Work & Labor Force

Why did we include this measure?

The employment-to-population ratio measures the extent to which this age group is working for pay. Those not employed include those who are not in the labor force (for example, because they are raising children at home, are full-time students, or have a disability) and those who are seeking work but cannot find an acceptable job. While there are often good reasons not to be working, this measure is useful because it reflects all the possible reasons that people might not work. With this and the other work measures below, we focus specifically on those age 25-54 to avoid including young adults who are not working because they are in college and older adults who are not working because they are retired. (The term "prime age" refers to the idea that these are ages when we are most likely to be in the labor force.)

How does Kentucky compare to the rest of the country?

Although Kentucky's trend in the employment-to-population ratio has been improving less than the US, it did not change in state ranking by two or more places. Therefore, we categorize Kentucky's comparison to the US as neutral or stable. In the most recent year, Kentucky ranked 46 (out of 51). In the same year, South Dakota ranked first, and Louisiana ranked last.

Additional Information.

The national trend has varied across several key periods. The ratio was increasing from 1990 until its peak around 2000, then declined some, and saw a sharp decline with the 2008 Great Recession. It then took more than a decade for the figure to revert back to the pre-2008 level, but then came the COVID-19 pandemic. More generally, employment is strongly related to the business cycle.

Why did we include this measure?

The labor force participation rate allows us to better understand whether changes in the employment-to-population ratio are due to changes in the likelihood that people are actively working or seeking work.

How does Kentucky compare to the rest of the country?

Kentucky's trend in the labor force participation rate has been improving more than the US. Compared to other states, Kentucky has also increased in state ranking by two or more places. Therefore, we categorize Kentucky's comparison to the US as positive. In the most recent year, Kentucky ranked 44 (out of 51). In the same year, Washington DC ranked first, and Louisiana ranked last.

Additional Information.

Labor force participation reflects some combination of interest, ability, and opportunities in work, as well as rising incomes, which increase demand for leisure. While women have seen increased or stable labor force participation, this has been offset by a decline for men. One likely reason is the decline in manufacturing jobs, which, since the mid-20th-century expansion of unionization, have been higher-paying jobs than the alternatives available to these workers. Once a person loses one of these jobs, it is generally difficult to find another of similar quality. Another reason may be that adults are getting married and having children less often and later in life and men have traditionally been the primary breadwinners. This means men now spend fewer of their prime working years being financially responsible for their families. Nationally, more adults—again, especially men—are not working and are also receiving income from disability insurance. This is happening even while work itself has been much safer and more accommodating to some disabilities. Declining mental and physical health and rising drug use may be part of the explanation. For women, employment has generally been increasing or remaining steady at the national level. This reflects the decline in birth rates combined with changing social norms about women's role in the labor force and declining occupational segregation by gender, which has increased women's job opportunities. The rise in single-parent households (and unmarried adults generally), combined with the fact that women are typically the main caretakers of children, means that women now have a greater need to work outside the home than in the past. The national trend in labor force participation also tells us that the decline in the employment-to-population ratio we saw earlier is not due, for example, to an increase in the number of people who are seeking work but cannot find it. (This is further reinforced below in our discussion of the long-term unemployment rate.)

Why did we include this measure?

Short-term unemployment mostly reflects the business cycle, layoffs, and people deciding they are not satisfied with their current jobs. Some degree of unemployment is natural and healthy as it allows both employers and employees to search for better matches between skills and job requirements. However, unemployment becomes a larger problem when people are out of the labor force for long periods of time. The longer workers are out of work, the harder it is to find a job and reengage in gainful employment.

How does Kentucky compare to the rest of the country?

Kentucky's trend in the long-term unemployment rate has been improving while the US has been worsening. Compared to other states, Kentucky has also increased in state ranking by two or more places. Therefore, we categorize Kentucky's comparison to the US as positive. In the most recent year, Kentucky ranked 43 (out of 51). In the same year, Montana ranked first, and Nevada ranked last.

Additional Information.

Our national long-term unemployment is relatively low by global standards perhaps in part because we have less generous unemployment insurance than other countries on average. These insurance policies are set at the state level, which might also partially explain cross-state variation in long-term unemployment because unemployment insurance is primarily a state matter. Of course, long-term unemployment is also driven by the overall strength of the economy and job creation, which also vary across the country.

Why did we include this measure?

Inflation-adjusted wages capture the ability of Americans to provide for their own needs and are a measure of work productivity. This is the largest single source of income overall and, for working age adults, usually the sole source of income.

How does Kentucky compare to the rest of the country?

Kentucky's trend in hourly earnings growth has been improving more than the US. Compared to other states, Kentucky has also increased in state ranking by two or more places. Therefore, we categorize Kentucky's comparison to the US as positive. In the most recent year, Kentucky ranked 17 (out of 51). In the same year, South Dakota ranked first, and Louisiana ranked last.

Additional Information.

Real wage growth is related to productivity growth. When productivity rises, employers can pay workers more. However, they do not move completely in tandem. National productivity has been increasing somewhat faster than real wages (see the Economy section). This reflects the rapid growth of executive pay, which falls outside the wage definition, relative to the wages of the average worker.