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Jobs, Inflation and the Economy

Renee Shaw and guests discuss jobs, inflation and the economy. Scheduled guests: Chris Phillips, Ed.D., Economics Professor, Somerset Community College; Ashli Watts, Kentucky Chamber of Commerce; John Garen, Ph.D., Professor Emeritus for Economics, University of Kentucky Gatton College of Business and Economics; and Jason Bailey, Kentucky Center for Economic Policy.
Season 30 Episode 18 Length 56:34 Premiere: 06/26/23

About

Kentucky Tonight

KET’s Kentucky Tonight, hosted by Renee Shaw, brings together an expert panel for in-depth analysis of major issues facing the Commonwealth.

This weekly program features comprehensive discussions with lawmakers, stakeholders and policy leaders that are moderated by award-winning journalist Renee Shaw.

For nearly three decades, Kentucky Tonight has been a source for complete and balanced coverage of the most urgent and important public affairs developments in the state of Kentucky.

Often aired live, viewers are encouraged to participate by submitting questions in real-time via email, Twitter or KET’s online form. Viewers with questions and comments may send an email to kytonight@ket.org or use the contact form. All messages should include first and last name and town or county. The phone number for viewer calls during the program is 800-494-7605.

After the broadcast, Kentucky Tonight programs are available on KET.org and via podcast (iTunes or Android). Files are normally accessible within 24 hours after the television broadcast.

Kentucky Tonight was awarded a 1997 regional Emmy by the Ohio Valley Chapter of the National Academy of Television Arts and Sciences. The series was also honored with a 1995 regional Emmy nomination.

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Renee Shaw is the Director of Public Affairs and Moderator at KET, currently serving as host of KET’s weeknight public affairs program Kentucky Edition, the signature public policy discussion series Kentucky Tonight, the weekly interview series Connections, Election coverage and KET Forums.

Since 2001, Renee has been the producing force behind KET’s legislative coverage that has been recognized by the Kentucky Associated Press and the National Educational Telecommunications Association. Under her leadership, KET has expanded its portfolio of public affairs content to include a daily news and information program, Kentucky Supreme Court coverage, townhall-style forums, and multi-platform program initiatives around issues such as opioid addiction and youth mental health.  

Renee has also earned top awards from the Ohio Valley Chapter of the National Academy of Television Arts and Sciences (NATAS), with three regional Emmy awards. In 2023, she was inducted into the Silver Circle of the NATAS, one of the industry’s highest honors recognizing television professionals with distinguished service in broadcast journalism for 25 years or more.  

Already an inductee into the Kentucky Civil Rights Hall of Fame (2017), Renee expands her hall of fame status with induction into Western Kentucky University’s Hall of Distinguished Alumni in November of 2023.  

In February of 2023, Renee graced the front cover of Kentucky Living magazine with a centerfold story on her 25 years of service at KET and even longer commitment to public media journalism. 

In addition to honors from various educational, civic, and community organizations, Renee has earned top honors from the Associated Press and has twice been recognized by Mental Health America for her years-long dedication to examining issues of mental health and opioid addiction.  

In 2022, she was honored with Women Leading Kentucky’s Governor Martha Layne Collins Leadership Award recognizing her trailblazing path and inspiring dedication to elevating important issues across Kentucky.   

In 2018, she co-produced and moderated a 6-part series on youth mental health that was awarded first place in educational content by NETA, the National Educational Telecommunications Association. 

She has been honored by the AKA Beta Gamma Omega Chapter with a Coretta Scott King Spirit of Ivy Award; earned the state media award from the Kentucky Society of the Daughters of the American Revolution in 2019; named a Charles W. Anderson Laureate by the Kentucky Personnel Cabinet in 2019 honoring her significant contributions in addressing socio-economic issues; and was recognized as a “Kentucky Trailblazer” by the University of Kentucky Martin School of Public Policy and Administration during the Wendell H. Ford Lecture Series in 2019. That same year, Shaw was named by The Kentucky Gazette’s inaugural recognition of the 50 most notable women in Kentucky politics and government.  

Renee was bestowed the 2021 Berea College Service Award and was named “Unapologetic Woman of the Year” in 2021 by the Community Action Council.   

