From Foresight, Vol. 10, No.3
published 2003
This is the second in a series of four reports documenting economic changes in four regions of the Commonwealth during the decade of the 1990s and examining the ways in which these changes relate to the framework for development presented in Table 1. Again, we turn to MDC, Inc., a North Carolina research group specializing in the unique economic structure of the southern United States, for a framework for assessing the economic health of western Kentucky. Table 1 shows the six building blocks MDC suggests and the shift from dated concepts of economic development to this new structure.
Table 1: The Building Blocks of Community Development
For the purposes of these analyses, we use Area Development District (ADD) boundaries to divide the state into four regions: eastern, western, south central, and the urban triangle of Kentucky. This report analyzes some of the social and economic changes that occurred in western Kentucky during the 1990s and their potential implications for the future.
As we noted in our profile of eastern Kentucky, structural economic changes, namely globalization and the advance of technology, have compelled more comprehensive local approaches to economic development. In this new environment, economic development can no longer be achieved through a simple jobs-creation strategy. Instead, a more holistic process is needed to raise living standards,(1) one that recognizes the interconnections between economic, human, and social capital.
The challenges Kentucky faces in economic development are readily apparent in the social and economic changes that have taken place over the past decade. In some areas, communities are becoming more vulnerable to the structural changes afoot in the new economy, not less. In addition, government at all levels is once again feeling acute pressure to do more with less as budgetary constraints conflict with the ever-increasing demands of citizens for more services.
Western Kentucky is a diverse region bordered to the north and west by the Ohio River and to the south by Tennessee. Rolling farmland outlies industrialized river towns to the north and a prominent military post to the south, while flat delta-like terrain marks the far west areas near the river. For the purposes of this report, western Kentucky includes 24 counties (see Figure 1), covering approximately 8,812 square miles of land.(2) Approximately 53 percent of the residents of this region lived in rural communities in 2000.
Figure 1: West Kentucky Region
When we examine western Kentucky in light of the first building block of MDC’s development model shown in Table 1, we find an industrially stagnant jobs environment characterized by moderate economic growth. While the overall industrial composition of the region’s employment remained relatively unchanged, both the number of jobs and wages increased but at a rate slightly lower than that for the rest of the state. Between 1990 and 2000, the total number of full- and part-time jobs increased in western Kentucky by 56,762 or 19 percent compared with 23 percent job growth in the rest of the state. The average unemployment rate for the counties in the region dropped from 7.4 percent in 1990 to 5.4 percent in 2000. This unemployment rate was approximately the same as the average rate for counties in the rest of the state (5.2 percent) but notably higher than the U.S. average (4.0 percent). However, unemployment rates soon rose in 2001 for western Kentucky (7.0 percent) as well as the rest of the state (6.6 percent), both substantially higher rates than the national average of 4.8 percent.
Changes occurred in each industry as some lost jobs and others gained, but the overall composition of employment and earnings changed little over the decade. Four industrial sectors accounted for approximately three quarters of the employment in both western Kentucky and the rest of the state in both 1990 and 2000 (see Figure 2). These sectors are services, government, manufacturing, and retail trade. Noteworthy differences are testament to the economic advantages western Kentucky enjoys over the remaining areas of the state. The most notable is seen in the government sector which accounts for approximately 21 percent of the region’s employment compared with 14 percent for the rest of the state. Most of this employment is linked to Kentucky’s largest military operation, Fort Campbell. Approximately 36 percent of government-sector employment in western Kentucky is attributable to the military compared with 10 percent in the rest of the state. In 2000, approximately 27 percent of personal income in western Kentucky was attributable to the government sector compared with 17 percent in the rest of the state.
