The United States economy has generated an impressive number of jobs since the 1970s. The contrast between the nation's vigorous employment growth and the modest performance of other major industrial countries is striking. Despite this rosy track record, the real (inflation adjusted) wages and salaries of many workers have stagnated or slipped in recent years. This development has provoked concerns about the quality of new jobs. Structural shifts in the composition of employment--from high-wage goods-producing to low-wage services-related sectors--is the culprit most often cited for the deteriorating quality of jobs.

Regions vary greatly in the make-up of their labor force, in their industry composition of employment, and their economic experience. Reviewing and examining recent developments in average earnings per job in Kentucky with comparison to the nation is an important first step in understanding the economic forces at play in Kentucky.

Discussion: Average Annual Earnings Per Job are computed by dividing BEA total industry earnings estimates by the BEA total full- and part-time jobs estimates. No convenient or adequate means exist at the state or regional level for converting the job estimates to a full-time equivalent measure. So, interpret the average earnings per job estimates with caution in consideration of the following issues:

Average earnings per job within industries involving more part-time work is lower than industries involving more full-time work, although there could be little difference in the underlying wage of full-time workers. Such differences could also prevail between states and regions. An increase in the proportion of part-time jobs over time may erode average earnings per job estimates, although full-time earnings per worker may have remained unchanged.

As with per capita income, average earnings per job may be subject to extreme short-run variation, especially in smaller states. Major construction projects relating to building dams, nuclear power plants, and private plant construction projects have caused extreme fluctuations in many smaller states. Such changes typify both small and large agriculture-dependent states owing to the extreme annual variations in farm incomes. Also, Since average earnings per job are just a simple average, it does not account for variations in the distribution of earnings among high- vs. low-wage jobs.

Figure 1 depicts Kentucky's annual average earnings per job over 1970-2022 in current and constant (2017) dollars. Constant dollar measurements remove the effects of inflation. They allow for comparison of changes in the real purchasing power of Kentucky over time.

When measured in current dollars, Kentucky's average earnings per job increased 838.83%, from $6,325 in 1970 to $59,377 in 2022. When measured in constant 2017 dollars to adjust for inflation, it advanced 59.91%, from $31,997 in 1970 to $51,168 in 2022.

Figure 2 portrays Kentucky's real average earnings per job growth in a broader context by offering direct comparisons across time with the United States. The growth indices shown here express each region's real average earnings per job in 1969 as a base figure of 100, and the real average earnings per jobs in later years as a percentage of the 1969 base figure. This method allows for more direct comparison of differences in real average earnings per job growth between regions that may differ vastly in size.

Kentucky's overall real average earnings per job growth was 62.45% over 1969-2022 outpaced the United States' increase of 62.26%.

Figure 3 displays the trends for average earnings per job relative to the national average by tracing Kentucky average earnings per job as a percent of the national average over 1969-2022.

In 1969, Kentucky's average earnings per job amounted to 82.85% of the national average; in 2022, it approximated 82.94%.

Figure 4 shows the short-run pattern of Kentucky's real average earnings per job growth by tracking the year-to-year percent change over 1970-2022. The average annual percent change for the entire 53-year period is also illustrated on this chart to provide a benchmark for gauging periods of relative high--and relative low--growth against the backdrop of the long-term average.

On average, Kentucky's real average earnings per job grew at an annual rate of 0.94% over 1970-2022. The state posted its highest growth in 1984 (6.03%) and posted its lowest growth in 1980 (-4.65%). In 2022, Kentucky's real average earnings per job declined by -3.42%

Over the past six decades some states have experienced extreme swings in growth, and often such swings have tended to coincide with the decades themselves. Figure 5 again depicts the annual percent change in Kentucky's real average earnings per job since 1970, but this time they are overlayed with average growth rates for the decade of the 1970s, 1980s, 1990s, 2000s, 2010s, and 2020-2022.

During the 1970s, Kentucky's annual real average earnings per job growth rate averaged 1.73%. It averaged 0.10% throughout the 1980s, 1.29% throughout the 1990s, 0.93% during the 2000s, 0.84% during the 2010s, 0.33% thus far this decade (2020-2022).

Figure 6 compares the decade average growth rates for Kentucky noted in the previous graph with the corresponding decade averages for the nation.

Relative to nationwide real average earnings per job growth trends, Kentucky registered above the nation in the 1970s (1.73% vs. 0.89%), recorded underneath the nation in the 1980s (0.10% vs. 0.71%), trailed the nation during the 1990s (1.29% vs. 1.68%), outperformed the nation throughout the 2000s (0.93% vs. 0.72%), posted below the nation over the 2010s (0.84% vs. 1.01%), and recorded above the nation over 2020-2022 (0.33% vs. -0.24%).