In 2015, she received the Green Dot Award for her coverage of domestic violence, sexual assault & human trafficking. In 2014, Renee was awarded the Anthony Lewis Media Award from the KY Department of Public Advocacy for her work on criminal justice reform. Two Kentucky governors, Republican Ernie Fletcher and Democrat Andy Beshear, have commissioned Renee as a Kentucky Colonel for noteworthy accomplishments and service to community, state, and nation.  

A former adjunct media writing professor at Georgetown College, Renee traveled to Cambodia in 2003 to help train emerging journalists on reporting on critical health issues as part of an exchange program at Western Kentucky University. And, she has enterprised stories for national media outlets, the PBS NewsHour and Public News Service.  

Shaw is a 2007 graduate of Leadership Kentucky, a board member of CASA of Lexington, and a longtime member of the Frankfort/Lexington Chapter of The Links Incorporated, an international, not-for-profit organization of women of color committed to volunteer service. She has served on the boards of the Kentucky Historical Society, Lexington Minority Business Expo, and the Board of Governors for the Ohio Valley Chapter of the National Academy of Television Arts and Sciences. 

Host Renee Shaw smiling in a green dress with a KET set behind her.

Panelists Discuss an Economic Climate with High Inflation and Job Growth and Debate State Tax Policy

Inflation is down by more than half of what it was last summer, unemployment remains surprisingly low, and the Federal Reserve opted not to raise interest rates earlier this month. Here in Kentucky, the state is expected to end the fiscal year with a billion-dollar surplus.

So the economy is doing great, right?

That depends. Inflation is still higher than consumers and economists would like, wage growth seems to have slowed, the Fed warns it still may raise borrowing rates, and some forecasters believe a downturn remains likely.

“We will hit a recession,” says Jason Bailey, executive director of the Kentucky Center for Economic Policy. “It’s a question of when, not a question of if.”

Bailey says America hasn’t seen these kinds of economic conditions – high inflation coupled with low unemployment – in five decades. He attributes the massive spike in inflation over the last two years to the double-whammy of the COVID-19 pandemic and the war in Ukraine. He says manufacturers and the global supply chains weren’t prepared for the sudden shift in demand from services to consumer goods when people isolated at home. As demand outpaced supply, prices increased. Some companies, according to Bailey, took advantage of the situation and padded their bottom lines by raising their prices even more.

John Garen, a professor emeritus at the University of Kentucky Gatton College of Business and Economics, says there was another, perhaps more important factor at play: The supply of money jumped when Congress approved multiple pandemic relief packages totaling some $6 trillion. As history shows, according to Garen, when there’s too much money chasing too few goods, inflation accelerates.

“The monetary theory of inflation has been around a long time and it works,” he says.

As the Fed raised interest rates and tightened the money supply, Garen says inflation has started to come down.

Bailey contends federal stimulus dollars didn’t cause inflation and says without that money the nation would have slipped into a depression. He argues inflation has decreased because manufacturing and supply chain issues have eased, allowing more goods to reach the market.

Employment and Wages

A goal of the Fed’s interest rate hikes is to slow down the economy by encouraging consumers to purchase less. But less demand for goods and services will likely also cause unemployment to increase.

So far, that hasn’t happened. Demand for labor has remained strong and workers have benefitted. Kentucky Chamber of Commerce President and CEO Ashli Watts says wages in the commonwealth have grown 6 percent in the past year across all sectors, with the mean hourly wage now at $25 an hour. She also says there are two open jobs for every one person seeking work.

“Employers are frankly pretty desperate for employees and they’re willing to pay more,” says Watts. “That kind of natural competition has driven up those wages.”

Demand is so strong that Watts says the Chamber is helping employers find workers in areas that have been under-utilized: retirees and individuals in recovery from addiction or recently released from prison.

Bailey is less sanguine about Kentucky’s workforce outlook. He says the fastest growing jobs are in the service sector, including fast food, hotels, retail, and elder and child care – jobs that traditionally aren’t unionized and don’t pay much. In fact, he says about 20 percent of jobs in Kentucky pay less than $15 an hour.

“We have a lot of jobs at the moment,” says Bailey. “We don’t have enough that pay a living wage.”

