Wednesday, October 29, 2014

There's (much) more than coal (and farming) in Kentucky's economy

I'm glad election season is finally winding down for the reprieve we get over the political ads blaming politicians for the demise of coal in Kentucky. One hears these attacks quite a bit while the General Assembly is in Frankfort as well, and I assume January will be no different. Just about every ad also features a candidate working on or speaking to someone working on a Kentucky farm. This creates an impression that farming is also huge. Dr. Paul Coomes recently gave the keynote speech at the Kentucky Economics Association's annual meeting (graphs are taken from his slides, you can download them here) that examined various aspects of the Kentucky economy, including the relative non-importance of coal. Some of the highlights are worth sharing in a blog format.

First, Kentucky has not moved much historically in terms of state rank of personal income per capita (minus transfer payments) from 1958 to 2013 (we're still 46th!). So, if the "war on coal" was so damaging, something else must have risen to offset the lost income.

According to the BEA, personal income in Kentucky was $159.2 billion dollars in 2013, 98.8% coming from non-farm occupations.So, farming does not put that much in the pockets of Kentuckians-- about $1.5 billion in 2013. Of the non-farm income, a little more than $1.8 billion came from mining earnings, (down from its 2008 peak of $2.4 billion). So, coal represents roughly 1% of the entire Kentucky economy. Together, both farming and mining have not (since 1990) made up more than 4.6% of Kentuckian's income.

Of 1.8 million Kentucky workers, only about 11.4 thousand work in mining (less than 1%). That is down from a recent high in 1990 of 29.3 thousand. About 4,300 people work in farming, fishing, and forestry occupations (this does not count people who own or live on farms). In other words, the political ads seem to suggest that a small minority of people in Kentucky have a huge sway in how we should vote.
Compare that to the graph above. Manufacturing in the Louisville economic region (as designated by Coomes) alone generates $5.4 billion.

Likewise, distribution, science, and professional service-related industries generate over $5 billion in earnings for the Louisville region alone.

So, where's the money, where's the growth, where's the future for Kentucky? In areas other than coal and farming. Why not celebrate a little more on the growth in these areas rather than focusing on the relative decline of a very small sector of the economy? Where do you aspire for your children and grandchildren to work? Are these areas reflected in the advertisements intended to sway your vote?

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