Figure 2: Distribution of Employment by Industrial Sector, Western and Nonwestern Kentucky, 2000
Another notable difference in western Kentucky’s industrial profile is its lower dependency on service jobs in comparison with the rest of the state. About 22 percent of the jobs in this region are in the service sector compared to 28 percent elsewhere, a mark of economic strength in that many service industry jobs are low-wage and low-skill. As a component of personal income, the service sector provides approximately 18 percent in western Kentucky compared to 23 percent in the rest of the state. The region, however, does not fare as well in the case of retail trade, which is predominantly a low-wage, low-skill industry. Approximately 16 percent of jobs in western Kentucky are in retail trade, the same percentage found in the rest of the state. In addition, growth in the service sector was stronger, 40 percent between 1990 and 2000 compared with 29 percent for the rest of the state, suggesting some realignment of job composition within the region.
Manufacturing, a historically important industry in this region, showed only a slight advantage over the rest of the state. It held steady at 16 percent of employment and approximately one fifth of total earnings in both 1990 and 2000. The employment estimate is only slightly higher than that found for the rest of the state (12 percent). Similar to western Kentucky, the rest of the state relies upon manufacturing for approximately one fifth of its personal income. Western Kentucky and the rest of the state saw similar growth patterns in employment and earnings as manufacturing employment increased by approximately 15 and 11 percent, respectively, and earnings from manufacturing increased approximately 53 percent for both areas.
A predominantly rural region, western Kentucky has also looked to farming as a source of supplemental employment and income over the years. While the region experienced moderate growth in jobs in this sector (2 percent), earnings more than doubled. And western Kentucky was able to hold fast to its slight advantage over the rest of the state in this sector with approximately 6 percent of its employment and 4 percent of its earnings from farming compared with 4 percent and 2 percent, respectively, in the rest of the state.
Considerable job losses occurred in the mining sector which declined from 3 percent of overall employment in the region in 1990 to just 1 percent in 2000. Earnings for this traditionally high-wage industry also fell from 6 percent of total earnings in western Kentucky in 1990 to just 2 percent by 2000. While these trends are similar to those found for mining in the rest of the state, the decline in jobs and earnings in this part of the state may be partially attributable to the type of coal extracted there. The western coalfield yields coal higher in sulfur content than that found in the eastern coalfield and other parts of the country. Demand for this type of coal dropped in the 1990s as power plants worked to reduce sulfur dioxide emissions as required under the Clean Air Act of 1990.(3)
Changes in personal income and its components, wages and salaries, show evidence of the potential for quality job growth in this region mixed with indicators of a sluggish economy on the horizon. The average real county per capita income (CPCI) in western Kentucky was 112 percent of the CPCI in the rest of the state in 1990. The CPCI increased for both western Kentucky and the rest of the state, and the western region ended the decade with a CPCI approximately 113 percent of the CPCI for the rest of the state. The average real CPCI for the region increased 19 percent from $18,783 in 1990 to $22,341 in 2000.(4) This exceeded the $19,535 average 2000 CPCI for the remaining counties, which increased 17 percent from $16,697 in 1990.
A relatively slower pace of growth in average salary and wages, a component of CPCI, illustrates the lagging earnings potential of many jobs in western Kentucky. Figure 3 shows an increase in average salary and wages from 1990 to 2001 for both western Kentucky and the rest of the state, but wages in western Kentucky rose at a slightly slower pace, contributing to growth in the gap between the region and the rest of the state. Approximately equal in 1990, the ratio between the average salary and wages of the region compared with the rest of the state was 1.02. By 2000, the ratio between average salary and wages in the counties outside western Kentucky and those within the region had risen to approximately 1.09 (see Figure 4).
Figure 3: Average Salary and Wages by Region, 1990-2001
Figure 4: Ratio of Average Salary and Wages Between Western and Nonwestern Kentucky, 1990-2001
Continuing to follow MDC, Inc.’s recommended strategy for development, we examine the region’s progress in light of its success in building a high-skill, high-value workforce. Data show that western Kentucky is on par with the rest of the state in the rate of attainment of a high school education among adults (see Figure 5).(5) The region began the decade slightly ahead of the rest of the state and maintained that status, as the pace of progress remained much the same for both the region and the rest of the state. However, this is not the case for postsecondary educational attainment. Western Kentucky began the decade trailing the rest of the state in this indicator, and although it made progress, it actually lost ground compared to its initial position relative to the rest of Kentucky and ended the decade a full 5 percentage points behind in this key indicator (see Figure 6).
