By Jordan Harris
LOUISVILLE, Ky. — Since the deepest points of the Great Recession, the number of people in the labor market who are unemployed has dropped by 64 percent, a remarkable testament to the strength of our recovery. The decrease, even with the considerable increase in the labor market as a whole, has caused a precipitous drop in the unemployment rate, which is matching its lowest marks ever recorded. Our unemployment insurance structure remains a problem, however, and one that is having an important impact on Kentucky’s workforce.
Kentucky currently has the third highest weekly benefit in the United States, alongside the fourth highest tax rate schedule, both worthy of caution in their own right. They help contribute to the state’s average weeks on the program being 24.4 percent higher than the national average. The average number of weeks on the program is above the national average of 15.2 at 19.1 weeks. In fact, nine of the 10 districts in Kentucky have an average number of weeks on unemployment insurance that is above national average.
The Louisville Metro area, despite having a surplus of nearly 10,000 jobs, has the longest unemployment insurance duration of any region in the commonwealth at 20 weeks. The TENCO region, covering Northeastern Kentucky, West Kentucky, Eastern Kentucky and Green River region all sit above the state average of 19.1 weeks, putting them all approximately 25 percent longer than national average. The Bluegrass region, covering Lexington and the surrounding counties matches the state average of 19.1 week, while the Cumberlands, Northern Kentucky, and South Central regions all hover above 18 weeks, which places them below state average but well above national average.
Only the Lincoln Trail Region, stretching from Breckinridge County in the west through Hardin County and into Washington and Marion County in the east, is currently below national average in duration of usage. That region is at 14.6 weeks.
Efforts in the Kentucky General Assembly to make structural changes to unemployment insurance have failed during the last two legislative sessions. Even as the economy in Kentucky expands, and a surplus of open jobs increases, unemployment duration, unlike the national trend, is not decreasing to its pre-recession trends.
A Pegasus Institute report last month showed that Kentucky has a surplus of approximately 15,000 jobs, but that those jobs are not evenly distributed. This could help explain the above average UI duration in regions like Eastern Kentucky, which has nearly 6,000 more people looking for work than jobs available, but would not explain regions like Northern Kentucky or Louisville Metro, both which have surpluses near or above 10,000. It likewise wouldn’t explain how the Lincoln Trail region, which actually has just under 3,000 more people searching than available jobs, would have a duration period below both state and national average.
Deeper structural reforms are almost certainly required.
Jordan Harris is founder and co-executive director of Pegasus Institute