by:
Michal Smith-Mello
Peter Schirmer
with:
Kimberly M. Mayo
Kelly Roberts
This inaugural biennial trends report of the Kentucky Long-Term Policy Research Center examines three broad topics. First, we outline some of the demographic trends that are likely to influence the people and the families who will form the communities of tomorrow. Secondly, we turn to an array of changes that are shifting the economic floor beneath Kentuckians and increasing the difficulty and the complexity of the pursuit of prosperity. Finally, we discuss some of the many cornerstones that provide an effective foundation for progress, including both physical infrastructure and increasingly important human potential.
Demographic trends that have gathered momentum over the past two decades suggest the communities of the 21st Century will look quite different from those of today. They will have adapted in many ways to meet the needs of more older citizens, fewer young people, and continued change in family structures. While most observers agree that families will survive the present test of their limits and remain central to our culture, the fundamental reshaping of the family will likely persist.
While surprising new expansion of Kentucky's population has occurred in the 1990s, demographers do not expect it to persist. Instead, underlying trends suggest that Kentucky will experience only moderate population growth in the years to come, in spite of the high rate of growth it has enjoyed in the early 1990s. The stagnation of Kentucky's population during the 1980s, which is largely attributable to substantial out migration, particularly among young people, poses questions about the viability of Kentucky's future labor force.
The homogeneity of Kentucky's population has also persisted in recent years, a trend that may not bode well for the almost certain advance of globalization of commerce, which will demand high levels of comfort with diverse peoples and cultures. States that are perceived as economically or socially inhospitable to minorities may risk accelerated decline in their minority populations and, in turn, undermine their competitiveness.
In an era of increasing urbanization, attended by problems of congestion, crime and pollution, Kentucky is expected to retain its essentially rural character for some time to come and, as a consequence, delay or avoid the arrival of some of the problems urbanization brings. The beauty and the quality of life this rural strength enables may hold enormous future appeal for those in flight from urban congestion and crime.
The families of our nation and our state are changing. Social and economic forces have not only influenced their shape but how and when they are formed. In Kentucky, we marry--and divorce--more often than the nation as a whole, multiplying uncertainty in the lives of children. The increased incidence of divorce and a growing number of births to unmarried women mean that more children live in households headed by single parents, who are much more likely to be poor. As more nuclear families have fragmented, the number of non-family households, those occupied by singles or unrelated individuals, has risen dramatically.
A combination of factors is influencing our population and the family structures it forms, but none is more pronounced than the state's sharply declining birth rate. Contrary to stereotypes, Kentucky registered the 49th lowest birth rate in the nation during the 1980s, signaling the strong possibility of continued population decline. The natural extension of that trend was a sharp decline in the state's population of young people under age 18. Only two states lost a greater percentage of young people than Kentucky.
As more of us choose to live alone and families continue to fragment, the number of households has risen while the number of people living in them has declined. While household formation continues to outpace population growth, the trend actually peaked in the 1970s. Nevertheless, the rapid expansion of households has triggered widespread, if belated, attention to the implications for families, the environment and a fraying community fabric.
Perhaps the most striking population trend, one that will persist and deepen over the first half of the 21st Century, is the aging of our population, revealed in an emerging middle-age population bulge, the result of a decrease in the number of Kentucky children and an increase in those in their middle and older years. The implications for the future of Kentucky, as well as the nation as a whole, are among the most far reaching that lie before us. This fundamental change in our population, which is occurring at a faster pace in Kentucky than in most states, will profoundly influence the way we work and live.
Because older Kentuckians are disproportionately poor, the aging of our population may be attended by expanded poverty. Rural states like Kentucky are often strained to provide much needed support services for older people, for which the demand is certain to expand.
Unless wisely countered with thoughtful public policy, converging economic and demographic trends may exacerbate tensions between the generations in the years to come. The conflicting economic and social interests of young and old are pushing the issue of generational equity, the distribution of public resources in terms of need rather than age, higher on the public agenda, in spite of the attendant political risk.