Figure 5: Percent of Adults Aged 25 and Older with a High School Diploma or Higher
Figure 6: Percent of Adults Aged 25 and Older with a Bachelor’s Degree or Higher
A comparison of educational attainment levels between the region and the rest of the state by age group shows similar patterns in the attainment of a high school diploma, but a lack of equivalent progress in the attainment of a four-year postsecondary degree. While 86 percent of western Kentuckians aged 25 to 34 had a high school diploma or equivalent in 2000 compared with 84 percent elsewhere, only 15 percent had a four-year college degree compared to 22 percent in the rest of the state. And lagging attainment is not solely the result of lower educational attainment levels among older generations. Indeed, the younger generations of western Kentucky exhibit similarly low levels of postsecondary educational attainment. The gap between western Kentucky and the rest of the state in this indicator reveals the ground this region will have to make up in order to compete effectively in the modern economy.
Importantly, western Kentucky leads the rest of the state in educational achievement at the elementary, middle, and high school levels, a positive indicator for the future. Figures 7, 8, and 9 show the average CATS scores for elementary, middle, and high school districts, respectively, for the region and the rest of the state. In each case, the scores improved and remained higher than the improvements made in the rest of Kentucky. However, the rest of the state closed the gap considerably in 2002 at the elementary level (see Figure 7).
Figure 7: Elementary Schools District-Level CATS Scores
Figure 8: Middle Schools District-Level CATS Scores
Figure 9: High Schools District-Level CATS Scores
While the region did not suffer actual losses of its current or future workforce, its population increased at a slower pace than the rest of the state in every age group. With a population increase of 29,903 between 1990 and 2000, an estimated 616,391 people lived in western Kentucky in 2000, accounting for approximately 15 percent of the state’s population. Population, however, grew at a rate (5 percent) less than half of that in the rest of the state (11 percent). The age-18-and-under population increased by just 1 percent compared to 5 percent in the rest of the state. Growth among working-age adults, those aged 18 to 64, was just 7 percent compared to 13 percent in the rest of the state. Even among older citizens, those aged 65 and older, the population grew by just 3 percent compared to 9 percent.
When we turn to consideration of physical infrastructure as envisioned by MDC, we find evidence of conditions comparable to those found elsewhere throughout the state. In short, the region recognizes that bridging the so-called digital divide is key to the economic development of communities, as well as ensuring safe roads, adequate and clean drinking water, and effective wastewater treatment.
Data for western Kentucky indicate that, similar to trends in the rest of the state, electronic connectedness is advancing. Figure 10 shows significant increases in each of the survey years in the percent of adults who had accessed the Internet in the previous year. The graph also suggests the possibility of regional differences between western Kentucky and the rest of the state, but due to small sample sizes, these differences could not be substantiated, as they are not statistically significant. A 2002 report on Kentucky network access revealed that at 30 percent, western Kentucky trails the remaining regions in the percent of residents with cable modem access.(6) However, at 51 percent, the level of DSL access in the region is second only to northern Kentucky. The study also notes that while 65 percent of the region’s counties have access to cable modem service and DSL is generally available in the populated areas, Carlisle and Hickman counties have neither type of broadband resource available to their residents.(7) High-speed access is fast becoming a necessity for business location, one that can effectively eliminate many rural disadvantages. Without it, many are unable to rapidly connect to headquarters, receive online orders, and execute tasks that require high-capacity, high-speed Internet access.
Figure 10: Internet Access, by Region
In the building and maintenance of traditional physical infrastructure, such as clean water, sewer, and roads, data from the statewide strategic plans for these systems in the coming years suggest that western Kentucky’s systems are in reasonably sound condition relative to the rest of the state. Using projected expenditures as a measure of need, we find that western Kentucky is expected to consume just 12 percent of the cost of the state’s total outlay for building and maintaining public water lines from 2000 to 2020—the least of the four regions we are examining.(8) Proposed plans for public sewer systems from 2000 to 2020 show western Kentucky needs are expected to require about 16 percent of the state’s total costs.(9) And, of the $6.2 billion cost to complete long-range highway improvements, approximately 19 percent is expected to be spent in the area for approximately 24 percent of the planned improvement mileage throughout the state.(10) In short, these projected needs suggest significant regional strength in traditional infrastructure.