Another point of concern for the commonwealth is the workforce participation rate. For all Kentuckians 16 years of age and older, that rate is 57 percent. For those in the prime working ages of 25 - 54, the participation rate is 79 percent. Both of those numbers are below national averages, according to Watts, placing Kentucky in the bottom 10 of all states. Bailey says participation is actually above the national average in the state’s so-called Golden Triangle between Louisville, Lexington, and northern Kentucky. But he adds that it falls far below in rural areas that lack jobs, especially in eastern Kentucky.

Another issue affecting workforce participation is the state’s lack of affordable, quality child care. About half of Kentuckians live in child care deserts where the number of children needing daycare exceeds the capacity of existing providers. That makes it hard for working families to look after their children and hold jobs.

Bailey says that deficit could grow worse in the coming months as federal pandemic aid to child care centers ends. He says those dollars made it possible for centers to increase worker wages, improve facilities, and keep costs down for parents. Watts says the state now offers matching funds to companies that host employer-based child care sites, but Bailey says lawmakers must do more to help providers replace the lost federal moneys.

State Taxes and Budget

While these greater economic factors have played out, the General Assembly has pursued tax reforms that are shifting Kentucky from a reliance on income taxes to more consumption taxes. House Bill 8 in the 2022 legislative session created the framework to incrementally reduce the state’s individual income tax to zero as General Fund receipts and Budget Reserve Trust Fund balances hit certain milestones. That legislation added the state’s 6 percent sales tax to a wider range of goods and services to compensate for the reduced income tax receipts.

This year, the personal income tax rate dropped from 5 percent to 4.5 percent. As a result, state budget officials report that income tax revenues for the commonwealth this year have already fallen by $148 million.

“It should really not shock nor scare anyone that those numbers are going down,” says Watts. “It’s really going very much according to plan.”

Watts says income tax receipts are expected to decrease as the rate goes down. But she says that will be offset by higher sales tax revenues. Sales tax receipts have already increased by $40 million this year, according to state officials. Even with the lower income tax revenues this year, Watts says receipts for May still outpaced receipts for May of 2019, which she contends is a good sign.

But Bailey says income taxes are a fairer, more effective way of raising revenues for vital state services like infrastructure, public education, and health care. Consumption taxes, he contends, place more burden on low-income and working families. He fears the long-term implications of the tax shift, especially once the state no longer has pandemic relief dollars to bolster the Budget Reserve Trust Fund. Bailey says it’s troubling that state revenues have dropped while the national economy is so strong. If the U.S. does slide into recession, he says that would make it even harder for Kentucky to meet its revenue goals under the new tax system.

“The new sales tax on services is pennies, the reduction in the income tax rate is dollars. So what they’re doing is blowing a huge hole in the budget that’s not visible now because we have all this surplus revenue,” says Bailey. “The legislature is using a temporary opportunity to make permanent tax cuts… without any viable options to replace the revenue that we lost.”

Lawmakers in the Republican-controlled General Assembly have already tweaked the application of the state sales tax to help ensure it doesn’t become over-burdensome. Watts says legislators will continue to monitor that to make sure collections are adequate. Garen says such tweaks are common to tax overhauls.

“It’s hard to get this sweeping reform all at once,” says Garen. “Sometimes little by little is the way it goes.”

Kentucky’s individual income tax rate is already set to drop another half point to 4 percent next year. Further reductions are contingent on the state meeting the General Fund and Budget Reserve Trust Fund milestones mandated in HB 8.

“The triggers are really what makes the plan work – as long as long as they are adhered to,” says economics professor Chris Phillips of Somerset Community College.

Opponents of Kentucky’s tax overhaul point to how Kansas lawmakers had to reverse cuts they made to tax rates in their state after revenues dropped dangerously low. Phillips says Kentucky’s fiscal triggers should prevent that from happening here, but he says it still could happen if budget shortfalls became large enough.

Watts says Kentucky’s tax reforms have given the state a more competitive business climate and make sense for today’s service-oriented economy. But she adds that lawmakers need to guard against applying sales taxes in such a way as to hurt small businesses and service-based companies. She also says a complete elimination of the income tax in Kentucky may not be necessary.

“We could still be a really competitive state taxwise without getting to zero,” says Watts.

