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Kentucky’s Labor Force Participation: National and Local Contexts

Posted on: 05/01/2023

After a nearly twenty-year long sustained decline in the volume of available labor, the labor force participation rate continues to be a highly visible metric. While Kentucky consistently ranks among the states with the lowest participation, a limited discussion of state rankings obscures uneven geographical trends among the state’s local economies and important parallels between those economies and similar ones across the country.

What does the labor force participation rate measure?

The labor force participation rate is generally calculated as the percentage of the working-age civilian population that is also in the labor force, although various statistical agencies have their own nuanced estimation methodologies. For example, KYSTATS publishes state-level labor force participation rates from the U.S. Bureau of Labor Statistics (BLS, who limit the population estimate used in their calculation to the civilian non-institutional population age 16 and over), as well as regional and county-level “workforce” participation rates designed to mirror the BLS methodology. The U.S. Census Bureau’s American Community Survey (ACS) also publishes their own participation rate estimates, calculated with the total population age 16 and up (including military and institutionalized individuals). But again, the basic premise is the same: what portion of our working age population is either working or has recently sought employment? Use the button below to begin exploring some of the underlying components of these calculations.

Download these descriptions in text format here.

How does Kentucky compare to other states?

First, it is true that Kentucky’s overall labor force participation rate consistently ranks among the lowest in the country. According to estimates from the BLS, as of 2021, Kentucky’s labor force participation rate was 57.4%, topping only six states (South Carolina, Arkansas, Alabama, New Mexico, Mississippi, and West Virginia). State level 2017-2021 ACS estimates tell a similar story, with Kentucky exhibiting the 8th lowest rate among all states (59.5%).

Monthly State Labor Force Participation Rates, Seasonally Adjusted, January 1990 - December 2022

Download the data for this graph by selecting Download Crosstab in the lower right.
Source: U.S. Bureau of Labor Statistics (BLS), Local Area Unemployment Statistics (LAUS). Data accessed 3/7/23.

A closer look at county-level ACS estimates reveals substantial differences among local communities throughout the state. Typically, in Kentucky and across the country, fewer individuals belong to the labor force in rural areas than urban areas. More specifically, in Kentucky, low overall labor force participation is largely driven by its 54 Appalachian counties, which collectively exhibit a median participation rate nearly ten percentage points below that of the state. In fact, 16 Appalachian Kentucky counties exhibit lower participation rates than the lowest rate of a non-Appalachian county. Hover over the map below to explore the labor force participation rates of counties across Kentucky and the nation. Enter working age population ranges and use the participation rate slider to filter counties in the view.

County Labor Force Participation Rates, 2017-2021

Download the data for this graph by selecting Download Crosstab in the lower right.
Source: U.S. Census Bureau, American Community Survey (ACS) 2017-2021 Five-Year Estimates, Table S2301.

How different are Kentucky’s local communities from similar communities across the country?

Having established that labor force participation differs substantially among local communities within the state, how does each general type of area compare to similar communities in other states? Urban Kentucky counties compare reasonably well to other urban areas across the country, with median labor force participation rates of 60.4% and 61.6%, respectively. Typical urban counties, in Kentucky or otherwise, exhibit labor force participation rates roughly between 57% and 65%. Rural Kentucky counties (excluding Appalachia) similarly resemble their out-of-state counterparts, with median labor force participation rates of 55.3% and 57.6%, respectively. In fact, the participation rates of all but seven of these rural Kentucky counties fall neatly within the middle half of rural counties across the U.S.

Unlike the rest of the state, Kentucky’s Appalachian counties do not compare favorably to similar communities elsewhere. Kentucky’s Appalachian counties, with a median participation rate of 48.2%, lag behind counties throughout the rest of Appalachia, which have a median rate of 54.7%. Given the correlation between urbanicity and labor force participation, it is perhaps also noteworthy that most subregions of Appalachia contain major metropolitan areas (having populations of 250,000 or more), such as Pittsburgh, Knoxville, etc., while Central Appalachia (to which eastern Kentucky belongs) does not. More broadly, Central Appalachia contains 13 of the 32 U.S. counties having a population greater than 10,000 and exhibiting participation rates of 40% or less, and 10 of those counties are either located in Appalachian Kentucky or directly border it. Filter the charts below to explore the distributions of labor force participation rates among various categories of counties.

County Labor Force Participation Rates, 2017-2021

The source and underlying data for this graph are identical to the data underlying the map of county participation rates shown above.

Summary and future research

In terms of labor force participation, Kentucky as a whole lags behind most states. However, a closer look reveals that participation rates across large swaths of the Commonwealth are generally unremarkable in a national context. Urban Kentucky resembles the urban United States at large, and rural Kentucky (sans Appalachia) resembles the rural United States. Kentucky’s Appalachian counties are the exception, exhibiting labor force participation rates lower even than the rest of Appalachia, and contributing to Kentucky’s low labor force participation.

Future KYSTATS research will leverage longitudinal microdata in the Kentucky Longitudinal Data System (KLDS) and other labor market data to explore potential factors or phenomena associated with low labor force participation in Appalachia, including the age of its population, rates of disability, educational attainment in the region, industry composition, uneven employment opportunities by gender, out-migration and commuting behaviors, and a wide array of other socioeconomic factors.

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