In recent years, virtually unlimited global competition has placed extraordinary demands on business and industry and, in turn, on workers, who have scrambled to build higher quality products, in less time, at a lower cost. At the same time, the long heralded Information Age has arrived and exerted a powerful influence on the way we work and live. While some of the changes these forces are propelling promise to liberate and empower workers, others threaten to diminish the ability of many to participate in the economic and social mainstream of this nation. The transformation now underway is believed to be structural and systemic in nature; it will exert significant influence on the bedrock industries of Kentucky. Few doubt that it will be attended by pain, as well as the exhilaration of discovery and enlightenment.
The extraordinary era in which we live is characterized by rapid change driven by technology and our ongoing struggle to harness it and adapt to the consequences of its broad-based application. It has abbreviated the distance between points around the world, advanced global commerce, and forced a reckoning with assumptions about the organization and conduct of work. At the same time, it has raised the skills ante to new, ever rising heights that are making flexibility and lifelong education a growing imperative. While painful to those left behind, technology is accelerating the rate of change and creating an explosion of opportunities for highly skilled workers and innovative firms.
Today, a seemingly limitless world marketplace is challenging Kentucky firms and their employees to meet rising product and performance goals. However, if Kentucky is to make the most of these opportunities, it must explore ways to improve the ability of its organizations, its managers and its workforce.
Historically, Kentucky's economy has depended heavily on the core industries of mining, agriculture, and manufacturing, each of which are being transformed by a combination of forces. While mining and agriculture remain vital to the economic well-being of the state, both industries face uncertain long-term prospects. Likewise, in spite of emerging strength, manufacturing employment is predicted to decline over the long-term. As a consequence of these anticipated changes, the Commonwealth's future economic prosperity will hinge on its ability to successfully negotiate a shifting economic landscape, to anticipate coming changes and skillfully manage them. Without Information Age prowess, for example, Kentucky's future will likely yield more of the same persistent poverty that has for too long defined who we are.
While Kentucky's coal industry has logged record production levels in recent years, employment in this high-wage industry has fallen sharply, largely as a consequence of technological advancements and the consolidation or closure of mine operations. Over the long term, rising environmentalism and the implementation of current and anticipated regulations complicate the utilization of Kentucky's coal reserve. Moreover, some studies suggest that mining may approaching its historic peak in Kentucky, one that could be followed by declining production.
In decline by several measures, including employment, farm population and cultivated land, Kentucky's farm economy nevertheless enjoys record output, as farming methods and equipment advance productivity. However, the vulnerability of its key crop--tobacco--has created significant uncertainty. The future of burley tobacco, which is being influenced by declining use and increased imports of leaf, presents the most significant threat to farming and farmers in the state.
Predicted to decline nationally in coming years, manufacturing nevertheless is making dramatic gains in Kentucky's economy, outpacing the nation in terms of jobs and gross product. Kentucky produces a diverse range of manufacturing products; however, the predominance of small, often insufficiently capitalized firms, an inadequate base of intellectual capital, skilled workers, and technological know-how may inhibit our ability to compete in the global marketplace. The advancement of the automobile industry in Kentucky, however, bodes well for the future.
Kentucky hardwoods are prominent in the U.S. marketplace, but the virtual absence of an important second tier of value-added wood products industries prevents the state from capturing the full benefit of this abundant resource. Approximately 70 to 75 percent of the 700 million board feet of grade lumber cut here annually is shipped out of state in an unprocessed state. Development of the enormous potential the secondary wood industry holds for Kentucky's long-term economic prospects will require investment in expertise, entrepreneurial initiatives, and careful attention to the cultivation of an ethic of stewardship that will help sustain this abundant resource.
