Not since the steamboat ceased being a primary source of transportation has Kentucky’s economy been in a stronger position than it is today. Digging through the statistics can cause one to marvel.
According to the Bureau of Labor Statistics data, the commonwealth is at the lowest unemployment rate ever recorded, 4%, which, amazingly, has happened with one of the largest labor markets in the history of the state. In April, there were 2,065,210 individuals employed or looking for a job, among the highest numbers in history. This alone is an excellent sign, telling us that more and more people are entering the labor market every month because they believe they can find employment.
Their instinct is right.
The total number of individuals in the labor market has grown considerably, by 4.6%, since the summer of 2015, when it reached its 10-year low. The number of people employed has grown even more rapidly, increasing 5.9% since that time, and over 8% since its post-recession low.
The number of individuals unemployed has dropped precipitously too. In the worst periods of the recession, Kentucky had more than 220,000 people counted as unemployed. Last month, that number was sitting at just above 82,000, a decline of 62%, again, even as the size of the overall labor market has grown.
Our economy is so strong, in fact, that much like the nation as a whole, Kentucky has more open jobs than people searching for work. A report released by us, at Pegasus Institute, in May showed that according to the most recently available numbers, Kentucky has 15,000 more open jobs than people actually searching for work.
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The amount of investment in Kentucky – over $18 billion in three years – means that we can expect even more available jobs as operations begin and expand.
A mix of three factors is helping this economic renaissance. The first is the strength of the U.S. economy as a whole. If the national economy continues to expand through June, it will equal the longest period of economic expansion (10 years) in the post-war period, which reaps obvious benefits for Kentucky.
A second is the state’s natural advantages. Kentucky is a one-day’s truck drive from 65% of the U.S. population; has 2,000 miles of commercially navigable waterways; 20 interstates and federal highways; 2,700 miles of railroad track; and now has three major airfreight shipping hubs. These logistical advantages that Kentucky boasts are unmatched, a point that has been critical to the growth and investment in recent years. That is on top of the state’s relatively inexpensive land costs and lowest energy costs east of the Mississippi River.
But even if those important variables were removed, Kentucky is still doing a lot of things right that are contributing to success. Last year, the state updated its tax code in the most comprehensive way in eight decades, creating a much more business- and employee-friendly environment. Kentucky eliminated its progressive income and corporate tax structure, put in place flat rates for both, broadened its tax base, and began the process of eliminating inefficient taxes and loopholes. Becoming a right-to-work state, which Kentucky did in 2017, has expanded the pool of businesses that Kentucky can compete for and opened the door to new opportunities. Those things coupled with aggressive recruitment from policymakers has equaled a whirlwind of positive economic activity.
If this period of expansion has shown us anything though, it is not that we are at the end but rather, as Winston Churchill once said, the end of the beginning. So, where should policymakers turn their focus?
There are at least three policy areas where Kentucky still drags, that can bolster the economy even further if we can build long-term solutions — health-care outcomes, educational attainment and, interconnected with both, workforce participation. All three are areas that Kentucky ranks at or near the bottom nationally, constraining the potential of our state’s economy without solutions.
If Kentucky can find solutions to those challenges, and move the needle in a positive direction, the commonwealth can push to heights it has never seen before. ■
Jordan Harris is executive director of the Louisville-based Pegasus Institute public policy think tank.