Raising the federal minimum wage to $10.10 an hour would lift the wages of over one in four Kentucky workers and add $546 million over three years to the Kentucky economy, according to a recent report by the Economic Policy Institute (EPI).
New estimates show that Kentucky has added on average 1,500 net new jobs a month for the last six months and 1,525 a month for the last year. So far, the recovery is only very slowly shrinking the state’s jobs deficit, the gap between the jobs we have and the jobs we need to replace those lost in the recession and catch up with growth in the population.
Kentucky’s economy continues to change, with a decline in manufacturing jobs and a shift toward more jobs in the service sector—a trend that has accelerated with the weak economy of the last few years. These changes have big implications for the job quality of Kentucky workers.
The weak economy of the last few years has had far-reaching effects, but some groups have been harder hit than others. In particular, African Americans in Kentucky have suffered enormous job losses and continue to face a daunting labor market.
There is no question that greater levels of education are associated with higher wages and employment rates in Kentucky, and employment has been declining among those with less than a college degree in recent years. However, median wages have been stagnant for Kentuckians at all education levels over the last ten years—suggesting that our problems with job quality are more complex than just a skills gap.
Working Kentuckians have experienced a lost decade in terms of wage growth, a trend that is undermining family economic security across the Commonwealth and will likely persist at least as long as the unemployment rate remains high.
In times of recession and high unemployment, it’s particularly hard for young people to find jobs. Competition for the jobs that do exist becomes more intense, making it harder for less-experienced workers to obtain employment.
Between the start of the recession and February 2010, Kentucky lost 118,200 jobs. After several years of job growth, that gap has been trimmed to 35,100. However, ongoing growth in the working age population over those years means that the state's actual jobs deficit has only partially declined. The gap between Kentucky jobs and the number of jobs the state needs to regain its pre-recession unemployment rate stands at 98,300 at the end of October.
As in the U.S. as a whole, women’s participation in the paid workforce in Kentucky has grown over the last thirty years. Also, the gap in wages between Kentucky men and women, while still large, has been shrinking. However, that gap has narrowed in part because men’s wages have weakened, and male participation in the Kentucky workforce has also been declining.
The recession had devastating effects on employment in Kentucky, and the recovery is only gradually lifting the state out of a deep hole. The economy’s collapse drove up the state’s unemployment rate, forced higher levels of part-time work from those who would prefer full-time jobs and led to historically high rates of long-term unemployment.
Those with higher education fared better in the recession and are more likely to obtain the new jobs being created in the recovery. However, those new jobs tend to pay lower wages than the jobs that were eliminated during the downturn.
Kentucky added only 700 net jobs in June, again failing to produce enough jobs to make a real dent in the employment gap created by the recession. Kentucky needs to be adding 3,500 jobs a month in order to return to pre-recession unemployment rates within three years. Over the last three months, the state has been adding only 1,700 jobs a month on average.
A new report shows that one in six small business owners in the United States is an immigrant, while in Kentucky immigrants play a disproportionately large role as business owners relative to their small population.
In Kentucky, according to the report by the Fiscal Policy Institute, immigrants make up 4.6 percent of business owners while constituting only 2.8 percent of the population. Immigrants are more likely to be business owners in Kentucky than U.S.-born workers. Business owners make up 3.4 percent of the foreign-born labor force in Kentucky, and 2.8 percent of the U.S.-born labor force.
Job growth in the economy remains slow, and budget cuts at all levels are making matters worse. Those cuts are resulting in the direct elimination of jobs—both through layoffs and by agencies and organizations not hiring for open positions. More jobs are lost as the newly unemployed spend less money in local restaurants and stores. What’s more, with public sector layoffs Kentucky erodes vital services needed to grow the economy, including education.
In Kentucky, the big job losses since the beginning of the recession have been in middle-skill industries like manufacturing and construction that have historically meant middle-class wages for workers without a college education. Kentucky has lost a net 35,400 manufacturing jobs since December 2007 and 18,800 construction jobs.[i]
After stronger job increases over the winter, Kentucky’s employment growth slowed in the most recent two months with the state adding only 1,400 net jobs in March and 1,900 net jobs in April. That growth is far below what Kentucky needs to recover the huge job losses that happened during the recession and catch up with growth in the working age population. To close that deficit in three years, Kentucky needs to add an average of 4,500 jobs a month.
Job growth in Kentucky picked up in the last three months of 2011, as the state added 15,800 jobs. At the depths of the recession, Kentucky had lost 117,700 jobs. Job creation since the recovery began has reduced that gap, but the state still has 60,200 fewer jobs than before the recession hit.
Over 17 percent of Kentuckians live below the poverty line according to preliminary Census data released today, a substantial increase from over 12 percent ten years ago. Census also reported that 640,000 Kentuckians lack health insurance.
Coming over two years after the recession officially ended, Labor Day 2011 should be a time to celebrate a return to growth and prosperity. But the reality is much different across Kentucky, as jobs are hard to come by and workers’ paychecks aren’t getting any bigger. As the conversation in Washington bypasses the central topic of jobs, the tough times facing working Kentuckians threaten to persist for years to come without further action.
Now that the artificial crisis associated with raising the debt ceiling is over, the country must turn to the big challenge facing it: creating jobs and spurring faster economic growth. Recent Kentucky job numbers suggest an economy where job growth is so slow that employment won’t fully recover in the foreseeable future without greater federal action.
While recent announcements of positive job growth are good news for the country, the difficult economic situation will not end soon and neither will the related challenges for the state budget. The economy fell into a deep hole in the downturn that began in late 2007, and has a long way to go until it reaches pre-recession strength.