Kentuckians' low incomes spur study; GOAL: TO FIND OUT WHY PAY IS HIGHER IN BORDER STATES
BYLINE: Scott Sloan, HERALD-LEADER BUSINESS WRITER
A state economic development board asked University of Kentucky researchers yesterday to explore why states around Kentucky have been more successful in raising incomes.
The request grew out of research by UK's Center for Business and Economic Research, which analyzed why Kentucky remains such a poor state.
In a presentation to the Kentucky Economic Development Partnership board, CBER director Ken Troske described how Kentucky has fallen further behind its neighbors and the nation as a whole by many measures in the last few decades.
The board saw data on how nearby states such as Tennessee and North Carolina have grown income more rapidly than Kentucky, as well as how Alabama has leapfrogged the state.
Gene Fuqua, acting Economic Development Cabinet secretary, said the research is intended to be completed this fall, providing enough time to consider the recommendations before the 2008 General Assembly.
"We're looking for (short-term and long-term) plans," Fuqua said.
The research presented yesterday examined the significance of each of four factors -- stock of knowledge, business climate, infrastructure and industrial structure -- in improving Kentucky's income status.
It measured their influence on Kentucky's gross state product per capita, a measure of income that excludes government assistance payments.
The authors found that increasing Kentucky's stock of knowledge -- a measure of education and innovative ability -- would have the most effect on gross state product.
Under such a scenario, Kentucky's GSP per capita in 2004 would have been $36,100 instead of the actual $32,145.
The least beneficial would be changes to the business environment.
"Kentucky is probably higher than average in terms of business taxes in the current period, but, boy, the difference is pretty small," Troske said.
The measure included certain taxation data and the effect of Kentucky not being a right-to-work state.
Right-to-work states are those in which employees are not forced to join unions and pay dues at organized workplaces.