After more than a year of uncertainty and challenges brought on by the COVID-19 pandemic, Kentuckians are seeing welcome signs of a return to “normal” life. Most remaining restrictions and mandates should be lifted in the next few weeks as more people get vaccinated. Employment continues to slowly rebound, the state’s GDP is growing, and sales tax revenues have hit record highs.
But even with those positive indicators, challenges still remain. According to a new report from the Kentucky Chamber of Commerce, 104,000 Kentuckians who were employed just before the pandemic started last year still have not found new jobs. The state’s workforce participation rate remains well below pre-COVID levels, meaning that many who lost work last year are no longer looking for employment. The gap between Kentucky’s rate and the national rate has also widened.
The Chamber’s Vice President of Workforce Development Beth Davisson says that’s left many of the state’s employers in a serious bind.
“If you talk to any Kentucky Chamber members today, they will tell you that finding workforce and recruiting talent is as hard as it’s ever been, if not harder,” she says. “Kentucky’s key sectors are hurting and need people… in health care, in construction, in manufacturing – critical jobs that pay very good wages.”
Workforce Participation and Better Wages
Kentucky perennially ranks near the bottom of states in workforce participation. Davisson says pre-COVID the state was 40th and dropped to 50th at the height of the pandemic. Now it ranks 48th.
What’s behind the low participation rate? Davisson says Kentucky has more unemployment claims than most other states and a greater percentage of workers who are at risk of losing their jobs due to automation and other technical innovations. Lack of available child care and lingering COVID-related fears are also keeping some people out of the workforce.
Jason Bailey, executive director of the Kentucky Center for Economic Policy, says another significant factor that dissuades people from working is low wages.
“We don’t have a labor shortage, we have a pay shortage,” says Bailey. “If any employers say, ‘I can’t find the workers I need,’ you need to add the statement ‘at the wages I want to pay.’”
Those businesses that offer good wages and working conditions are able to find the help they need, according to Bailey. But he says nearly 40 percent of all jobs in the state pay less than $15 hour an hour. He says states that have higher minimum and median wages have better workforce participation rates.
Restaurants are particularly struggling to find help, especially as capacity restrictions are lifted. Kentucky AFL-CIO President Bill Londrigan attributes that to a minimum wage for tipped workers that can be as low as $2.13 an hour – a rate that hasn’t changed since 1991, he says. Plus, Londrigan says that with fewer people dining in, restaurant workers can’t rely on tips to boost their take-home pay. He says the labor shortage will continue until employers raise pay rates and improve working conditions.
“How do workers get incentivized to come back to work?” says Londrigan. “They come back to work for wages, for health care benefits, for retirement.”
Even as state and federal lawmakers debate raising the minimum wage, some companies are voluntarily increasing their base pay rates. For example, Kentucky Retail Federation Senior Vice President Shannon Pratt Stiglitz points to Chipotle, which recently adopted a $15 per hour minimum.
“It looks to me like the market is driving that wage up all on its own,” she says.
Employers Compete with Enhanced Unemployment Benefits
Some business leaders attribute their hiring woes to enhanced unemployment payments that make it more lucrative for some workers to stay home and collect weekly benefits rather than return to work. In addition to the state stipend, those on unemployment also receive an additional $300 a week from the federal CARES Act.
In hopes of getting more people back to work, some 20 states, including neighboring Indiana, Ohio, and Tennessee, have announced plans to end the enhanced payments before they are set to expire on Labor Day. Gov. Andy Beshear has so far resisted calls to do that in Kentucky, but he has reinstituted a requirement that anyone on unemployment demonstrate they are actively seeking work.
Bailey says the enhanced unemployment payments pump $34 million a week into the state’s economy, so removing them early would hurt businesses and hamper the recovery. He also disputes the notion that people are avoiding work just to collect unemployment.
“People are using this benefit in the right way: It’s plugging a major hole in the economy and in family budgets,” says Bailey. “They were staying on them as long as they needed to.”
Stiglitz says the enhanced unemployment plus the three stimulus payments Americans received averages out to about $32 an hour, which she says is far more than most restaurants and retailers can afford to pay. Still, she says employers are doing their best to meet the needs of their employees.
“Just because we have raised [unemployment benefits] as a concern or say that that is a factor in why they are not returning to employment does not mean that we think those workers are lazy,” says Stiglitz.
The Chamber lobbied Beshear to reinstate the job-search requirement, according to Davisson. She says more must be done to fill the thousands of job openings across the commonwealth, but she isn’t sure ending the enhanced unemployment payments is the answer.
“This benefit has helped Kentuckians greatly over the past year,” says Davisson. “We need a Kentucky solution that’s going to be good for our citizens and good for businesses.”
COVID Fears Still Linger
Even with COVID cases slowly declining, and vaccination numbers increasing, some people are still reluctant to return to the workplace.
“The situation has definitely improved but workers are still feeling at risk, and those that are on the frontlines especially,” says Londrigan. “There are still people getting COVID every day and there are people dying from it every day in large numbers, so we’re still in a very precarious situation.”
While federal and state authorities are easing mandates on workplace capacities, masking, and social distancing, many employers are left with uncertainties about what they should do to protect their employees and customers. Can they mandate employees to get vaccinated? Can they require customers to wear masks even if the U.S. Centers for Disease Control and Prevention says face coverings are no longer necessary?
“We’re all clearly still in the wild, wild west,” says Davisson. “Everyone is still trying to catch up to get the safest guidelines in place.”
Many employers overhauled their businesses to keep workers safe, which Davisson says limited the spread of COVID in Kentucky workplaces. But Bailey and Londrigan say without any federal Occupational Safety and Health Administration standards for COVID protocols, many workers have been and may still be in danger.
“There are some employers who have done good, there are some who have not,” says Bailey.
“At this point about 36 percent of the Kentucky population is fully vaccinated, so we have a ways to go before we defeat this virus and so workers are continuing to take those risks on the job.”
Without clear federal standards, some retailers are keeping in-store mask mandates for now, while others have already dropped them. Stiglitz says her Retail Federation members wished they had had advance warning before last week’s CDC announcement that fully vaccinated people don’t have to wear masks. She says even with the new guidance, some retailers will continue to ask staff and customers to mask and they will keep other mitigation efforts in place, such as barriers around cashiers.
“I think the Plexiglass pieces will be here to stay,” says Stiglitz. “I think [retailers] will do it for liability concerns, for their customers’ comfort, and for their employees’ comfort.”
