Tracking the Economic Fallout of COVID-19 in Kentucky

By Dustin Pugel
October 16, 2020

Social distancing policies and practices are protecting lives in Kentucky. In the short term, that means record job losses and the threat of increasing hardship as people struggle to make ends meet. Once the pandemic is behind us, the economy may still underperform if the policy response between now and then isn’t strong enough. 

This tracker brings together some of the most important state-level indicators of how Kentucky’s economy is faring. It will be updated as new data are released.

Unemployment Insurance
Initial claims for unemployment insurance for the week ending October 10: 5,769
Continued claims for Pandemic Unemployment Assistance for the week ending September 26: 49,879

New unemployment insurance (UI) claims are close to a real-time indicator of how many Kentuckians are losing hours and employment because of the COVID-19 pandemic. Continued claims are a good indicator for how protracted joblessness is, as individuals ask for additional weeks of benefits. But the state only provides 26 weeks of regular UI benefits, and many have exhausted those benefits and are becoming eligible for an additional 13 weeks through the federally-funded Pandemic Emergency Unemployment Compensation program, which the state is not providing data for at this time. 

The most recent week represents “advance claims” rather than initial claims, and is revised the following week with actual initial claims. Also, many workers who do not qualify for unemployment insurance do qualify for “Pandemic Unemployment Assistance” (PUA) under the CARES Act.


Supplemental Nutrition Assistance Program (SNAP)
Total SNAP participation in September 2020: 616,169
Percent of Kentucky participating in SNAP September 2020: 13.8%
Groceries purchased with SNAP September 2020: $107.5 million

Like unemployment insurance, SNAP responds quickly to changes in the economy, and so it is also an early indicator for how Kentuckians are faring. Because it is targeted to people with net incomes below the poverty line ($26,200 for a family of four), it is particularly helpful for knowing how Kentuckians with low incomes are faring. SNAP is a strong tool for reducing food insecurity and improving health, but also for dampening economic harm during downturns.

Employment in Kentucky
Total estimated Kentucky employment September 2020: 1,826,000
Percent change in Kentucky employment from last month: 0.0%

Many public-facing businesses were ordered to close during the state of emergency in an effort to slow the spread of COVID-19, and many other businesses have laid off and furloughed workers due to decreased demand. Changes in total employment will help reflect the ongoing crisis in the labor market — and will show when Kentuckians eventually begin going back to work.

The following chart tracks the monthly change in nonfarm employment in Kentucky from the Current Employment Statistics State and Metro Area Employment estimates. Because many are staying home rather than searching for a job, the unemployment rate is not yet a good indicator of the health of the economy but will be useful later when orders to close are gradually lifted and businesses begin hiring back their workforce.

Monthly General Fund Revenues
Total General Fund revenue September 2020: $1,115,361,602
Percent change in tax revenue year-over-year September 2020: 4.8%

Though the impact of COVID on state coffers is just beginning to be felt, as workers are laid off and demand falls, Kentucky’s General Fund revenue will steeply decline, making it harder to invest in vital services for Kentucky communities. A smaller workforce and less demand will especially impact the individual income tax and the sales and use tax — the two largest sources of revenue for the state. Although the extra $600 in unemployment benefits helped prop up revenues in June and July, those benefits have now expired. Without significant federal assistance, Kentucky will face an unprecedented shortfall, leading to widespread public layoffs and significant harm to the public institutions that educate, protect, and care for Kentuckians and strengthen communities across the commonwealth.

The graph below tracks monthly General Fund revenues compared to the same month the previous year.