Ky. politicians trumpet job growth, but economist is cautious

ssloan@herald-leader.comOctober 24, 2012 

State officials trumpeted Kentucky's job growth Wednesday, saying the percentage growth was the second-highest among states in September compared with a year earlier. But at least one of the top economists in the state cautioned the news wasn't necessarily all good.

State officials said a federal study prepared monthly shows that Kentucky's net job growth was 2.6 percent between September 2011 and September 2012. That ranked the state behind only North Dakota, which saw job growth of 5.6 percent, which officials there attributed to new oil and gas field discoveries.

Kentucky's high percentage jump came, though, because last year's performance was poor, said Ken Troske, director of the Center for Business and Economic Research at the University of Kentucky's Gatton College of Business and Economics.

"When you start at a low base, you can have high growth," Troske said.

He said the state had a pretty good year in 2010 coming out of the recession, but 2011 was tough.

He cited a tough year for major state employer Toyota, which was dealing with fallout from the Japanese tsunami that idled factorise, and lower interest related to past recalls. Troubles at Toyota also ripple through to its many part suppliers in Kentucky.

"Relative to other states with auto plants, we didn't do very well last year," Troske said. "We had pretty anemic state GDP growth, then pretty anemic growth in employment.

"One way to have high growth is to have low growth the year before."

He said a better indication of the state's economic health would be to factor out last year and see how growth looks over the two years.

With that, "we wouldn't see as much growth this year," he said.

In its news release, state officials trumpeted hiring at companies, including Ford and General Electric in Louisville.

But Troske said those companies are hiring now after layoffs or other troubles in the past.

"We've seen a long trend downward in manufacturing, and all indications are that it will continue," he said. "Manufacturing looks like agriculture did a hundred years ago. We still produce a lot of manufacturing output, but we use less employees to do it.

"While it's great news that Ford and GE have announced new job creation in the state, that's probably not sustainable in the long run."

Troske said Kentucky is better situated to grow in health care and logistics, highlighted by companies such as UPS. One of the factors supporting the latter is Kentucky's central geographic location.

"We do have a lot of advantages in that," he said. "The question is: Are we going to be able to sustain that job growth? It's not clear.

"In some sense, it's great that we did have growth, but I do think it's important to temper that with the fact that last year was not a very good year for us."

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz

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