Report: Kentucky adding low paying jobs

FRANKFORT, Ky. (AP) -- Kentucky added more than 3,500 jobs in April as the unemployment rate fell to 7.7 percent — but a new report from the Kentucky Chamber of Commerce says those are mostly low-paying jobs replacing high-paying ones.

University of Louisville economist Paul Coomes said Kentucky's average annual pay is $46,000 compared to the national average of $55,600. Kentucky's average pay has not increased in eight years. The state is tied with West Virginia for the lowest pay per job among the seven states that border Kentucky.

Kentucky lost 104,000 jobs during the recession, Coomes said, and has added 65,000 jobs during the recovery period. Almost all of those jobs have been in low-wage industries including temporary jobs, educational services, restaurants, nursing, transportation and warehousing. The biggest job losses have come in construction and coal mining, two industries that pay above average wages.

"We've not kept up with the national growth in (the technology) sector, which is sort of your brain part of the economy," Coomes said. "It looks like we're about 16 percent below the national average in pay per job and really not making any gains."

Candidates in Kentucky's U.S. Senate race, among the most competitive and closely watched races in the country, disagree on how to fix this. Democrat Alison Lundergan Grimes wants to raise the federal minimum wage to $10.10 per hour. But Republican Sen. Mitch McConnell says that would hurt the economy by forcing employers to hire fewer workers.

Coomes agreed with McConnell.

"Raising the minimum wage induces their employers to hire fewer people. It actually causes unemployment," he said. "It's a crude tool to raise the income. It's usually sold as we want to help working families. But very few working families are trying to make a living on the minimum wage."

In speeches and editorials, Grimes has relied on the Kentucky Center for Economic Policy to bolster her argument in raising the minimum wage. The nonprofit, Berea-based think tank argues that if workers had more money, they would spend enough of it to offset any job losses.

"Low wage workers spend the dollars that they get. They spend it at grocery stores, they spend it at local businesses of all types and that helps spur other employment and other growth that more than compensates for any employment impact," said Jason Bailey, the center's director.

That spending would increase the middle class, Grimes says, and actually add 2,200 jobs to Kentucky, according to a report from the Economic Policy Institute, a liberal think tank.

"Hardworking Kentuckians who work full-time should not be struggling to keep their families' heads above water," Grimes spokeswoman Charly Norton said. "Mitch McConnell has voted against raising wages for Kentuckians over 15 times."

Coomes notes that only 56 percent of Kentucky working-age adults have jobs — the lowest rate among the seven states that border Kentucky. For Kentucky to catch up to the national average would require adding 100,000 jobs — more jobs than Kentucky has added since 2009.

"If you're wondering how a job market can be so bad for so long, it's because Obama's economic policy that Grimes embraces is based on a political agenda that couldn't pass a seventh grade math class," McConnell campaign spokeswoman Allison Moore said.