As our population ages, the store of historical sites in Kentucky and the state's ready accessibility are expected to increase its appeal to tourists, magnifying the economic benefit of tourism to Kentucky. While it is viewed as a viable, sustainable option for the development of rural communities, tourism has not proven to be an antidote to poverty. The seasonal and marginal quality of the jobs it creates often do not produce returns in the lives of those who work in this industry. Successful development strategies should maximize local involvement in order to increase opportunities for Kentuckians to own and operate businesses and create important, complementary industries to counter the cyclical nature of tourism.
Small enterprises are expected to be the engine of our future economy, fueled by expertise, capital and a broad-based commitment to their development. As the small-business sector of the economy continues to create the lion's share of new opportunities, the importance of enabling entrepreneurs rises. Much of the state's future success in cultivating small enterprises and the opportunities they will yield hinges on the availability of expertise--managerial and technical--and capital.
While human resources will be critical to Kentucky's ability to use and apply technology to create opportunities, existent and expanding infrastructure, particularly Kentucky's planned Information Superhighway, may offer points of leverage. They include the possibility of exploiting new opportunities in communications, pharmaceuticals, biotechnology, environmental remediation, and advanced materials.
While we are making previously unimagined gains in technology, product development and the management of human resources, the gap between those who have and those who do not has not narrowed. For many workers, the American Dream has become more elusive and the pursuit of it a frantic chase. The employer-employee contract is becoming more tenuous, as firms meet global competition with fewer, less costly employees, many of whom work part-time or on a contingency basis. Wages have stagnated and, at the same time, employee benefit packages are shrinking or disappearing. The notion of lifetime employment is now widely viewed as an anachronism, and hard work is no longer an assurance of anything. Pressed to close widening economic gaps, families are experiencing an increasing poverty of time and money that is affecting both their viability and stability. Many Americans work but remain poor.
In Kentucky, rising levels of contingency employment, the ascendance of low-wage industries, a reciprocal decline of high-wage industries, low labor force participation, and the types and the mix of jobs industry is bringing to the state are influencing wage levels and opportunities. As a result, the percentage of poor working families in Kentucky grew during the 1980s and continued to exceed that of the nation as whole.
Increasingly, economists view deepening disadvantage as a problem with broad-based implications. Falling U.S. wages have been accompanied by the rise of income inequality and what many analysts believe is a shrinking middle class. In Kentucky, income inequality became more pronounced over the most recent decade. The impoverishment and decline that inequality fosters is believed to discourage investment and, in turn, adversely affect productivity and the broad-based benefits it yields.
As more workers face growing uncertainty fueled by stagnant wages, diminishing benefits, continued layoffs, and the prospect of rising workloads and work hours, the critical relationship between worker and employer is being undermined. Because the quality of that relationship figures prominently in productivity and, hence, in the future of the American economy, the importance of forging joint worker-manager efforts to address emerging problems rises on the policymaking landscape.
The importance of strengthening the foundation that will support Kentucky's future progress cannot be overstated. The skeleton of a sound physical infrastructure must be matched with the realization of our fullest human potential if we are to create and capture opportunity in the coming years. We will be challenged to repair, fine-tune, maintain and expand Kentucky's foundation for progress to ready our state for the certain and dramatic changes ahead.
To manage the trends affecting the state and seize the many opportunities on the horizon, Kentucky must put its limited resources to work efficiently and effectively. Kentucky's state and local spending mix, its tax structure, its debt position and financial resources must form a cohesive unit, if we are to harness important technological, economic, and demographic changes influencing the future.
Kentucky's fiscal structure is characterized by a heavy concentration of taxing and spending at the state level, more so than in other states. Consequently, the people of Kentucky rely heavily on state government to provide services, financing, infrastructure and leadership on matters that are traditionally the obligations or prerogatives of local governments in other states. Presently, the state's debt position is manageable and sustainable, but its platter of responsibilities, as well as the cost of major programs, continues to expand. Moreover, the need to plan more effectively for the long term is evident.
