As the governor and General Assembly consider additional cuts to pension benefits for employees, it’s important to understand the role such benefits play in local economies. In 2016, public retirees of the Kentucky Employees’ Retirement System, State Police Retirement System, County Employees Retirement System and Kentucky Teachers’ Retirement System received pensions totaling $3.4 billion. That’s the economic equivalent of an entire industry — for comparison, the accommodations and food services industry in Kentucky generated $4.5 billion in earnings in 2015 while the construction industry generated $7 billion, according to the Bureau of Economic Analysis.
As the interactive map below shows, those pension checks are an important part of the economy in every Kentucky county. Over 94 percent of Kentucky Retirement Systems (KRS) retirees live in Kentucky, and 89 percent of retired teachers. When retirees spend their checks at hardware stores, restaurants and other local businesses, it results in an economic ripple effect that creates jobs. As KRS reports, each $1.00 of benefits supports about $1.43 of total economic activity.
When you cut benefits for current or future public employees and retirees, it harms not just them but the local economies where they live.