Economist: Kentucky's economic recovery has been uneven, state lags others on pay

jpatton1@herald-leader.comJune 26, 2014 

Toyota

Team member Darryl Asher installed inner dash silencers on a Camry moving down the assembly line last February at the Toyota plant in Georgetown. "We're very proud that the Camry ... was once again named the most American-made car built," plant chairman Steve St. Angelo said.

CHARLES BERTRAM

  • Comparing growth

    Wage and salary growth since bottom of last recession (in percent)

    Region All industries Manufacturing

    LEXINGTON 17.3 14.8

    Mountains -9.7 2.3

    Cumberland 8.5 28.3

    B. Green-Hopkinsville 17.0 33.7

    Paducah-Purchase 18.8 17.7

    Owensboro-Henderson 20.2 30.0

    Louisville 20.1 33.6

    Northern Kentucky 23.6 39.8

    Ashland 5.8 9.7

    Employment growth since bottom of last recession (in percent)

    Region All industries Manufacturing

    LEXINGTON 13.1 3.4

    Mountains -5.3 4.8

    Cumberland 6.4 6.6

    B. Green-Hopkinsville 11.3 12.6

    Paducah-Purchase 6.7 -8.5

    Owensboro-Henderson 8.5 8.5

    Louisville 12.7 22.3

    Northern Kentucky 8.0 12.6

    Ashland 3.4 0.7

    Source: Kentucky Chamber of Commerce

  • IF YOU GO

    Economist Paul Coomes will present more findings at the Chamber Business Summit and annual meeting in Louisville on July 21 and 22. Go to Kychamber.com/businesssummit to register to attend.

  • Region definitions

    Economist Paul Coomes used commuting patterns and television market areas to determine Kentucky's nine economic regions. Here are the counties included in each.

    Lexington area: Anderson, Bath, Bourbon, Boyle, Casey, Clark, Estill, Fayette, Franklin, Garrard, Harrison, Jackson, Jessamine, Lincoln, Madison, Menifee, Mercer, Montgomery, Nicholas, Owen, Powell, Robertson, Rockcastle, Rowan, Scott, Woodford.

    Mountain area: Bell, Breathitt, Floyd, Harlan, Johnson, Knott, Lee, Leslie, Letcher, Magoffin, Martin, Morgan, Owsley, Perry, Pike, Wolf.

    Cumberland area: Adair, Clay, Clinton, Cumberland, Knox, Laurel, McCreary, Pulaski, Russell, Wayne, Whitley.

    Bowling Green-Hopkinsville area: Allen, Barren, Butler, Caldwell, Christian, Edmonson, Hart, Logan, Metcalfe, Monroe, Simpson, Todd, Trigg, Warren.

    Paducah-Purchase area: Ballard, Calloway, Carlisle, Crittenden, Fulton, Graves, Hickman, Livingston, Lyon, McCracken, Marshall.

    Owensboro-Henderson area: Daviess, Hancock, Henderson, Hopkins, McLean, Muhlenberg, Ohio, Union, Webster.

    Louisville area: Breckinridge, Bullitt, Carroll, Grayson, Green, Hardin, Henry, Jefferson, LaRue, Marion, Meade, Nelson, Oldham, Shelby, Spencer, Taylor, Trimble, Washington.

    Northern Kentucky area: Boone, Bracken, Campbell, Fleming, Gallatin, Grant, Kenton, Mason, Pendleton,

    Ashland area: Boyd, Carter, Elliott, Greenup, Lawrence, Lewis.

Kentucky's economic recovery from the recession has been uneven, with some regions bouncing back while others lag, according to an analysis of five years of quarterly jobs and wages data.

Economist Paul Coomes looked at wage and employment growth in the state since the bottom of the 2008-09 recession through 2013. He is scheduled to present some of his findings in July to the Kentucky Chamber of Commerce.

"The main reason the Kentucky Chamber reached out to Dr. Coomes was to drill down to the regional level and really attempt to understand what economic trends affect people's lives, incomes and careers," said the chamber's CEO, Dave Adkisson. The goal, he said, is to come up with regional development strategies rather than a statewide one.

Coomes found that the Lexington, Louisville and Bowling Green-Hopkinsville regions had the highest growth in total jobs, with four Kentucky regions surpassing the national average of 7.3 percent total employment gains.

Coomes said he used commuting patterns and television market areas to determine the state's nine economic regions.

Overall, Kentucky gained more than 164,000 jobs, with most of them coming in Louisville (more than 68,000) and Lexington (more than 46,000).

The 26-county Lexington region had the highest growth rate in total jobs, with a 13.1 percent gain in employment, according to the figures.

The 18-county Louisville region had the highest growth rate in manufacturing jobs: 22.3 percent, nearly twice the growth rate of any other Kentucky economic region.

"Louisville has seen about 60 percent of the state's total growth in manufacturing jobs growth since the recession," said Coomes, who is a professor emeritus at the University of Louisville.

But the mountain area of Eastern Kentucky and the Paducah-Purchase area of far Western Kentucky both continue to lag on jobs. Coomes found that the mountain area is down 5.3 percent, or 5,000 jobs, from where the region was five years ago; the Paducah-Purchase area is down 8.5 percent, or 1,000 manufacturing jobs, since the recession hit.

In terms of average pay per job, Kentuckians as a whole lag behind the rest of the country, with slower growth than the national average of 25 percent growth.

"We are slipping, relative to other states, in terms of average pay," Coomes said.

The question is: Why, if the state has gained so many jobs, are people making so much less money?

The new jobs pay a lot less on average than they did before the recession, Coomes said. Even new auto manufacturing jobs, which tend to be high-paying, have come at the price of concessions by auto unions to accept lower wages.

"And the general nature of recovery in Kentucky is not adding jobs in the highest sector, but in lower-pay, lower-skill sectors," Coomes said. "Temporary agencies are the No. 1 fastest growth industry sector in Kentucky." The state has also seen strong growth in the food and beverage industry and in nursing homes.

Northern Kentucky had the strongest gains in average pay, with 18 percent growth.

Kentucky also suffers because the state lacks a major, fast-growing city to pull in high-wage professional jobs, Coomes said.

"Kentucky relies on manufacturing and distribution centers for job growth," Coomes said. "We compete very well on assembling things and moving things around. ... So Richmond, up and down Interstate 75, and east toward Mount Sterling are seeing a lot of growth, but they are just not high-paying jobs."

Six of Kentucky's nine economic regions saw wages and salaries increase by more than 17 percent, Coomes found. But payrolls in the mountain region fell by 10 percent, the worst in the state.

Janet Patton: (859) 231-3264. Twitter: janetpattonhl.

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