Despite the concentration of fiscal responsibilities at the state level, the finances of counties, cities and special districts are extremely important. Indeed, local governments are responsible for a quarter of total state and local expenditures in Kentucky. A burden on city and county budgets which has received particular scrutiny in recent years is unfunded federal mandates, which are exerting increasing fiscal pressure on local governments.
While the focus of considerable debate, the question of Kentucky's tax competitiveness remains unanswered. Research efforts in the past year have made significant contributions in addressing these issues and in establishing priorities among tax goals, but more detailed information about the state's tax structure and its effects on state revenues is needed.
A quality transportation system will be critical to Kentucky's future prosperity. Highways, the quality of which is improving even as use expands, are the traditional backbone of this system, and they will continue to be so in coming years. However, a number of forces now at work will expand the role of other modes of transportation and dramatically alter the transportation planning process. Federal legislation, environmental considerations, competition for business and technological advances will affect the way projects are planned, how they are funded and even the modes chosen to deliver needed services.
Evidence of change can already be seen in the planning process here in Kentucky, which now emphasizes preservation and management of the existing system; enhancement of safety and convenience; promotion of economic development; and, coordination of the planning process. How well Kentucky meets these four goals will determine the quality and usefulness of the state's transportation system in the coming years.
While we have prospered greatly from the immense wealth of Kentucky's natural resources, we have often done so in the interest of short-term capital gain--bequeathing long-term environmental consequences to future generations at immeasurable cost. While Kentucky has made significant progress in restoring health to its environment, much more remains to be done to reverse the negative impacts of pollution and prevent costly and destructive future problems. Significant evidence suggests that in doing so, we will strengthen the foundation for progress and possibly expand opportunity and income.
The quality of Kentucky's water continues to improve, but substantial investment in infrastructure will be required in coming years, to safely treat wastewater and extend public drinking water to more Kentuckians. Strong, consistent, and targeted enforcement of environmental regulations, which has enabled Kentucky to make real gains in the restoration of its water resources, is believed to be critical to maintaining the progress that has been achieved. New approaches to managing pollution are likely to focus on the source, rather than the outcome, of water pollution.
Kentucky's air quality has improved dramatically since the enactment of the federal Clean Air Act in 1970, the provisions of which have led to significant reductions in levels of harmful pollutants, such as lead and carbon monoxide. When fully enforced, the federal Clean Air Act Amendments of 1990 are expected to dramatically reduce air pollution, but they will have an as yet undetermined impact on the state's coal industry.
Timely legislation has checked the influx of out-of-state garbage, but management of Kentucky's solid waste continues to challenge policymakers at every level. Programs to promote waste reduction and recycling will likely increase, as landfill disposal costs rise and more markets for recyclables become available.
Remarkable changes, driven primarily by advancing technology and rapidly rising health care costs, are underway in our thinking about health and health care. Increasingly, the health care emphasis will shift to health promotion and disease prevention as a means of making health care more accessible and affordable while retaining quality. Secondly, a higher level of cooperation among individuals, private service providers and government is expected to emerge. Advanced applications of technology and more active involvement of communities will overarch these trends, as we attempt to create a more manageable, useful and equitable health care system.
Effective primary care and preventive and educational services for all Kentuckians offer perhaps the most useful tools for managing preventable illnesses and containing medical care costs. By a number of measures, Kentuckians are among the least healthy people in the nation, presenting significant opportunity to mediate costs.
Research has consistently confirmed that poverty adversely affects the health and educational attainment of children reared under its mantle, and in turn, the productivity and independence of their adult lives. From one-fourth to nearly one-half of Kentucky's children live in poverty. In dealing with this issue, our long-term strategy must be that of identifying high risk groups and investing in intensive help. If we remain indifferent to the growing needs of Kentucky's poor families with children, we will help ensure the perpetuation of poverty of unacceptable breadth, as well as the deprivation, the mediocrity, the pain and the costly consequences that attend it.
