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Kentucky’s 2014 Annual Jobless Rate Drops to 6.5 Percent

Kentucky’s annual unemployment rate plunged to 6.5 percent in 2014 from 8 percent in 2013, while nonfarm employment gained 29,000 jobs, according to the Office of Employment and Training (OET), an agency of the Kentucky Education and Workforce Development Cabinet. It was the lowest annual jobless rate for the state since 2008 when it was a pre-recession 6.4 percent.

“Kentucky’s labor market has finally brushed off the last remaining drag from the Great Recession,” said economist Manoj Shanker of the OET. “In 2014, we added nonfarm jobs at a pace just short of the hectic expansion of the dot com era 15 years ago. One out of five new jobs was in manufacturing, and the unemployment rate continued to drop throughout 2014.”

The U.S. annual unemployment rate fell to 6.2 percent in 2014 from 7.4 percent in 2013. 

The U.S. Bureau of Labor Statistics’ estimate of the number of employed Kentuckians for 2014 was 1,875,146. This figure is down 16,962 from the 1,892,108 employed in 2013 but up 17,330 from 2004. 

The estimated number of unemployed Kentuckians for 2014 was 130,106, down 35,156 from the 165,262 unemployed in 2013. The number of those unemployed is up by 24,047 compared to 10 years ago. 

In 2014, the estimated number of Kentuckians in the civilian labor force was 2,005,252. This is down 52,118 from the 2,057,370 recorded in 2013, but up 41,377 persons from 1,963,875 in 2004. 

Labor force statistics, including the unemployment rate, are based on surveys designed to measure trends.

Annual unemployment rates declined in all states 50 states in 2014 compared to 2013. The lowest rates were in North Dakota, 2.8 percent, and Nebraska, 3.3 percent. Mississippi, Nevada and the District of Columbia tied with the highest rate of 7.8 percent.

Kentucky had the 17th highest annual unemployment rate among all states and the District of Columbia in 2014. Kentucky was one of 22 states, including the District of Columbia, with annual unemployment rates above the U.S. annual rate in 2014. Four contiguous states, Indiana, Missouri, Ohio and Virginia, had unemployment rates lower than the national average. The other three, Illinois, Tennessee and West Virginia, had unemployment rates higher than the U.S. average.

“It’s worth noting that Kentucky saw an improvement in the unemployment rate that has continued into 2015. The annual revisions which align data for the past year were released last week and revealed that Kentucky’s unemployment rate has been below the national rate for the last six months,” said economist Manoj Shanker of the OET. “That’s quite an accomplishment. The last time Kentucky’s unemployment rate was below the national average for such an extended period was in 1995.”

In a separate federal survey of business establishments that excludes jobs in agriculture and people who are self-employed, Kentucky’s nonfarm payroll in 2014 increased by 29,000 or 1.6  percent to 1,858,900 employees making it the highest number of nonfarm jobs in Kentucky since 2007 when Kentucky’s nonfarm employment peaked at 1,866,700.

Nonfarm data is provided by the Bureau of Labor Statistics’ Current Employment Statistics program. According to this survey, seven of Kentucky’s 11 major nonfarm job sectors listed in the North American Industry Classification System (NAICS) showed employment growth in 2014, while three reported losses and one stayed the same.

Kentucky’s professional and business services, a sector that includes professional, scientific and technical services, management of companies, and administrative and support management, added 10,000 jobs in 2014 for an expansion of 5 percent. This category also includes temporary help agencies that provide workers to other businesses on a contractual basis. In the last 10 years, the sector has surged by 46,300 jobs or just over 28 percent.

“Companies are increasingly outsourcing their payroll and data entry jobs to temp services. As a result more than a quarter of all new jobs in 2014 where in support services,” said Shanker.

According to the annual employment data, Kentucky’s trade, transportation and utilities sector jumped by 6,900 jobs or 1.9 percent in 2014. Over a 10-year period, the number of jobs increased by 3,500 or 0.9 percent. It is the largest Kentucky sector with a total of 377,000 jobs or one-fifth of Kentucky’s nonfarm employment. Within the sector in 2014, wholesale trade was up by 700 jobs, retail trade employment increased by 2,200, while businesses in transportation, warehousing and utilities added 4,000 jobs.

“As the economy strengthens the demand for consumer goods rises and that pushes up employment in retail trade,” said Shanker. “At the same time businesses are cutting down on inventory in favor of drop shopping. Fortunately, many of these warehouses are located in Kentucky for logistical reasons, driving up employment in transportation and warehousing.”

The state’s manufacturing sector expanded by 5,900 jobs or 2.6 percent in 2014 for a total of 234,900 positions. In the last 10 years, the manufacturing base has eroded by about 11 percent with the loss of 28,600 jobs.

“The decline in energy prices in 2014 has helped manufacturing by lowering production costs, and by increasing disposable income,” said Shanker. “Manufacturing employment peaked in 2000 when it accounted for 17 percent of all jobs in the state. Then for 10 years there was a steady decline. In the last four years, Kentucky’s manufacturing base has expanded especially in the durable goods sector with the resurgence of the auto industry.”

Kentucky’s construction sector added 4,400 jobs in 2014, for a growth of 6.5 percent. The sector has declined by 11,000 jobs or nearly 13 percent since 2004.

“Construction employment was buoyed by consumer confidence and a continuous drop in lending rates during each month of 2014,” added Shanker.

The state’s leisure and hospitality sector added 3,300 positions in 2014, and rose by 21,800 or well over 13 percent since 2004. Within the sector are arts, entertainment and recreation, and accommodation and food services.

The financial activities sector gained 1,000 jobs from a year ago. Over the past 10 years this sector has added 4,800 jobs or 5.6 percent.

The educational and health services sector rose by 100 jobs in 2014 and has surged by 27,700 or a little under 12 percent in the last 10 years. Within this sector, health care and social assistance industries, such as hospitals, nursing and residential care facilities and social assistance businesses, lost 600 jobs in 2014, but have expanded by 28,800 jobs or over14 percent in the past 10 years. Educational services in this sector include employees at private elementary, secondary and postsecondary schools along with other establishments that provide instruction and training. Educational services gained 700 jobs in 2014, but declined by 1,200 jobs in the last 10 years.

“The decline in health care jobs is a function of cost. Many of the ancillary health care jobs like payroll, data entry and insurance have been outsourced to staffing companies. This has helped to reduce health care costs, though unfortunately, it has caused wages to be kept low,” said Shanker.

The information sector, which includes establishments involved in publishing, Internet activities, data processing, broadcasting and news syndication, had no change in employment in 2014 from a year ago. It is down by 2,800 jobs or almost 10 percent compared to 10 years ago.

The government sector, which includes federal, state and local employment in public education, public administration agencies and state-owned hospitals, declined by 900 jobs or 0.3 percent 2014. In the last 10 years, the sector has grown by 26,200 positions.

Other services, a sector that includes repair and maintenance; personal and laundry services; and religious, civic, and professional organizations, dropped by 800 jobs or 1.2 percent in 2014. The sector has lost 13,800 jobs in the last 10 years.

Employment in the mining and logging sector fell by nearly 6 percent with the loss of 1,000 jobs in 2014. Over a 10-year period the sector has lost 3,300 jobs. Other industries included in the sector are forestry; oil and gas extraction; and support activities for mining.

Unemployment statistics are based on estimates and are compiled to measure trends rather than actually to count the number of people working. Civilian labor force statistics include non-military workers and unemployed Kentuckians who are actively seeking work. They do not include unemployed Kentuckians who have not looked for employment within the past four weeks.

Learn more about Kentucky labor market information at www.kylmi.ky.gov.