Kentucky trailing national averages in economic statistics, middle-of-the-pack among border states, chamber report shows

12/27/2015 08:00 AM

Kentucky has trailed the rest of the country in employment and wage growth from the lowest point of the economic recession, although the state has outperformed many of its neighbors in the same categories, according to an analysis by the Kentucky Chamber of Commerce.

The chamber’s report, completed by University of Louisville professor emeritus and consultant Paul Coomes, found that Kentucky’s employment grew by 7.4 percent from June 2009 to June 2015, lagging the 8.4 percent average nationally. Wages and salaries here increased 21.6 percent while the rest of the country averaged 24.5 percent, according to the analysis, which relied on U.S. Bureau of Labor Statistics.

Compared to surrounding states, however, Kentucky ranked third- and fourth-highest in those categories, respectively. Only Tennessee, with 10.4 percent employment growth, and Indiana, at 9.8 percent, topped Kentucky’s 7.4 percent growth, and Kentucky’s 21.6 percent wage growth trailed Tennessee’s 26 percent, Indiana’s 24.3 percent and Ohio’s 21.9 percent increases, according to the chamber’s data.

Tennessee’s growth when compared to Kentucky’s “has been a decades-long issue,” while Indiana’s pace has been a relatively new phenomenon, Coomes said in a press call with reporters last week.

“(Tennessee has) faster population growth,” he said. “They have no state income tax. It’s a right-to-work state, so they’re doing well in manufacturing.”

“Indiana was sort of a Rust Belt place until the last eight or ten years, and I’ve seen Indiana really come on strong in some of the relative statistics, and of course they’ve modernized their state government and had some tax reform and they’re a right-to-work state, and I think they’ve been pretty well managed out of Indianapolis,” Coomes continued. “So I give them credit for that.”

Although Kentucky ranks sixth among with seven contiguous peers in manufacturing employment with 241,497 jobs as of this June, its employment and wage growth in that industry since June 2009 – 14.4 percent and 36.2 percent, respectively – far outpacing national averages of 5.5 percent and 22.3 percent, according to the report.

Coomes said economic evidence shows right-to-work laws in other states make some difference in job creation, “but it doesn’t make a transformational difference as far as manufacturing jobs go.”

“It’s not something that would transform your economy, but there probably are knock-on effects once you send that signal out that this is your business climate, that workers are not required to join unions to work in certain places,” Coomes said. “… It might also spill over to public-sector unions.”

Chamber President Dave Adkisson, an advocate of right-to-work legislation, said Daviess County lost out on economic development opportunities during his time with the local chamber of commerce, saying a southern right-to-work state landed one such opportunity and with it 5,000 to 8,000 jobs.

He called a statewide right-to-work law, which has failed to pass the Democrat-led House of Representatives in Kentucky’s General Assembly, “a signal of a state’s level of business friendliness.”

“While it might not be transformational to a state economy, it can be transformational to a community’s economy,” Adkisson said during the teleconference. “And I would suggest that we’re losing several thousand jobs per year by not being designated right-to-work.”

The report breaks the state into nine different economic regions: Louisville, Lexington, Northern Kentucky, Mountains, Ashland, Cumberland, Bowling Green-Hopkinsville, Paducah-Purchase and Owensboro-Henderson.

Louisville, Lexington, Bowling Green-Hopkinsville and Northern Kentucky surpassed that state’s average of 7.4 percent in employment growth with 10.7, 9.5, 9.2 and 8.9 percent increases, respectively, while Louisville, Northern Kentucky and Lexington topped the state’s 21.6 percent wage growth with 26.6, 24.9 and 23.5 percent growth, respectively, according to the report.

The Mountains region was the only one in the study to face steep declines in both categories, posting a 13.2 percent loss in post-recession employment growth and a 12.6 percent drop in wage growth, while Ashland saw a 5.9 percent decline in employment growth during the same time period, according to figures.

From April to June of this year, 58 percent of the state’s overall payroll came from Louisville and Lexington, the report shows.

Those two regions are among the state’s top in terms of employment rates with 58.6 percent for Louisville and 56.9 percent for Lexington, trailing only Northern Kentucky’s 61.8 percent employment rate, according to data from the U.S. Census Bureau and American Community Survey from 2010 through 2014.

Ashland, Cumberland and Mountains were the three regions with less than 50 percent employment rates, with 44.4 percent, 43.6 percent and 37.4 percent employment rates, respectively, and Kentucky’s 54.3 percent employment rate trails the 57.7 percent national average, the report indicates.

“It’s striking to me to see the dramatic regional differences in Kentucky in terms of the percentage of the population, the adult population that’s employed,” Coomes said during the teleconference. “I think this is an often overlooked statistic. We spend a lot of time reporting and reacting about the unemployment rate, which I don’t think is near as interesting as this.”


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