KY Policy Blog

Job Recovery for Some Kentucky Counties, Second Recession for Others

By Jason Bailey
May 5, 2017

When the Great Recession came at the end of 2007, all of Kentucky lost jobs. The U.S. economy hit bottom a couple of years later before starting to improve. Now the nation’s lost jobs as a whole are restored and the economy is strengthening, with some arguing the country is at or near full employment.

But when you dig down to the local level, the picture becomes less rosy — as the map below shows.

In Kentucky from 2009 to 2017, 32 counties experienced modest to strong job growth, with the number of people employed rising in those counties between 11 percent and 31 percent. Most of the growing areas are in central and northern Kentucky or are located along interstate corridors.

But in 32 other Kentucky counties — many of which are in eastern Kentucky — the number of people employed fell between 2009 and 2017 from 10 percent to 32 percent. While the economy overall was recovering, those counties felt what you might call a second recession (a shift in population to more prosperous areas in response to economic conditions plays a role in these numbers.)

Responding to Transition

This drop in employment stems in part from the loss of coal jobs (and factory jobs in northeastern Kentucky) plus the ripple effects in communities. Already, most of the counties experiencing the biggest employment losses had high poverty rates.

These counties were experiencing a second recession at the same time Recovery Act dollars that helped rescue the U.S. economy were drying up, and as the federal and state government enacted additional budget cuts that reduced investments in local schools, roads, human services and more.

The federal government was initially slow to react to the loss of coal jobs. But a few years ago, the Obama administration announced the POWER Initiative and coordinated the funneling of federal grant dollars to transitioning communities, of which Kentucky has received about $20 million. Other initiatives were announced, and Congressman Rogers filed the RECLAIM Act to release abandoned mine land monies for land reconstruction, though the bill has not passed through Congress.

Also helping in a major way was the Affordable Care Act. Kentucky expanded Medicaid, and eastern Kentucky counties gained more than any other part of the state. That resulted in hundreds of millions more dollars flowing per year to health care providers in the region, as well as greater opportunities for preventive services that improve health.

Aid Now at Risk

The region clearly needs much more that builds on those investments and improves the jobs picture. But instead of considering ways to spur greater job growth, we are now at risk of major cuts to the investments that are helping.

The American Health Care Act (AHCA), which passed the House yesterday, unwinds the Medicaid expansion and makes other cuts that will drastically reduce federal health funding to the region. The 5th Congressional District in eastern Kentucky could lose an estimated 20,000 jobs if the AHCA is passed and fully implemented, according to one estimate. That would make it the hardest-hit congressional district in the country by the AHCA.

And the President’s budget for 2018 proposed completely eliminating funding for 7 of the 12 programs that were part of the POWER Initiative — along with other investments that benefit the region. The budget proposed complete elimination of the Appalachian Regional Commission.

Now the AHCA heads to the Senate, and we expect the President’s full budget proposal later this month. Both could severely worsen an already dark jobs picture for one of America’s most economically distressed regions.


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