She says lowering the income tax to 3 percent combined with further reductions in business taxes and keeping the sales tax at 6 percent would make Kentucky very competitive.

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Season 30 Episodes

Reviewing the 2024 General Assembly

S30 E44 Length 56:33 Premiere Date 04/15/24

Final Negotiations on the State Budget

S30 E43 Length 56:33 Premiere Date 03/25/24

School Safety

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Early Childhood Education

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Abortion Legislation

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School Choice and Education Issues

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State Budget Discussion

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Diversity, Equity and Inclusion (DEI) in Higher Education

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Safer Kentucky Act

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Legislative Priorities in the 2024 General Assembly

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Governor Andy Beshear's Budget Address

S30 E34 Length 56:36 Premiere Date 12/18/23

2024 Legislative Preview: Part Two

S30 E33 Length 56:35 Premiere Date 12/04/23

2024 Legislative Preview

S30 E32 Length 56:35 Premiere Date 11/20/23

Analysts Discuss What to Expect on Election Day 2023

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Candidate Conversations: Lieutenant Governor

S30 E30 Length 56:33 Premiere Date 10/30/23

Candidate Conversations: Governor

S30 E29 Length 56:33 Premiere Date 10/23/23

Political Analysts Forecast the 2023 General Election

S30 E28 Length 56:33 Premiere Date 10/17/23

Secretary of State; Commissioner of Agriculture

S30 E27 Length 56:33 Premiere Date 10/09/23

Auditor of Public Accounts; State Treasurer

S30 E26 Length 56:33 Premiere Date 10/02/23

Kentucky's Economy, Jobs and Taxes

S30 E25 Length 56:33 Premiere Date 09/25/23

Higher Education in Kentucky

S30 E24 Length 56:33 Premiere Date 09/18/23

Kentucky's Health Care Challenges

S30 E23 Length 56:33 Premiere Date 09/11/23

Education Issues in Kentucky

S30 E22 Length 56:33 Premiere Date 08/21/23

Fancy Farm Preview and Kentucky Politics

S30 E21 Length 56:33 Premiere Date 07/31/23

Kentucky's Energy Needs

S30 E20 Length 56:35 Premiere Date 07/17/23

Artificial Intelligence

S30 E19 Length 56:35 Premiere Date 07/10/23

Jobs, Inflation and the Economy

S30 E18 Length 56:34 Premiere Date 06/26/23

SB 150 and LGBTQ Issues

S30 E17 Length 56:33 Premiere Date 06/19/23

Horse Racing Safety

S30 E16 Length 56:35 Premiere Date 06/12/23

A Discussion of Gun Laws

S30 E15 Length 56:34 Premiere Date 06/05/23

Recapping The 2023 Kentucky Primary

S30 E14 Length 56:33 Premiere Date 05/22/23

2023 Primary Election Preview

S30 E13 Length 56:34 Premiere Date 05/15/23

Republican Candidate for Secretary of State

S30 E12 Length 15:00 Premiere Date 05/08/23

Republican Candidates for Governor

S30 E11 Length 1:29:20 Premiere Date 05/01/23

Candidates for Treasurer and Commissioner of Agriculture

S30 E10 Length 1:15:06 Premiere Date 04/24/23

Challenges Facing Kentucky Schools

S30 E9 Length 56:35 Premiere Date 04/17/23

Policy Analysts Recap the 2023 General Assembly

S30 E8 Length 56:34 Premiere Date 04/10/23

Recap of the 2023 Kentucky General Assembly

S30 E7 Length 56:35 Premiere Date 04/03/23

Kentucky Legislation on LGBTQ+ Youth

S30 E6 Length 56:35 Premiere Date 03/20/23

Student Discipline Legislation

S30 E5 Length 56:33 Premiere Date 03/13/23

Gambling Proposals in the Kentucky General Assembly

S30 E4 Length 56:34 Premiere Date 02/27/23

Kentucky's Teacher Shortage

S30 E3 Length 56:33 Premiere Date 02/20/23

Exploring Local Government Issues

S30 E2 Length 56:35 Premiere Date 02/13/23

Child Abuse and Neglect in Kentucky

S30 E1 Length 56:34 Premiere Date 02/06/23

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