Ky business leaders optimistic on economy, struggling with workforce

FRANKFORT, Ky. — Two in three business leaders view Kentucky a favorable place to succeed and most think consumers like living in the commonwealth. Nearly half expect increased revenue this year.

Surveying Kentucky business and nonprofit leaders to capture their views on key economic, workforce, and public policy issues, the Kentucky Chamber of Commerce again partnered with local chambers, the National Association of State Chambers (NASC), and the Siena College Research Institute (SCRI).

The survey asked questions on issues such as employers’ views of current and future economic conditions, their attitudes towards state and federal policymakers, and their top challenges and public policy interests, including child care.

“Understanding how business leaders view the economy and major public policy questions is top-of-mind for the Kentucky Chamber,” said Ashli Watts, President & CEO of the Kentucky Chamber. “The data gathered through this partnership offers an opportunity for leaders throughout Kentucky to understand how employers are navigating our ever-changing world and what their top concerns are.”

“Two-thirds of Kentucky’s CEOs say the area is a place where businesses can succeed and nearly as many, 63%, say Kentucky is a place where consumers want to live,” said Dr. Don Levy, Director of SCRI. “Forty-three percent, more than double last year, expect increasing revenues this year and 36%, up from 24%, predict profits to be up this year.

“Fewer are looking to hire this year — 31%, which is down from 40% percent last  year. But 78% continue to say Kentucky does not have an ample supply of workers ready to contribute and workforce development rings loud and clear as the CEO’s number one ask of state government.”

Views on the Economy

Kentucky business leaders remained optimistic about economic conditions. 39% expected the economy to be better next year, and 38% expected it to be the same as this year. 23% expected the economy to be worse next year. Although unemployment rates went up in Kentucky and nationally this year, job growth is still trending positively, according to analysis by the Kentucky Chamber Center for Policy and Research.

Kentucky companies also shared what challenges concern them most.

Government regulations (58%), health care costs (58%), the threat of an economic downturn (55%), and rising supplier costs (50%) were the top challenges. Among small businesses, the top three challenges were health care costs (62%), economic downturn (56%), and government regulation (54%).

Cybersecurity also posed a newer risk, with 37% of businesses noting their concern. Supply chain concerns were notably reduced in 2024 from last year (31% to 19%).

Workforce

Workforce remained a pressing issue for Kentucky businesses, with 78% of surveyed leaders saying there were not enough workers to fill their open jobs; however, 58% of businesses said they are having difficulty recruiting to fill open positions — a noticeable decrease from last year’s 70% of respondents sharing this challenge. Finding skilled and semi-skilled workers to fill open positions was the most difficult (66% and 59%, respectively), while only 38% reported difficulties recruiting unskilled workers.

The survey showed that employers started taking steps to recruit and retain employees through compensation and benefits. Of the surveyed employers, 60% reported they increased wages and 32% offered bonuses to recruit new employees while 79% of businesses increased wages and 55% offered bonuses to retain their current employees.

In October 2023, an estimated 62,733 non-working Kentucky adults cited “caring for children not in school or daycare” as their main reason for not working, according to a U.S. Census survey. As child care relates to workforce and the current business climate in Kentucky, 58 percent of employers said having affordable, quality child care positively impacts workforce retention, 63 percent said having affordable, quality child care positively impacts employee satisfaction, and 62 percent said child care availability had a positive impact on their general business operations.

With many ways to support employees’ child care needs, 55 percent of companies said they offer flexible scheduling to help employees manage child care needs as part of their company benefits. Only 6 percent noted that they offer subsidized child care financial assistance or a subsidized child care center. 27 percent reported they don’t offer any additional benefits related to child care.

However, 53 percent of surveyed business leaders said they would offer new or enhanced child care assistance benefits if they were to receive a grant from the state or local government matching their contribution, similar to the Employee Child Care Assistance Partnership that the General Assembly passed during the 2022 legislative session.

Public Policy

Kentucky employers had a more positive opinion of the state government than the federal government’s role in creating a strong business climate, with 53 percent believing the state government is doing a good or better job, 33 percent said a fair job, and 14 percent said a poor job. 58 percent of companies were confident in state government to improve the business climate over the next year. 48 percent of businesses thought the federal government is doing a poor job at creating a strong business climate, and 82 percent did not have confidence in the federal government to do so.

Companies said they want the governor and state legislature to focus on these issues: workforce development (66 percent), personal income tax reform (52 percent), business income tax reform (45 percent), and infrastructure and business development (42 percent). Regarding the responsibility of workforce development, 78 percent of business leaders said they would likely develop a partnership program with local educational institutions and local and state government.

Relocation

The survey also showed changes in where employers would locate, whether they would remain in Kentucky or potentially relocate to a different state. 83 percent expected to remain in Kentucky for the next 10 years, an increase of four points from 2023’s survey results. 79 percent of business leaders said would start their business in Kentucky instead of another state if given the opportunity to do everything again, a two-point increase from last year. 8 percent said they would choose another state, and 13 percent were uncertain if they would start their business in Kentucky again.

About the Survey

SCRI conducted the study from May through July 2024, working with the Kentucky Chamber and local chambers to disseminate the survey for business and nonprofit leaders to complete digitally. While the 218 leaders who completed the survey is not a representative sample of CEOs across the state, the sample still provided unique insights into the views and attitudes of Kentucky’s business leaders.

Of the surveyed entities, 62 percent were for-profit and 38 percent non-profit. Industries included construction, natural resources and mining, financial, manufacturing, retail, leisure and hospitality, professional services, transportation and logistics, education and health services, information and technology, and other. Small firms with less than 100 employees accounted for 61 percent of survey respondents. Medium firms with between 100 and 1,500 employees accounted for 32 percent. Six percent of respondents came from companies with more than 1,500 employees.

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