Like the rest of the nation, the Louisville region is experiencing a very tight labor market. The unemployment rate is near record lows, and average wages are increasing. But with inflation on the rise, workers are not feeling the full benefits of wage increases. In this rare shift toward worker power, employees are able to voluntarily leave their current position and seek out new and better working conditions.
The unemployment rate in the Louisville region fell to 2.9% in December 2021. This is one of the lowest unemployment rates ever recorded locally. Outside of a few months during the expansion of the late 1990s, this is one of the tightest labor markets the Louisville region has ever encountered.
As is the case when there is a shortage of supply, the cost for labor has increased. Average hourly wages for Louisville’s private sector workers are up 10% in 2021 as compared to their 2019 levels. Throughout much of the second half of the last decade, the region’s average hourly wage hovered around $23 per hour. Wages began increasing in 2019 when the labor market was tightening before the pandemic. In December 2021, the average hourly wage for Louisville’s private sector workers reached $27.13 per hour, almost $3 per hour more than the level in December 2019.
At the same time, the costs of basic necessities have also been increasing. Overall inflation reached 7.5% in January 2022, the highest since the early 80s. The cost of food, rent, and household energy are all much higher now than they were before the pandemic.
After adjusting for inflation, real wages for Louisville’s workers have only increased 3.5% on average in 2021 compared to 2019. Even though workers are seeing big wage increases, their purchasing power is constrained by the cost of rising prices.
In such a tight labor market, workers are able to voluntarily leave their job and seek higher wages with a different employer. The quits rate for Kentucky workers reached an all-time high in 2021, topping 4% in April, August, and November. Although this has been framed as a “great resignation” it is more accurately described as a “great reshuffle.” The hiring rate for Kentucky workers has also reached an all-time high in 2021. This suggests workers are quitting, but then being hired elsewhere. It is also a contributing factor to the increase in the region’s average hourly wages, as workers are likely finding positions with higher pay when they are hired elsewhere.
In a tight labor market and living nearly two years in a global pandemic, many workers are rethinking their relationship with work. They have an opportunity to seek higher wages, better benefits, and more stable scheduling. They can look for a workplace that values them as an employee and listens to their needs and concerns. Employers who provide quality jobs are winning over workers as the market experiences one of the fastest economic recoveries ever recorded.
If you are a worker considering a new or different career path, connect with the Kentucky Career Centers. Career specialists can help you navigate the current market and help you find your next step.
