FRANKFORT, Ky. — Employers in Kentucky are optimistic about the state’s economic future. However, many see opportunities for improvement in workforce development and tax reform, according to a new survey of business and nonprofit leaders from around the Commonwealth.
Throughout the summer of 2023, the Kentucky Chamber of Commerce partnered with local chambers, the National Association of State Chambers, and the Siena College Research Institute (SCRI) to survey 300 Kentucky business and nonprofit leaders to capture their views on key economic and public policy issues.
SCRI consistently has earned an A+ rating from Five Thirty Eight.com and was named the most accurate pollster in the U.S. for its 2022 election polling with the New York Times. SCRI conducted the study from June through August 2023, working with the Kentucky Chamber and local chambers to disseminate the survey for business and nonprofit leaders to complete digitally. While the 300 leaders who completed the survey are not a representative sample of CEOs across the state, the sample still provides unique insights into the views and attitudes of Kentucky’s business leaders.
“Understanding how business leaders view the economy and major public policy questions is top-of-mind for the Kentucky Chamber,” said Ashli Watts, President & CEO of the Kentucky Chamber. “The data gathered through this partnership offers an opportunity for leaders throughout Kentucky to understand how employers are navigating our ever-changing world and what their top concerns are.”
The survey asked questions on issues such as employers’ views of current and future economic conditions, their attitudes towards state and federal policymakers, and their top challenges and public policy interests.
“Kentucky CEOs, while trending towards optimism, are concerned about potential adverse economic conditions, governmental regulation, and health care costs,” said Dr. Don Levy, Director of SCRI. “More than half are confident in Kentucky’s political leadership but fewer than 20 percent think the federal government is doing a good job for businesses. Forty percent are looking to hire but only 15 percent believe there is an ample supply of workers and 60 percent want the governor and legislature to focus on workforce development.”
Views on the Economy
Regarding the economy as a whole, Kentucky employers appear generally optimistic about current and future economic conditions. 37 percent of employers expect the economy to be better a year from now, while 32 percent expect it to be about the same. 31 percent expect it to be worse. For context, the most recent data for Kentucky’s economy showed an unemployment rate of 4 percent as of August 2023. Job growth in the state has consistently trended positively since 2021. In March 2023, Kentucky surpassed 2 million nonfarm payroll positions for the first time in its history, according to analysis by the Kentucky Chamber Center for Policy and Research.
From a revenue perspective, 51 percent of surveyed business leaders anticipate revenues to grow or stay the same over the next 12 months vs. 48 percent who anticipate declines. Many employers are planning to increase their investments in Kentucky, with 58 percent planning to invest in fixed assets (like buildings and machinery) over the next year.
Top challenges facing Kentucky employers include the potential for an economic downturn (61 percent), government regulations (57 percent), health care costs (52 percent), taxes (44 percent), rising supplier costs (44 percent), and human resources (42 percent). Among small businesses – firms with less than 100 employees – the top three concerns were an economic downturn (59 percent), health care costs (55 percent), and taxes (54 percent).
Workforce
Workforce challenges emerged as a major focal point in the survey. A total of 80 percent of Kentucky employers say there is NOT an ample supply of workers in their local area, and 70 percent are having difficulties filling open positions. Finding skilled and semi-skilled workers to fill open positions is the most difficult (64 and 62 percent, respectively), while only 36 percent reported difficulties recruiting unskilled workers. Throughout the economic recovery from the pandemic, job vacancies in Kentucky have consistently outnumbered unemployed Kentuckians looking for work.
The survey shows that Kentucky employers have worked proactively to recruit and retain workers. 79 percent have increased wages to retain talent, while 62 percent have increased starting pay. Employers are also offering more bonuses as well as flexible work hours and flexible work locations. A new report by the ADP Research Institute showed that Kentucky was among the top 10 states for wage increases in September 2023, with median annual wages rising 6.8 percent year-over-year.
Only 5 percent of Kentucky employers anticipate decreasing the size of their workforce over the next year, according to the survey. 40 percent expect to increase their workforce, while 55 percent plan to remain about the same as they are now.
Public Policy
When it comes to public policy, Kentucky employers are far more confident in the ability of the state government to create a favorable business climate than the federal government. 51 percent say state government is doing an excellent or good job creating a strong business climate, and 55 percent feel confident that state government can improve the business climate even more over the next year. Kentucky employers feel the opposite way about the federal government. Only 19 percent say the federal government is doing an excellent or good job creating a strong business climate. Only 25 percent think the federal government will improve the business climate over the next year.
The top issues that Kentucky employers would like to see state policymakers focus on include workforce development (59 percent), tax reform – including both personal and business taxes (49 percent and 47 percent) – and infrastructure (44 percent).
Relocation
The survey also asked questions about employers’ plans to remain in Kentucky or potentially relocate to a different state. 79 percent of Kentucky employers say they anticipate their company will still be in Kentucky 10 years from now. Only 6 percent anticipate leaving. 15 percent were uncertain. If given the opportunity to start from scratch, 77 percent say they would start their business in Kentucky, while 12 percent say they would do it somewhere else.
Of the employers who said they would start their business somewhere else, the top states were Tennessee (20 percent), Florida (20 percent), Indiana (16 percent), and California (16 percent).
About the Survey
300 Kentucky business leaders participated in the survey in June, July, and August 2023. 69 percent were for-profit entities, and 31 percent were non-profit. Industries included construction, natural resources, financial, manufacturing, retail, leisure and hospitality, professional services, transportation and logistics, education and health services, information and technology, and others. Small firms with less than 100 employees accounted for 65 percent of survey respondents. Medium firms with between 100 and 1,500 employees accounted for 31 percent. 4 percent of respondents came from companies with more than 1,500 employees.
