Lawmakers receive update on Kentucky’s workforce challenges from Kentucky Chamber Center for Policy and Research

Workforce challenges for Kentucky employers will likely continue in the coming decades, but there are steps state policymakers can take to increase worker availability and training in the Commonwealth. This was the central message from Kentucky Chamber Center for Policy and Research Executive Director Charles Aull at a meeting of the Interim Joint Committee on Economic Development and Workforce Investment in Frankfort yesterday morning.

Key labor market metrics like workforce participation remain below pre-pandemic levels, Aull said, and workforce participation among 25-54 years olds in Kentucky is below nationwide averages. In total, Kentucky had about 20,000 fewer workers in May 2023 than it did in January 2020. Meanwhile, employer demand for workers continues to be elevated. In March 2023, total jobs in Kentucky surpassed 2 million. The business community would like to add even more workers to payrolls but is struggling to fill open positions. As of April 2023, there were almost two open jobs for every unemployed Kentuckian.

The challenges employers face when it comes to hiring are likely to persist due to an aging population and slower population growth. Aull discussed population projections by the U.S. Census Bureau and the Congressional Budget Office (CBO), noting that both anticipate significantly slower population growth and a rapidly aging population in the coming decades. Consequently, Aull noted that we can expect to see continued demand for goods and services, but there will be fewer working-age adults to provide those goods and services. The Census Bureau projects that 1 in 4 Americans will be 65 or older by 2060. CBO projects that the population will slow to an annual rate of growth of just 0.3 percent through 2053 due to low fertility rates.

Kentucky is already experiencing these demographic changes. In 2022, nearly a quarter of Kentucky’s workforce was 55 or older, compared to just 14 percent in 2002. This age group is the state’s fastest-growing segment of the workforce, growing 73 percent since 2002.

Meeting these demographic challenges head-on and ensuring that Kentucky continues to be an ideal state for doing business will require action from both the public and private sectors, Aull said. State policymakers can have an outsized impact by pursuing public policies aimed at attracting workers from other states and counties and optimizing our homegrown workforce. Specific policy examples mentioned by Aull included ensuring an attractive state tax code; increasing access to affordable, quality child care; encouraging employment among Kentuckians with histories of substance use disorder and criminal records; developing statewide strategies to optimize underutilized populations like refugees, immigrants, and individuals with disabilities; and targeting state financial aid programs to respond to workforce needs and employer demand.

The Kentucky Chamber Center for Policy and Research has produced several reports on workforce issues in the Commonwealth and highlighted these challenges most recently in “Kentucky’s Winning Strategy,” a new report outlining a positive vision for the state’s economic future. Access these reports here.