Demographics, politics could affect Kentucky’s jobs outlook

November 8, 2015

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.


Eastern Kentucky jobs outlook: health care and more broadband

August 11, 2014

crouch1Ron Crouch is the director of research and statistics for the Education and Workforce Development Cabinet in Frankfort. He says a growing health care industry in Eastern Kentucky should help offset jobs lost to coal’s decline. Photo by Mark Mahan

 

There is more talk than usual about the need to create jobs and a more diverse economy in Eastern Kentucky because of the coal industry’s decline.

It made me wonder: what are the latest trends? For some answers, I called Ron Crouch, director of research and statistics for the Education and Workforce Development Cabinet. He previously headed the Kentucky State Data Center for two decades and is better than anyone I know at analyzing this sort of information.

People are alarmed because coal-industry employment in Eastern Kentucky has dropped to about 7,300 — half what it was five years ago. Coal-mining jobs have been important to the region because they pay well: about $65,000 a year.

President Barack Obama’s critics have blamed stricter environmental regulations for the sudden drop in coal employment. But the biggest factors have been cheap natural gas and the fact that Eastern Kentucky’s best coal seams have been depleted over the past century; the coal that is left is more costly (and environmentally damaging) to mine.

But Crouch notes that coal employment in Eastern Kentucky has been declining steadily for more than six decades — even accounting for periodic booms and busts — mainly because of mechanization. Coal production peaked in 1990, but coal employment peaked in 1950, when there were 67,000 miners.

Some Eastern Kentucky leaders have pursued manufacturing as a source of new jobs. But Crouch says the long-term prospects for manufacturing aren’t too good, either, also because of automation.

“Manufacturing is coming back to the United States, but not necessarily manufacturing jobs,” he said. “We’re producing far more goods, but with far fewer workers.”

Still, Crouch sees hopeful signs for Eastern Kentucky.

While the region still lags the state in college degrees, high school graduation rates have improved significantly, as have the number of people completing other levels of training between high school and a bachelor’s degree. Many new, good-paying jobs are for people with that level of education.

Those areas include health care as well as professional, scientific and technical services. Some of these jobs pay well. For example, the number of registered nursing jobs, which pay about $55,000, is growing significantly.

Eastern Kentucky’s health care industry should see big growth in coming years. One reason is demographics. Baby Boomers are now entering their 60s and 70s and will require more health services. Another reason is the Affordable Care Act.

“You’re going to see a huge increase in the number of people in East Kentucky who have health insurance,” Crouch said.

Because Eastern Kentucky families are smaller than in the past, there will be less pressure for young people to leave.

“You now have a population with more people in their 40s, 50s and 60s than in their teens and 20s,” Crouch said. “If those young people can get the education and training they need after high school, there will be jobs for them in East Kentucky.”

But many of the growing economic sectors in the region, such as health care, have traditionally been dominated by women, while shrinking sectors, such as mining and manufacturing, have been mostly male. In some Eastern Kentucky counties, women now have higher employment rates than men.

“The good news is the economy has been transitioning to a broader economy,” Crouch said. “But how do you transition a population of males who have been involved in mining and manufacturing to jobs in professional, technical services and food services and health care, which have largely been female?”

Crouch said improving broadband service in Eastern Kentucky, which has the state’s poorest connections to the Internet, is vital.

“That would accelerate the growth in higher-skilled jobs,” he said.

Crouch is troubled that many Eastern Kentucky counties have high percentages of working-age people not in the formal labor force. He thinks many are “getting by” in the cash and barter economy, some of which is illegal.

He also is concerned that much of the job growth has been in low-wage service industries. Because the legal minimum wage hasn’t kept pace with inflation, full-time work in many low-wage jobs doesn’t produce a living wage for a family.

“The good news is that East Kentucky is not having a brain drain, despite what people think; it’s having a brain gain,” he said. “But, as the saying goes, we’re halfway home and have a long way to go.”


Kindness, help took this hard worker a long way

December 12, 2010

Everyone loves an inspirational story, especially this time of year. You know the kind I mean: A person succeeds against all odds. Someone’s life is changed by acts of kindness. The human spirit is renewed in an unlikely place — say, for instance, a grocery store aisle.

For all of that and more, it would be hard to top Lewis Matherly’s story.

Matherly was born 57 years ago with mental disabilities to an alcoholic mother and a father who soon abandoned them. “A lot of the boys on the street used to pick on Lewis, so my brothers and I would take up for him,” said David Duncan, who lived nearby in the blue-collar neighborhood behind The Red Mile.

When Virginia and Harry Duncan moved their family to a new home on Alexandria Drive, they sometimes returned to Curry Avenue to bring Matherly out to play with their three sons and three daughters.

Beginning at age 7, Matherly did odd jobs and delivered newspapers to earn money. Often, though, his mother took his money to buy herself liquor. As Matherly grew older, their relationship grew worse.

“She booted me out the door when I was 14 and told me to hit the road,” Matherly said. “I was sleeping under a bridge, and it was winter like this.”

Virginia found Matherly under that bridge one night and took him home with her. He has lived with the Duncan family ever since.

School was hard, so Matherly dropped out after the ninth grade and went to work with Harry, a brick mason. “He taught me how to work and make a living,” Matherly said. “He was a good teacher.”

Matherly worked as a mason’s helper with the Duncans and others for more than three decades. “It was hard work, but I liked it,” he said, explaining with pride how much he could do in a day.

“I’ll tell you what, he’s a worker,” said Mike Duncan, another of Matherly’s unofficial brothers. “He was sometimes the only one on a job you didn’t have to tell what to do.”

Harry died in 2002. The construction business slowed, and Matherly found other jobs, with Duncan family members and others. He learned to get around by walking or taking LexTran buses.

But when Virginia died last year, Matherly said he panicked. Angry with God for taking her, he walked out of the house — and kept on walking. After about 10 miles, Matherly said, “The Lord told me to go back home.”

Matherly now lives in Gardenside with one of his unofficial sisters, Kathy Duncan Huggins, and her husband, Andy. “We always told Mom not to worry about Louie; we had his back,” she said. “He’s a joy to have around. He’d do anything for you.”

Matherly wanted to continue working — to be as self-sufficient as possible — but he needed more help than the Duncans could give him. He found it at Employment Solutions Inc., a non-profit organization that helps train and place people who have what social workers call “barriers to employment.”

Staff members assessed Matherly’s skills, got him hearing aids and helped him get a job in October stocking shelves at the Kroger store on Bryan Station Road. Except for the overnight hours, Matherly loves his job.

“They’ve got great people out there,” he said. “They’ve been very patient with me. I’m getting faster now.”

I have always admired Kroger for employing people with special needs. They often put enormous pride and effort into their work.

“It’s a reflection of our company’s desire to have an inclusive culture,” Kroger spokesman Tim McGurk said. Store managers are not required to hire special-needs people, he said, “But many do, because it’s often a win-win situation for Kroger and for the employee.”

Matherly and Kroger were honored last week by Employment Solutions as part of its annual “community partners” luncheon. Dale Walker, of the organization’s Bluegrass Career Services unit, nominated Matherly as the client who most inspired her.

As Walker told Matherly’s story and presented him with a plaque, three of the five surviving Duncan “children” proudly applauded — and tried not to cry.

“We work with a lot of people with harrowing stories,” said Nicole Dummitt, director of Bluegrass Career Services, which helped place about 100 people in Lexington-area jobs over the past year.

“They don’t all come from having lived under a bridge, but they’ve all needed a little help overcoming an obstacle that was keeping them from working,” she said. “Sometimes, just a few little things can make an enormous difference in someone’s life.”