Lexmark's layoff of more than 500 Lexington-based employees in its inkjet division, which it is closing, might be a tough blow for the city to absorb, a University of Kentucky economist said Tuesday.
Ken Troske, the Sturgill Professor of Economics at UK, said the number of employees being laid off is not large in terms of the Central Kentucky labor force of more than 240,000 workers, but Lexmark is one of the few firms with Kentucky headquarters that does a substantial amount of its engineering and development work here.
That means a lot of highly skilled, highly paid employees are being let go, he said.
Troske said such workers are "something that we tend to lack in Kentucky in general. More than anything else, that is where the impact will come."
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Workers with unique skills might be able to find a new job, Troske said.
"Given the relative lack of high-skill jobs in the area, that will affect the local economy," he said.
The financial impact to the city from the layoffs in Lexington, according to preliminary figures, could be $1 million, city finance commissioner Jane Driskell told Tuesday's meeting of the Lexington-Fayette Urban County Council's Budget and Finance Committee.
More than $800,000 will be from a decline in payroll taxes, the remainder from net-profits taxes.
Driskell said those are preliminary figures because the city doesn't know which employees are being let go, their salaries or the timing of the payouts of the severance packages.
State economist Manoj Shanker said it's possible that the area economy can absorb the hit, given that it's coming out of the recession. He said it's never an ideal time to lose a job, but it's better to do so when the economy is improving rather than when it's stuck in the economic doldrums.
"The inkjet economy has reached its pinnacle," he said. "There's not much more happening there."
Lexmark's generous severance package and the state's rapid-response team of counselors who help to advise laid-off employees on adapting their skills to the economy should help, he said.
Also helping: Lexington employment had gone up by 4,800 workers in July 2012 from a year earlier, Shanker said. The state has gained 3.9 percent in manufacturing jobs in the past year, he said, mainly in durable goods such as automobiles.
"Lexington has a really dynamic economy and should be able to absorb most of this," Shanker said.
Erica Lupson, a work-force services manager at the Bluegrass Area Development District, said Lexmark is working with that organization to determine which of its "rapid response" layoff services will be made available to the terminated employees. Possible services for the employees include education and employability counseling, unemployment insurance information, and contacts for the Kentucky Housing Corp.'s Unemployment Bridge Program, which helps homeowners with mortgage payments while they are unemployed.
Robert Quick, president and CEO of Commerce Lexington, said it's difficult to immediately assess the impact of the layoffs to the local economy.
"What we have to do is usher all of our resources that we can to work with those individuals who will lose their jobs, and see how we can put those folks back into other areas of our economy," he said. "We're not going to know the impact ... until we have a chance to try to put those people in other jobs."