The COVID-19 pandemic and ensuing economic downturn reshaped Kentucky’s economy in ways that are still revealing themselves 30 months after the virus arrived in the commonwealth.
Part of the story is good news for workers. Aggressive federal pandemic aid has stimulated a historically fast recovery and a tight labor market that have begun to drive up wages, increase job opportunities and accelerate unionization efforts. This progress is much needed after years of eroding job quality and stagnant wages. But Kentucky still has room to improve, and this Labor Day marks an opportunity to embrace pro-worker policies that give people, no matter their race, gender or county, the tools they need to build a good life.
Despite recent gains, many hardworking Kentuckians still find it difficult to make ends meet and provide for their families, according to our “State of Working Kentucky 2022” report. For example, while Kentucky is close to returning to pre-pandemic levels of employment in half the time it took us to recover from the Great Recession, those gains haven’t been realized across the board.
Women have recovered more slowly than men, in large part because they are more likely to care for family members and lack access to affordable child and elder care. By the 4th quarter of 2021, employment among male employees was 1.3% above pre-pandemic levels, while employment for women was still 1.4% below.
Black Kentuckians were hit harder by layoffs in the COVID-19 downtown and the trend continues. Despite making up only 9.9% of the workforce in jobs eligible for unemployment insurance (UI), Black Kentucky workers accounted for 17.3% of UI claims at the end of last year.
Rural counties are still struggling to recover from the Great Recession (let alone from a shifting economy or recent natural disasters), having lost nearly 76,000 jobs or 9.8% of employment since 2007. At the same time, urban counties have added over 116,000 jobs, or 9.9% growth.
State and local government employment has continued to worsen even as private sector employment has bounced back to where it was before COVID hit. This problem is the result of 15 years of budget and tax cuts that have led to stagnant wages and a failure to invest our current large revenue surpluses in the state budget to adequately address poor public sector wages and reduced benefits.
Even still, overall wage growth was a bright spot for most workers in the current economy. For the first time in decades, middle- and lower-wage-earning Kentuckians saw much-needed boosts to their paychecks in recent years due to a tight labor market, with many quitting lower-paying jobs and taking ones that value them more. Kentucky workers in the 20th-70th percentiles saw inflation-adjusted hourly wage gains between 1.5% and 4.5%.
Unfortunately, now-higher price increases brought on by global inflation have eaten into those raises and typical pay in Kentucky remains insufficient to adequately meet a family’s financial needs.
In Kentucky, the median annualized full-time wage of $40,165 is not enough to cover the basic needs of families with children. While a single adult without children can get by on $32,147 per year, a family of five with both parents employed need $107,389 before taxes to provide for their families, according to an MIT cost-of-living calculator.
Rising prices, the end of federal pandemic-era aid and Kentucky’s new law rolling back unemployment benefits make Kentuckians vulnerable to economic harm this Labor Day. That’s why the state should begin to focus on policies that honor the contributions of hardworking Kentuckians.
Specific steps we can take are to raise the minimum wage for the first time in 13 years (including by getting rid of legal, sub-minimum wages for waiters and disabled workers) and support unionization, expand investment in child care and create a state child tax credit, ensure workers can take time off when sick or caring for a newborn without losing income or a job, and use the state’s largest ever budget surplus to expand quality public sector jobs that meet critical needs in urban and rural communities alike. These are policies that work for working Kentuckians, but are still lacking in the commonwealth.
This Labor day, let’s honor Kentucky’s workers by prioritizing the kind of policy agenda that puts Kentucky workers first, where they belong.
This column appeared in the Herald-Leader on Sept. 2.