Kentucky sees largest job growth increase in the nation in August, new federal data show

Olivia Evans
Louisville Courier Journal
GE Keane Fitzpatrick is part of a program called GEA3DAY, which allows him to work a three day work week.
Aug. 25, 2022

Kentucky's workforce saw the largest increase in the nation in August, growing by more than 26,000 jobs even in the midst of a tightening labor market, according to new data released by the U.S. Bureau of Labor Statistics.

From July to August, Kentucky added 26,700 nonfarm payroll jobs to the state economy, a 1.4% increase over the month pushing Kentucky into first place. Across the South region, other states saw just a fraction of the growth ― Mississippi experienced a 0.7% decrease in jobs, Georgia saw 0.3% growth and South Carolina saw 0.4% growth month over month, data show.

"As the labor force increases, this will also support payroll growth, or job growth," said Uric Dufrene, Sanders Chair in Business at Indiana University Southeast. "Over the year, we see an increase in the labor force, and this is matched with an above average increase in payrolls."

The largest sector of job growth was in government, which added 15,000 new positions. Dufrene said the increase can likely be attributed to the start of the school year, as most of the jobs were related to local government education services. Total jobs in the sectors, however, remain down by nearly 12,000 positions compared to 2019 before the COVID-19 pandemic caused large fluctuations in the labor market.

The manufacturing sector also added 8,000 jobs, but is still short roughly 5,000 jobs overall compared to pre-pandemic levels. Manufacturing jobs account for about 13% of Kentucky's economy.

From August 2021 to this August, Kentucky has added a total of 58,400 jobs. While the commonwealth has seen a total job growth of 3.1% year over year and had its unemployment rate decrease by 1% compared to 2021, the state employment rate ticked up to 3.8% in August, up from 3.7% in July.

Student Jose Lopez works on smoothing down a metal rod before be begins practicing at the Knight School of Welding in Louisville's West End. Behind him is the shadow of a welding instructor checking work. "They're really great people to learn from," said Lopez. "They make sure we're prepared and ready."

Louisville metro area continues economic growth

Currently, the Louisville metro area is faring better in unemployment than the state as a whole with a rate of 3.1%.

"The magnitude of the drop deserves notice," Dufrene said. "Over the year, the rate declined from 3.9% last year to 3.1% this August."

Louisville saw a deeper decline in unemployment year over year compared to nearby major metro areas. In the neighboring Cincinnati metro area, unemployment dropped from 4.3% in August 2021 to 3.8% this August, a smaller shift compared to the Louisville market. Further north in the Indianapolis metro area, the rate dropped from 3.1% in August 2021 to 2.8% this August.

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"We know that employers continue to face challenges in finding workers. So, entrants to the labor force are finding employment," Dufrene said.

The metro area, which includes Jefferson County and part of Southern Indiana, saw over 15,000 jobs added from July to August. A total of 22,600 jobs were added to Louisville's labor market as of August 2022, a 3.4% increase year over year.   

"This percent gain would rank among the top five in the past 30 years, not counting the abnormal changes associated with (COVID-19)," Dufrene said. "The year-over-year change is quite impressive."

Dufrene predicts the economy will continue to soften in an attempt to curb inflation, but stabilize as interest rates increase to reduce demand.

"We will not continue to see national job gains that are much higher than normal, which is what we've been seeing for the past couple of years," he said. "We'll likely see some increases to unemployment, but nothing compared to the Great Recession or spikes observed during the (COVID-19) recession."

For now, Louisville continues to add more jobs to the area. Kentucky Gov. Andy Beshear and executives from Ford Motor Co. announced Tuesday that 500 jobs will be added to the Kentucky Truck Plant in east Louisville, bringing in another $700 million in investment.