Demographics, politics could affect Kentucky’s jobs outlook

The creation of more jobs that pay well enough to support a middle-class family was an issue in last week’s election, and it will be a bigger issue in next year’s elections. So it begs the question: what are Kentucky’s job prospects?

The past year has been better than some campaign rhetoric would lead you to believe. Kentucky’s unemployment rate has fallen to the national rate of 5 percent, its best showing since June 2001.

Average weekly earnings have shown strong growth over the past six months — twice the growth rate of a year ago, and more than the national growth rate. The state has regained the 96,000 jobs lost during the recession and added a few more.

The biggest gains in the past year have been in education and health services, which added 7,600 jobs. It will be interesting to see if Governor-elect Matt Bevin’s dislike for the Affordable Care Act, Medicaid expansion and Kynect, which provided health insurance for 400,000 Kentuckians, results in a hiring slowdown or job losses.

Kentucky manufacturing has rebounded, creating 6,500 jobs in the past year. That includes the new Lexus line at Toyota’s assembly plant in Georgetown.

Another growth area has been the hospitality, food service and arts sector, which added 5,600 jobs. Financial services created 3,800 jobs, while all levels of government added 3,700. Professional and business services added 2,300 jobs. Construction added 1,800 jobs — the same number mining and logging lost over the past year.

But there is one big caution for the future: Kentucky’s labor force is declining, mostly because of demographics. This state has a larger proportion of retirement-age people than the national average.

Ron Crouch, who crunches numbers for the Education and Workforce Development Cabinet and is a leading authority on Kentucky demographics, has been warning of this trend for years. He noted that while the working-age population (ages 20 to 64) grew by 18,000 from 2010 to 2014, the 65-and-older population grew four-times faster, to 76,000.

Assuming this trend continues, Kentucky must make sure its working-age population has the education, skills and good health to fill not only the jobs being vacated by Baby Boomers but new ones that must be created for economic growth. That means we can’t afford to have so many working-age Kentuckians “lost” to idleness and disability.

This is especially important because two sectors that for generations provided good-paying jobs to under-educated Kentuckians — coal mining and low-skill manufacturing — are mostly gone and won’t be coming back.

The North American Free Trade Agreement in the 1990s sent a lot of low-skilled manufacturing jobs overseas and left many Kentucky towns with idle factories. The state’s manufacturing sector is now more high-tech, with large segments in the aerospace and automotive industries, and that requires more skilled workers.

Several uncertainties could affect the growth of manufacturing, from rising energy costs to the new Trans Pacific Partnership trade agreement, whose details are just now becoming public.

If Bevin and Republicans are successful in passing “right to work” laws — or, as union workers call them, “right to work for less” laws — wage growth could be hurt. Business groups say those laws make states more attractive to businesses that create jobs, but the result is lower average wages.

Kentucky politicians of both parties crow about being “friends” of coal, but the reality is the coal industry will never be very job-friendly again.

State officials reported last week that coal employment has dropped by half since 2011 — from 18,812 jobs to 9,356. But what people forget is that, since it peaked in 1981 at about 48,000 workers, the number of mining jobs has been in steady decline, mostly because of mechanization.

While some job losses in coal have come because of environmental concerns and regulations, the biggest factor by far has been cheap natural gas. Also, Eastern Kentucky’s coal reserves are dwindling, making it more costly to mine and less competitive with coal from other regions.

For Kentucky to prosper in the 21st century, leaders must be aggressive about exploring new economic opportunities rather than protecting dying industries. And they must help create a work force that is better-educated, better-trained, healthier and better-paid than it has been.

As you listen to politicians propose new policies, ask yourself which ones will make it easier to accomplish those goals and which ones will make it harder.



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