Gaps in education have a visible dollars-and-cents impact on families, communities and states like ours, and it is intensifying. As the workplace and society are gradually reoriented, knowledge will be key to our ability to adapt. Technology's vast embrace of information has challenged millions of workers, who make products ranging from cars to computers, to extend their own intellectual reach, to use and effectively manage a vast store of information and, in the process, become more active participants in the day-to-day business of the enterprises for which they work.
By virtually every measure, however, Kentuckians are undereducated and ill prepared to meet the challenge before us. Prominent among the litany of often repeated deficiencies are high dropout rates, a low rate of college attendance and one of the highest percentages of adults in the nation who do not have a high school diploma. While significant and even dramatic progress is being made, the Commonwealth still has far to go in its drive to close persistent education and training deficits.
In spite of its ranking at or near the bottom of the 50 states in many aspects of educational attainment, Kentucky has ascended to national prominence in educational reform. In just a few short years, the Kentucky Education Reform Act has yielded measurable improvements in the performance of students and engaged thousands of parents, teachers and administrators in a new way of thinking about education.
Increasingly, however, educational need has extended beyond the basics provided by a high school education. By the turn of the Century, the majority of U.S. workers will need more than a high school diploma. As the demand for highly trained workers who have a solid intellectual foundation continues to expand, the importance of honing the skills of new and current workers is critical to Kentucky's future. In spite of emerging innovations in other states, as well in Kentucky, our current system of education and training remains relatively fragmented, frequently inaccessible or unaffordable, poorly linked to business and industry, and underused. Voices of support for training our present and future workforce through vocational/technical schools, apprenticeships, school-to-work programs, literacy and adult education, on-the-job training, universities and community colleges, as well as other strategies, are remarkably united.
Knowledge and the analytical and creative skills higher education enables are becoming central to our lives. Increasingly, intellect will not only provide public and private institutions with direction, it will shape the work we do, the products we make and the future we build. While higher education continues to provide the intellectual capital needed to meet future challenges, cost poses an increasingly formidable obstacle to its benefits. Competing and compelling needs have eroded once generous public funding for higher education, challenging administrators to do more with fewer state dollars and prompting closer scrutiny at every level.
Researchers offer conflicting analyses of crime data, even as public opinion surveys record deep alarm about its presumed expansion. Some researchers conclude that violent crime is not escalating, contrary to widely held assumptions. Instead, they suggest, our response to crime--the criminalization of more acts, particularly drug offenses, increased reporting, more accurate data collection, and more effective responses--have combined to create the impression of an exaggerated increase in crime.
While Kentucky's crime rate is quite low and only a fraction of regional (South) and national crime rates, available data on violent crime suggest it may be rising in Kentucky. Moreover, juvenile arrests for serious offenses have also risen.
Predictably, prison populations have risen accordingly. Over the past 20 years, the rate of incarceration has increased 233 percent in Kentucky. The rising costs associated with increased incarceration are challenging policymakers to discover and implement alternatives to prison. As an important starting point, Kentucky's criminal justice system has begun to explore mediation as an alternative to litigation and to shift nonviolent offenders to less costly facilities or, in some cases, to home incarceration.
In the years to come, it is believed that rising crime rates and increasing costs will be partly ameliorated by technological advances, which will assist the courts, law enforcement and corrections. Moreover, white collar crime is expected to become more commonplace, moving a substantial portion of crime off the streets. Consequently, in addition to adapting to new technologies, Kentucky's law enforcement agencies must prepare for changing types of crimes.
The effectiveness of government in the future will depend upon the ability of its leaders to overcome cynicism, alienation and even despair among the citizens it serves and build the social capital or citizen participation needed to meet the challenges before us. Research shows that those communities and regions which enjoy high levels of civic engagement are far more prosperous. While hopeful signs of rising engagement can be detected in the civic life of Kentucky, many community activists observe that, for a variety of reasons, civic engagement is inadequate and, therefore, self-limiting. Despite this, government must, as a matter of routine, turn to citizens for guidance, direction and support, if it hopes to build the social capital on which successful development relies.