Jobs and the Economy

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.

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.

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.

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.

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.

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.

News of layoffs at the University of Kentucky follows stories of pending job loss at the Fayette County health department. Both announcements can be linked to the 11 rounds of cuts the legislature has made to the state budget, which have reduced funding for many state functions by 15-30 percent or more.

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.

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.