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Two studies show business confidence in Ky. growing

The following is an op-ed by David Adkisson, president and CEO of the Kentucky Chamber of Commerce.

Kentucky Chamber President and CEO Dave Adkisson

FRANKFORT, Ky. — Two recent studies conducted by the Kentucky Chamber of Commerce show that business confidence is growing among Kentucky business leaders and that Kentucky is growing faster in jobs, incomes and population than most of its bordering states.

The chamber believes that recent pro-growth policy changes in Kentucky (for example, Kentucky moving this year from ranking 33rd to 23rd among states in our tax structure) will build momentum and lead to even greater progress for Kentuckians.

In a recent survey of business leaders across the state, nearly 700 responded, and 63 percent said Kentucky was on the “right track” compared to only 49 percent who responded the same way in 2015. Their outlook on the state’s economic conditions was up dramatically in the same period, from 66 percent who responded “excellent, very good or good” compared to 41 percent in the previous survey. While there were regional variances in economic performance and business attitudes, clearly optimism is up.

Another recent report by the Kentucky Chamber, conducted by emeritus University of Louisville economics professor Dr. Paul Coomes, looked at Kentucky’s economic performance from the end of the recession in 2009 to 2017. That report brought news that Kentucky has posted more growth in jobs, population and wages than half its bordering states. While we continue to trail the nation in those categories — a reality that describes most of Middle America compared to the growth in costal and more urban areas — and we trail Indiana and Tennessee, two states that were faster to implement various pro-growth policies, the state of Kentucky is on a positive growth trajectory. That trajectory, combined with business confidence, will fuel economic momentum in the years ahead.

What did we learn from the economic analysis by Dr. Coomes?

  • Kentucky had 1.9 million wage and salary jobs as of December 2017. That reflects growth of about 180,000 jobs; the 10.4 percent increase compares to 12.6 percent growth nationally.
  • Kentucky’s economic performance has outpaced that of West Virginia, Ohio, Illinois and Missouri; Tennessee and Indiana have done better than Kentucky.
  • Per capita income of $39,393 in 2017 is growing, but so is the income of other states, keeping Kentucky’s ranking at 47th.
  • Kentucky has an employment, or workforce participation, rate that trails the nation – 54.9 percent compared to 58.5 percent. One reason for this is the state’s high rate of disabilities. Among those aged 18 to 64, 15.8 percent of Kentuckians report a disability, compared to 10.3 percent nationally.

Of particular interest is what the report says about the importance of immigration to the workforce. Demographers break population growth into two categories – natural increase (births minus deaths) and net migration (both state-to-state and internationally).

Kentucky’s population has grown at a rate of 2.6 percent since the Great Recession (compared to a national rate of 5.5 percent).

The 115,000 people represented by the percentage increase included 82,000 more births than deaths. Of perhaps greater significance: while the state lost population due to people migrating to other states, it gained 46,000 new residents from outside the United States.

Although net population was down in some areas, every part of the state gained population from international migration. This was the only category where all regions of the state had the same experience.

Several years ago, the chamber asked Coomes to develop a regional approach for gauging economic activity. The resulting nine regions were developed based on television market areas supplemented by information on county-to-county worker flows.

The latest economic report showed a continuing, significant variation among the regions’ economic circumstances. The more metropolitan areas of the state posted the strongest gains while regions in the east and far west showed slower or negative growth patterns. Migration from rural areas to urban areas continues to be a trend, not just in Kentucky or the U.S., but around the globe. People are moving to cities for jobs, housing, educational options and social opportunities.

When viewing these findings together, two things are clear: Kentucky still faces significant economic challenges, but the business community is optimistic about the state’s ability to meet those challenges to build a stronger future. Enacting pro-growth policies, improving the state’s tax structure, eliminating outdated regulations and sustaining business confidence will allow Kentucky to continue its growth and build momentum for the next generation.