State

Kentucky’s economy improves in cities. Rural areas falling behind.

Kentucky Center for Economic Policy

While Kentucky appears to be recovering from the Great Recession of 2008, workers in rural areas still lag behind the nation and state when it comes to jobs and wages, according to a new economic report.

Urban areas of Kentucky have seen strong job growth since the recovery started around 2010, but rural areas have seen “essentially no job growth,” says the Kentucky Center for Economic Policy, a progressive think tank in Berea that produced “The State of Working Kentucky 2018.”

Statewide, Kentucky has been growing jobs by an average of 1,073 a month since the beginning of 2016, but that is significantly slower than the 2,561 per month it averaged in 2014 and 2015, the report said..

“Once growth in the population since the recession is taken into account, we are still about 36,000 jobs shy of reaching the employment level we had in December 2007,” the report says.

In addition, the share of the Kentucky prime working-age population is the equivalent of 60,000 jobs short of where it was in the much stronger economy of 2000, and lower-level wages are stagnating, leading to increasing inequality.

The report found that a full-time worker at the 30th percentile of earnings makes $12.51 an hour, which is just more than half of what’s needed for a budget in a family of one adult and one child. Kentucky women make 83 cents for every $1 earned by men and black workers make 83 cents to every $1 white workers get.

Overall, the report found, inflation-adjusted wages for the median worker in Kentucky were 0.5 percent lower in 2017 than they were in 2001. Even workers who make the 90th percentile wages, about $36 an hour, saw only 0.9 percent growth between 2009 and 2017.

“A CEO might think the economy is soaring because they see it in their paycheck and investment portfolio,” KCEP Executive Director Jason Bailey said. “But from the point of view of the typical Kentucky worker, good jobs are difficult to find and wages remain stuck — as they have been for the last couple of decades.”

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Kentucky Center for Economic Policy

The strongest growth areas have been in jobs in warehouse and storage, car manufacturing, car parts manufacturing and social services. The weakest areas are those more tied to rural areas, such as coal mining, jobs in education and the federal government, and heavy and civil engineering.

The report calls for policy changes that include more federal investment in infrastructure and more public service employment in jobs ranging from child care to elder services.

“More must be done at the state and federal level to spur job growth and increase job quality,” Bailey said. “Congress should be pursuing direct job creation in distressed regions like eastern Kentucky and expanded investment in needs like infrastructure, and the Federal Reserve should hold off raising interest rates until wages truly begin to grow. The state should be increasing standards for job quality through policies like raising the minimum wage, and reversing budget cuts that are causing job loss in vital public services across the state.”

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