Employment stats paint picture of tough economic climate in Eastern Kentucky

13 October 2020 - Russ Cassady (Appalachian News-Express)

As Eastern Kentucky’s unemployment rates continue to rise despite a post-COVID-19 lockdown boost, another key economic figure shows that the region still has far to go to consider its economy “recovered.”

On Sept. 24, the Kentucky Center for Statistics released the state’s county-level unemployment data for August, showing that, while unemployment rose in all 120 counties in August, no area has been hit as hard by that rise as Eastern Kentucky.

Statewide, the data shows, Kentucky’s number of unemployed individuals rose to 149,419 in August, representing 7.5 percent of the workforce, up from 5 percent in July.

In the Big Sandy Region, however, the unemployment rate went from 7.8 percent in July to 11.7 percent in August, nearly double the 6.1 percent rate in August 2019. The highest unemployment rate in the state remains in the Big Sandy Region, with Magoffin County weathering an 18.1 percent unemployment rate. In the Big Sandy Region, after Magoffin County, Martin County has the next highest rate at 13.7 percent, followed by Floyd at 11.5 percent, Johnson at 10.8 percent and Pike at 10.6 percent.

The Kentucky River District (Breathitt, Knott, Lee, Leslie, Letcher, Owsley, Perry and Wolfe) didn’t fare much better, with an 11.5 percent rate in August. Perry County saw an 11.5 percent rate in August, up from 7 .9 percent in July, and 6 percent in August 2019.

However, according to Dr. Michael Clark, Ph.D., director of the University of Kentucky Center for Business and Economic Research, a more telling statistic is the employment numbers, which further indicate the eastern part of the state is lagging further behind the rest.

The unemployment rate, he said, doesn’t show key factors that the employment rate indicates, such as those who are considered unemployed, but no longer seeking employment, meaning they’ve left the labor force.

“Focusing on the employment numbers is probably the best indicator right now,” he said.

The employment numbers show that, in August compared to 2019, the number of those employed was down 12 percent in the Big Sandy region and 10 percent in the Kentucky River district, with the largest drops being seen in Pike County (down 15 percent over 2019), Perry County (down 12 percent over 2019) and Floyd County (down 11 percent over 2019).

Clark said Kentucky does seem to be recovering some from the initial hit of COVID-19 lockdowns.

“We do seem, at least at the state level, to be recovering,” he said. “We’ve recovered about 62 percent of the jobs that were lost early in the pandemic, but we’re still not back to where we were pre-pandemic levels.”

But, Clark said, much uncertainty remains in the direction the economy will go in coming months.

“Do we see some type of second wave and what type of a policy response do we see as a result of that?” he said. “Could we see businesses shutting down to try to prevent the spread of the virus? Do we see governors issuing further social distancing orders to prevent the spread of the virus? We don’t really know how those things are going to progress.”

The large losses of employment, he said, were mainly seen in hospitality, leisure and retail industries. Clark said, though, that several of those businesses and industries have been finding new ways to operate which is helping them to to sustain, but they will continue seeing the bulk of the effects of the pandemic.

However, one sector that has not necessarily been hit as hard at this point, but will likely be soon is in the area of government.

“Government employment is a pretty large sector of some counties, particularly in rural counties,” he said. “But, as the economy is down, that’s likely to translate to reduced revenues for state and local governments and school districts. As they see their revenues go down, that’s likely to affect the level of services that they can provide and it may affect the level of personnel that they can employ.”

The key to economic recovery, Clark said, is dealing with COVID-19.

“Really addressing the public health threat is what helps the economy to get back to what it was,” he said.