In MDC’s matrix, a strong social infrastructure that enables all people to live and work with dignity assumes a high level of importance. The goals MDC outlines for communities in this area also include affordable, quality health care for all as a pathway to self-sufficiency for economically vulnerable individuals and families. And MDC asserts that affordable housing should be viewed as a right and home ownership as an asset-building tool for both homeowners and communities.(11) Here, the theme of unchanging conditions continues for western Kentucky where little change was evident in the economic vulnerability of its citizens.
While data indicate an unchanging income scenario throughout the decade, considerable differences in public health care payments to economically vulnerable persons are found. The distribution of personal income remained relatively unchanged for western Kentucky between 1990 and 2000, with earnings constituting 64%; dividends, interest, and rent 19%; and transfer payments at 17%. However, Figure 11 shows the change in the composition of sources of transfer payments for the period. Transfer payments from retirement and disability declined from 51 percent of total transfer payments to 44 percent, while those from medical payments increased from 29 percent to 38 percent between 1990 and 2000. While the percent of medical payments for Medicare declined from 59 percent to 52 percent, medical payments for public assistance medical care (Medicaid) rose sharply, from 38 percent in 1990 to 47 percent in 2000. Thus, while the region’s rate of dependency has not changed significantly, the cost of health care in general and to the partly state-financed Medicaid Program in particular skyrocketed over the decade. At the same time, fewer transfer payments issued from retirement and disability and more from public assistance for medical care indicate a shift in cost burdens away from Medicare, which does not cover costly prescription drugs or long-term care, and employer-sponsored programs, to a program that aids individuals based upon need.
Figure 11: Distribution of Transfer Payments in Western Kentucky
As Table 1 shows, preserving and enhancing the natural, cultural, historical and built environment of communities is integral to the MDC framework for development. Our data show that these values are important to western Kentuckians, but challenges remain. The region has become a retirement haven for many who treasure its abundance of natural beauty and amenities, with such attractions as the largest man-made lakes in the country and Mammoth Cave—a national park. What’s more, these assets have not gone unnoticed by community leaders and residents, who are acting to preserve them. According to survey results, more than two thirds of western Kentuckians recycled items like glass containers, plastic containers, or newspapers in 2000, indicating a strong awareness of and commitment to preserving the region’s natural beauty.
Appreciation of arts and culture is also strong, but relatively less so, in this region than in the rest of the state. Approximately half (48 percent) of residents reported having visited a museum, festival, arts performance, or historic site in their home county during the previous 12 months, according to a 2000 survey, compared to 63 percent in the rest of the state.(12)
The region’s environment is also affected by the presence of a coalfield that underlies an estimated 12 counties of the western and central part of the state.(13) In 2000, western Kentucky had 26 mines that produced 25,787 short tons of coal.(14) Six of Kentucky’s top-10 producing mines in 1999 were located in western Kentucky. The principal environmental problems associated with coal mining are unreclaimed spoil and refuse piles, pot-hole subsidence, and acid mine drainage, but the impact of abandoned mines on potable and industrial water supplies also has been significant.(15) Associated problems remain in spite of passage of the federal Surface Mining law in 1977 which mitigated these problems and made reclamation, the process of restoring the site to a useful state, an integral and standard part of the mining industry’s work. The Abandoned Mine Land Reclamation Program established in 1982 was designed to provide for the reclamation unaddressed in the 1977 law. Under this reclamation program, the Pleasant View mine site near Madisonville was recognized by the U.S. Office of Surface Mining in 2000 and received a regional and national award from the agency.
