment overall would be very high and the approach would have the greatest benefits for smaller communities across the state. Very initial designs have been explored for how to establish such a system building on existing assets. Finally, we compare this first-best approach to alternative approaches that are closer to the current support actions underway in the state.
Working Papers
Housing in Wyoming: Constraints and Solutions
Quantitative evidence supports the contention that Wyoming’s housing market is constrained, to a greater degree than many other parts of the US. Prices are persistently above expectations given economic fundamentals […]Quantitative evidence supports the contention that Wyoming’s housing market is constrained, to a greater degree than many other parts of the US. Prices are persistently above expectations given economic fundamentals in most parts of the state, and the supply of new housing in Wyoming is on average less responsive to price increases than in other US counties. This has undermined natural population growth and contributed to a low amount of population density close to city centers in Wyoming, as compared to other US cities with comparable population levels. Importantly, this phenomenon is not simply the result of pandemic-era economic frictions. The evidence shows that these constraints have durably persisted in Wyoming.
This housing constraint weighs heavily on the broader Wyoming economy, and chokes off growth in new industries that could add to the Wyoming economy beyond its natural resource base. Businesses consistently report a lack of access to workforce as a leading problem that ultimately results from a lack of housing. Some businesses have even tried to create their own housing for employees, and news reports abound of teachers and nurses who secure jobs in Wyoming communities but then have to leave because they cannot find housing.
Key problems behind Wyoming’s housing constraints include excessive regulations concerning housing density and insufficient investment in arterial infrastructure. For example, there is evidence that over-regulated minimum lot sizes in Wyoming are blocking the creation of supply to match free-market demand for houses with smaller amounts of land. Other areas of over-regulation include those concerning allowable housing types, building height, parking spaces per dwelling, and the housing approval process itself. This may be seen as surprising given Wyoming’s reputation as a low-regulation state, but Wyoming maintains restrictions that other states and countries have discarded as outdated and highly counterproductive. Besides outright restrictions on housing development, we find that the most common cost driver undermining the housing development has to do with low public investment in needed arterial infrastructure, especially water systems. Land supply as well as material and construction costs are not primary constraints to housing development across the state, but may matter for select communities.
We suggest a portfolio of policy changes for the state of Wyoming to explore in order to solve its housing constraints. One category of changes is regulatory, and focuses on deregulation, reducing bureaucratic overhead, and shifting from veto-cratic to democratic housing approval procedures. Another category is focused on investment on infrastructure to support housing, and exploration of state-local funding structures to facilitate continuous infrastructure improvement. If implemented, these changes will not only help to solve Wyoming’s housing constraints but also facilitate housing development in a way that combats urban sprawl, and in doing so protects open spaces outside of cities that Wyomingites value.
Related project: Pathways to Prosperity in Wyoming
Working Papers
A Growth Perspective on Wyoming
This report sets out to understand if the economy of the State of Wyoming is positioned to grow into the future. To do this, the report begins by investigating the […]This report sets out to understand if the economy of the State of Wyoming is positioned to grow into the future. To do this, the report begins by investigating the past. To know where the state economy could be headed, and how that direction may be improved, it is critical to understand how the state developed the economic structure and drivers that it has today. Thus, Wyoming’s economic trajectory is explored over the long, medium, and short term. From this investigation, we find that Wyoming faces an overall growth problem, but we also find a high degree of variation in economic engines and growth prospects across the state. The problem that this report identifies is that the composition of economic activities is not positioned to sustain a high quality of life across all parts of the state.
“Across all parts of the state” is an essential part of the problem statement for Wyoming. While some local and regional economies in the state are growing and bumping up against identifiable constraints, other local and regional economies are experiencing sustained contractions and will require new sources of growth in order to retain (or expand) population and high quality of life. Since economic dynamics vary significantly across the state, analysis is conducted in as much geographic detail as possible. By combining historical and geographic dimensions of growth, this report aims to inform pathways for sustained and inclusive prosperity across Wyoming.
Related project: Pathways to Prosperity in Wyoming
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Project on Indigenous Governance and Development at HKS
The project is leveraging the knowhow and capabilities of the Harvard’s Project on Indigenous Governance and Development. In February 2023, Prof. Emeritus Joe Kalt joined the project to present to leaders from the Northern Arapaho and Eastern Shoshone tribes on the Wind River Reservation. The project is working to support tribally led initiatives to address development challenges on the reservation and connect the labor market to the regional economy.
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