Kentucky ranks 48th in the nation in workforce participation rate, according to a new report — “20 Years in the Making: Kentucky’s Workforce Crisis” — recently released by the Kentucky Chamber Foundation. This report also makes an effort to identify and introduce possible remedies for the economic plight.
The report indicated low workforce participation rate in Kentucky developed well before the COVID-19 pandemic. It identified numerous causes of the economic downturn. To illustrate, the amplification of “preexisting trends” and the magnification of “weak points” are a couple of the factors driving and keeping the rate down. Fewer adults in Kentucky participate in the workforce than in almost any other state in the nation.
“Kentucky’s workforce challenges are exceptional, but they did not suddenly emerge in the age of COVID-19,” according to the report. “Rather, they have been building and holding back our economy for at least two decades.”
More specifically, the concerning pattern surfaced in 2000. The report cited demographic changes, poor health outcomes, substance abuse and incarceration as some of the causes.
The Kentucky Center for Statistics reports the August workforce participation rate for West Kentucky — Local Workforce Area — was 54.5%.
The workforce participation rate, otherwise known as the labor force participation rate, studies the number of workers — 16 or older — that are either employed, unemployed or looking for work. The data excludes active-duty military personnel and institutionalized individuals.
From 2000 to 2020, the men’s workforce participation rate dropped from 71.3% to 63.8%. Alternatively, the women’s workforce participation rate fell from 57.9% to 51.4%.
All surrounding states, except West Virginia, hold higher employment-to-population ratios. The report shows that Kentucky has the fifth-lowest ratio in the nation.
The ratio includes working-age adults 16 or older that are employed. It is distinct from the workforce participation rate because it excludes unemployed individuals.
The report outlines the pandemic has impacted the workforce in five primary areas: workers are quitting at unprecedented levels, workers are reconsidering their careers, stability and work-life balance are top of mind, flexibility is in demand, remote work will have state and local tax implications.
The report centers on eight overriding solutions that can remedy Kentucky’s workforce participation rate, which is the nation’s third-lowest.
Solutions include closing the skills gap, tracking spending, evaluating workforce programs to ensure return on investment (ROI), criminal justice reform, transportation, infrastructure, broadband investment, social safety net improvements, health outcome improvements, child care investment and growing the state’s population.
The report noted that the return to pre-pandemic levels is not guaranteed, and if rates go back to normal, Kentucky is likely to lag behind neighboring states and the nation.