Toxic chemical releases also pose a serious threat to the environment in this area of the state. Kentucky ranked 20th in the nation in 1999 in toxic releases, and the majority of these releases (65 percent) occurred in 10 counties. Of the top-10 Kentucky facilities releasing toxic chemicals to the environment in 1999, five were located in western Kentucky counties. Many of the state’s power plants, which were responsible for 97 percent of the hydrochloric and sulfuric acid releases in the state in 1999, are located in the western region.(16)
The final building block of economic development that we borrow from MDC is that of a strong civic infrastructure bolstered by a culture of participatory decisionmaking and problem solving that is future-oriented, accountable, and inclusive. Ensuring open and accountable governments that value all voices and develop the civic capacity of communities to address their own challenges and opportunities are among the goals that MDC suggests southern communities focus their efforts upon.
We find high levels of civic pride, confidence in the safety of communities, and trust of others throughout the Commonwealth, including the western region. These attributes are indicators of the strength of the ties that bind our communities together. In 2002, approximately 95 percent of western Kentuckians were extremely or somewhat proud of their communities, compared with 93 percent in the rest of the state.(17) The vast majority of citizens (95 percent) of the region, as in the rest of the state, reported that they always or usually felt safe.(18) Almost two thirds, about 62 percent, said that they could usually trust others, compared with a slightly lower 58 percent in the rest of the state.(19)
The rich social capital throughout the state is manifested in high levels of civic activity, including volunteering, participating in community projects, and pursuing leadership development opportunities. Approximately 58 percent of Kentuckians in both the western part of the state and the remaining regions reported volunteering on a regular basis while approximately 84 percent and 80 percent made charitable contributions in that year, respectively.(20) Similar to the rest of the state, most adult western Kentuckians, approximately 88 percent, were registered to vote in 2002.(21) And approximately 43 percent of Kentuckians in the western region had participated in a group to solve a problem or address a need in their community, while approximately 10 percent had actually led such a project.(22) A little over a quarter (28 percent) of western Kentuckians, like the rest of the state, had participated in a leadership development program in the previous year.(23)
Overall, the economic landscape of western Kentucky remained relatively unchanged over the last decade. For the most part, its residents remained reliant upon the same industries for employment and income. As a consequence, the high levels of government employment found in this region are a potential point of vulnerability when the nation undergoes its next round of base realignments and closures scheduled for 2005.(24) Otherwise, the region’s economic makeup is quite similar to that of the rest of the state. While the region was able to maintain its income advantage over the rest of the state over the decade, declining wages and salaries relative to the rest of the state indicate some erosion in the earnings power of jobs in this region. While the region’s workforce has been poorly positioned for advancement in the new economy, with educational attainment at the postsecondary level lagging behind the rest of the state, the performance of elementary and secondary students promises improvement ahead.
Physical infrastructure, abundant natural amenities, environmental quality, and strong civic capacity are areas of considerable strength on which the region can build. Overall, indicators point to a relatively stable economy in an as-yet unspoiled region that is ideal for families as well as seniors seeking peaceful, beautiful, amenity-rich places for retirement. The region’s considerable natural amenities combined with opportunities for economic stability offer a foundation that could yield real returns in the decades to come. However, the past mainstays of the economy are declining, and forward-thinking community leaders and activists will be needed to maintain—and elevate—this quality of life in the years to come.
* Dr. Amy L. Watts is a policy analyst at the Kentucky Long-Term Policy Research Center. The author would like to thank Michal Smith-Mello for her invaluable editorial contributions. Return to text.
1 MDC, Inc., The Building Blocks of Community Development (Chapel Hill, NC: Author, 2002). Return to text.
2 The counties included in this region are: Ballard, Caldwell, Calloway, Carlisle, Christian, Crittenden, Daviess, Fulton, Graves, Hancock, Henderson, Hickman, Hopkins, Livingston, Lyon, Marshall, McCracken, McLean, Muhlenberg, Ohio, Todd, Trigg, Union, and Webster. Return to text.
3 Leslie Cole, Erik Siegel, and Lola Williamson, 2000-2001 State of Kentucky’s Environment (Frankfort, KY: The Kentucky Environmental Quality Commission, June 2001) 135. Return to text.
4 All estimates reflect constant 2000 dollars. Return to text.
5 These are simple descriptive statistics, for which tests for statistically significant differences among them were not conducted. Return to text.
