At a meeting of the Workforce Attraction and Retention Task Force on Tuesday, Kentucky Chamber Center for Policy and Research Executive Director Charles Aull and Dub Newell, Kentucky Chamber Small Business Policy Council Chair and CEO of Louisville Tile, outlined challenges and solutions to address Kentucky’s ongoing workforce crisis.
Aull said Kentucky’s Workforce Participation Rate was 57.3% in May this year, 1.3 points lower than in December 2019 and 5.2 points lower than the national rate in May this year. He noted the steady decline in workforce participation in Kentucky and the United States since 2000, saying, “it has a lot to do with an aging population and retirements.”
“This is not a full explanation of the challenges we’re dealing with when it comes to workforce issues in Kentucky, and to understand this, we have to understand what’s going on with prime-age workers. These are people ages 25-54, and they’re the demographic that is most likely to be working. They are a very important part of the labor market,” Aull explained.
The rate of workforce participation in the prime-age demographic in Kentucky has declined 1.5 points between 2000 to 2023, he explained, and the workforce participation rate has been slower to recover since the COVID-19 pandemic compared to the national rate within this age group.
Aull advised task force members to look at the total number of workers in addition to the percentages to get a full picture of Kentucky’s workforce challenges. The total number of prime-age workers in Kentucky fell by more than 100,000 between 2000 and 2023.
“The demographic is getting smaller, not larger, and that’s a really big issue because this is the core of our labor market,” Aull said.
Highlighting some policy solutions to address workforce participation issues, Aull said everyone will have to play a role in addressing ways to reduce barriers to work, from government to the private sector.
Newell provided an employers’ perspective to the task force, saying he is seeing challenges in hiring due to various reasons.
“I have 260 employees at Louisville Tile, and 113 of those are here in Kentucky. Recruiting and retaining employees is and will continue to be a significant cost to our company. The common challenge is, regardless of the position, we are lacking qualified applicants to fill the role,” Newell testified.
Newell said his company has supported employees by allowing for flexible working arrangements to address the lack of housing in the area, along with other transportation, education, and economic issues his employees have faced.
“The bottom line is if we’re to maintain what we have as a state and try to grow Kentucky, we must attract more workers. Existing companies are not going to stay here, and new companies will not relocate to Kentucky unless we address some of these shortages,” Newell said.
Aull outlined a two-fold strategy for state policymakers: Optimize the current workforce to help align the state’s workforce participation rate with the national average and attract skilled prime-age workers to reverse current trends.
Policy priorities that could address the state’s workforce challenges include increasing access to child care, increasing rates of post-secondary attainment, and building a competitive tax climate. Aull also encouraged legislators to revisit legislative proposals from past sessions, such as automatic expungement to help low level, nonviolent offenders reenter society.
Aull emphasized a recent report from the Center for Policy and Research, Building a Foundation for Growth: Meeting Kentucky’s Current & Future Housing Needs, that provides ways to address Kentucky’s housing shortage and create a stronger housing market.