ECONOMIC OVERVIEW Janet Kelly Urban Studies Institute University of Louisville

Recovery Every four to six years we experience an economic slowdown – The current bull market is in its fourth year CBO predicts real GDP growth at about 2.5% Business profits up over 7% from a year ago Auto sales and homebuilding leading the expansion Unemployment will remain near 8%

Unemployment in the Louisville Economy New USI research report – usi.louisville.edu Structural factors – Substitute technology for workers – Skills mismatch Cyclical factors – Stimulus too timid Aggregate demand remains sluggish

Labor Market Distortions - Demand Persistent high unemployment may lead employers to believe it is a “buyer’s market” Seek perfect worker Inflate qualifications Offer below market wage rates Discriminate against long term unemployed – Evidence that unemployed over six months significantly reduces likelihood of being hired

Labor Market Distortions - Supply Unemployed workers may have unrealistic expectations about achieving the same wages they enjoyed prior to the recession Extension of unemployment benefits and expansion of assistance programs raised the reservation wage – Job search delayed until recovery – Months waiting reduced attractiveness to employers House lock, making relocation difficult

In Labor ForceEmployed Unemployment Rate AGE 16 to 19 years42.60%31.40%26.40% 20 to 24 years80.90%69.90%13.10% 25 to 44 years85.10%76.80%9.40% 45 to 54 years79.80%72.80%8.70% 55 to 64 years63.30%59.30%6.30% 65 to 74 years27.20%26.10%4.20% 75 years and over5.50%5.00%8.30% 2012 Jefferson County Employment by Age

In Labor ForceEmployed Unemployment Rate White66.10%60.90%7.70% Black or African American63.90%52.90%16.90% Asian69.10%66.20%4.10% Two or more races68.60%56.70%15.40% Hispanic or Latino78.80%66.80%14.20% White, not Hispanic or Latino65.60%60.60%7.40% 2012 Jefferson County Employment by Race and/or Ethnicity Source: ACS 1 Year Estimates, US Census Bureau

In Labor ForceEmployed Unemployment Rate Population 25 to 64 years78.50%71.60%8.60% Less than high school graduate52.90%42.20%20.40% High school graduate (GED)74.60%64.30%13.80% Some college or associate's degree80.50%73.50%8.30% Bachelor's degree or higher86.50%83.40%3.30% 2012 Jefferson County Employment by Educational Attainment

Education Level Jefferson County Louisville MSAKentuckyUSA Less than high school graduate20.4%18.8%15.0%14.2% High school graduate (GED)13.8%10.4%9.2%10.1% Some college or associate's degree8.3%7.5%7.9%8.0% Bachelor's degree or higher3.3%3.4%3.2%4.2% 2012 Unemployment by Educational Attainment Source: ACS 1 Year Estimates, US Census Bureau

Concluding Thoughts Unemployment is not a number – Age, race and educational attainment shows the difference Education gap affects prosperity now – More jobs than workers with a Bachelor's degree or higher – More workers than jobs in all lesser education categories Education gap will drive local economy

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