6 Center for Information Technology Enterprise (CITE), Kentucky Prepares for the Networked World (Bowling Green, KY: Author, 2002) 10-11. The Kentucky regions referred to here are slightly different than those in our analysis. Return to text.
7 CITE 10. Return to text.
8 Author’s calculations from “Public Water Needs: 2000-2020,” in Governor’s Water Resource Development Commission, Water-Resource Development: A Strategic Plan (Frankfort, KY: Governor’s Commission, October 1999) 6-8. Return to text.
9 Author’s calculations from “Public Sewer Needs: 2000-2020,” in Governor’s Commission, Water Resource Development: A Strategic Plan for Wastewater Treatment (Frankfort, KY: Author, March 2000) 10-12. Return to text.
10 Author’s calculations from “Long-Range Highway Plan Element (FY 2005-2018)” in Kentucky Transportation Cabinet, Statewide Transportation Plan (FY 1999-2018) (Frankfort, KY: Author, December 1999) 127-165. Return to text.
11 MDC 10. Return to text.
12 These data were obtained from surveys by KLTPRC conducted by the UK Survey Research Center (UKSRC) in the fall of 2000. Households were selected using random-digit dialings, a procedure giving every residential telephone line in Kentucky an equal probability of being called. Calls were made from October 28 to November 21, 2000. The sample includes 859 noninstitutionalized Kentuckians aged 18 or older. The margin of error is slightly less than 3.3 percentage points, with a 95 percent confidence interval. The 95 percent confidence interval for recycling is 61 to 76. The cultural participation 95 percent confidence intervals for western and nonwestern Kentucky are 39 to 56 and 59 to 66, respectively. Return to text.
13 In addition to 10 of the counties in the western region defined by this analysis, the coal field also underlies two counties in the south central region. Return to text.
14 Energy Information Administration, “Table 3. Coal Production and Number of Mines by State and Mine Type, 2000,” (Washington, D.C.: Author, 2001). www.eia.doe.gov/cneaf/coal/cia/html/tb103p01p1.html. Return to text.
15 The Office of Surface Mining, “Kentucky: The state with the most active coal mines,” (Washington, DC: Author, 1998) 40-41. www.osmre.gov/pdf/Kentucky.pdf. Return to text.
16 Cole, Siegel, and Williamson 84-85. Return to text.
17 The 95 percent confidence intervals for western and nonwestern Kentucky are 86 to 95 and 93 to 96, respectively. Return to text.
18 The 95 percent confidence intervals for western and nonwestern Kentucky are 89 to 97 and 94 to 97, respectively. Return to text.
19 The 95 percent confidence intervals for western and nonwestern Kentucky are 45 to 61 and 56 to 63, respectively. Return to text.
20 The 95 percent confidence intervals for volunteerism in western and nonwestern Kentucky are 50 to 66 and 54 to 62, respectively, and for charitable donations are 68 to 81 and 80 to 85, respectively. Return to text.
21 These data were obtained from surveys conducted by the UKSRC in the spring of 2002, using methods described in endnote 12. The calls were made from July 20 to August 16, 2002. The sample for the 2002 survey includes 882 noninstitutionalized Kentuckians 18 years of age or older. The margin of error for the survey is slightly less than 3 percentage points at the 95 percent confidence level. The 95 percent confidence intervals for western and nonwestern Kentucky are 81 to 92 and 83 to 88, respectively. Return to text.
22 The 95 percent confidence intervals for group participation in western and nonwestern Kentucky are 39 to 54 and 42 to 50, respectively, and for leading such a group are 7 to 16 and 8 to 12, respectively. Return to text.
23 See endnote 12 for more details on the methodology used to obtain these data. The 95 percent confidence intervals for western and nonwestern Kentucky are 18 to 33 and 25 to 32, respectively. Return to text.
24 Michael T. Childress, “A Changed World: 9/11’s Implications for Kentucky,” in The Road Ahead: Uncertainty and Opportunity in a Changed World (Frankfort, KY: The Kentucky Long-Term Policy Research Center, 2002) 7. Return to text.