As we move into the CKCPJ Voices 2014 season, we encourage everyone to take the time to read the latest study, "The State of Working Kentucky 2014," from the Kentucky Center for Economic Policy. Written by Jason Bailey, Anna Baumann and Ashley Spalding, the report's conclusions paint a bleak picture for Kentucky families.
|... Kentucky is burdened by its historic legacy as a poor state with an economy built around being a cheap place to do business, including low labor costs (19).|
While those with less than a high school degree face the worst challenges, these are only 9% of the current workforce in Kentucky. "Real wages have been falling for more than a decade. The state’s changing mix of employment includes fewer manufacturing, construction, mining and other jobs that have historically provided employment with decent wages to those without college degrees. Troubling gender gaps disadvantaging women persist at the same time working-class Kentucky men are experiencing real declines in earnings. And while those with more education have fared comparatively better, even Kentucky workers with a bachelor’s degree or greater have seen their wages stagnate (iii)." In particular, Kentucky workers under the age of 25 have been hit the hardest, especially since older workers are staying in their jobs longer or returning to work because of reduced retirement funds (see page 9).
Kentuckians who are employed have lost ground with wage erosion between 2001 and 2013. Startling evidence from the Economic Policy Institute's Family Budget Calculator is presented to show that "even in two-parent, two-child households where one or both parents work full-time, wages are largely insufficient to support a decent standard of living (13)." Workers with a bachelor's degree or higher are still doing better than those without and the difference is growing slightly larger in the last decade. However, because of the overall loss in real wages, "education has not guaranteed wage growth -- neither for the labor force as a whole or for distinct demographic groups -- nor has it protected workers from wage decline (16)." Wage disparities by gender and race also persist in Kentucky, though expanded health insurance has started an upward trend for all in benefits.
The growing inequality is a major factor - the top 1% of Kentucky earners netted nearly half of state income gains from 1979 to 2007 (15). Gains from economic growth have not been seen across the board, "with incomes at the top soaring while middle- and low-income Kentucky workers see wages stagnate or decline (16)."
Recommendations for key federal and state actions to improve the state of working Kentucky are to:
- Sustain and strengthen the economic recovery
- Raise the minimum wage and create a state earned income tax credit
- Extend emergency unemployment benefits
- Invest more in the foundation of economic growth through tax reform
- Create forward-thinking economic development plans aimed at building a strong economy over the long term
Download the report here (.pdf file).
The Kentucky Center for Economic Policy (KCEP) is a nonprofit, non-partisan initiative that conducts research, analysis and education on important policy issues facing the Commonwealth. Launched in 2011, the Center is a project of the Mountain Association for Community Economic Development (MACED) and is located in Berea. For more information on KCEP, visit www.kypolicy.org.