(The Center Square) – A recent report published by the Kentucky Chamber of Commerce shows the state has one of the lowest workforce participation rates in the country, but it’s not an issue that was brought on due to the COVID-19 pandemic.
Instead, the state has seen the percentage of its working-age population trend downward since 2000. That January, 63.5% of Kentuckians age 16 and older, excluding those in the military or institutionalized, were either employed or out of work but actively looking. As of this past June, the workforce participation percentage is 56.3%.
The report, titled “20 Years in the Making: Kentucky’s Workforce Crisis,” points out that of its seven neighboring states, only West Virginia and its 55.2% participation rate ranked below the Bluegrass State.
West Virginia’s rate was the nation’s worst. Kentucky came in at No. 48.
The state’s low rate also means, according to the Chamber, there are more than 1.5 million working-age Kentuckians not involved in the workforce.
The report also noted the state typically has between 90,000 and 100,000 open jobs each month.
The study points out low workforce participation leads to higher rates of poverty and puts significant pressure on safety net programs. Among the reasons for the rate include Kentucky’s below-average percentage of working-age adults with a postsecondary degree or credential, increased automation by businesses, the lack of adequate childcare in parts of the state and substance abuse.
A University of Kentucky study found the opioid epidemic may be tied for up to a 3.1% point loss in the participation rate. That would represent more than 55,000 fewer workers and $169 million in lost state tax revenue.
“There is no one singular cause of these challenges,” said Charles Aull, the chamber’s senior policy analyst who wrote the report. “Instead, the causes are many, and the solutions must be, as well.”
Despite the low rate, Kentucky has succeeded in recent months in landing new businesses and helping existing ones expand their operations in the state. According to the Kentucky Cabinet for Economic Development, the $8.7 billion in expansion and attraction projects announced this year mean 11,700 new full-time jobs will become available in the next few years.
That includes the $5.8 billion Ford Motor Company lithium-ion battery manufacturing plant slated for Glendale in 2025. That will create 5,000 of those jobs.
However, with thousands of open jobs in the state, Chamber CEO Ashli Watts said state leaders must address the workforce crisis that’s at hand.
To do that, the Chamber’s report made several recommendations to officials and legislative leaders.
One way to address the skills gap would be to let recipients of Kentucky Educational Excellence Scholarship money use those funds for credentialing programs in fields like welding and truck driving.
Dr. Paul Czarapata, president of the Kentucky Community and Technical College System, said in a statement that all parties must work in concert to address the issue.
KCTCS sponsored the report.
“It is imperative that employers and educators partner to ensure alignment of supply and demand,” he said. “KCTCS stands positioned to collaborate with companies across the Commonwealth to develop customized, rapid response talent pipelines.”
Criminal justice reforms, including giving judges more leeway in setting lower cash bail, would also allow more people to re-enter or stay in the workforce. In 2016, more than 64,000 non-violent defendants were detained because they could not make bail. However the Chamber noted 43 percent of people accused of violent or sexual crimes were released while awaiting their court appearances.
Additional recommendations seek to make the state more inviting to attract new residents. That includes reforming the tax code to reduce income tax rates, supporting pro-immigration policies and avoiding laws “that could create misperceptions” about Kentucky being intolerant.
“We call on the legislature and state leaders to study this report and put a plan in place to tackle the report’s recommendations,” Watts said.