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Economic

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Rural

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Research

Report

Number 41

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Distribution of

Employment Growth

in Nine Kentuclcy

Counties

A Case Study

Stan G. Daberkow

Donald K. Larson

Robert Coltrane

Thomas A. Carlin

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Distribution of Employment Growth in Nine Kentucky Counties: A Case

Study, by Stan G. Daberkow, Donald K. Larson, Robert Coltrane, and

Thomas A. Carlin. Economic Development Division, Economic Research Service, U.S. Department of Agriculture. Rural Development Research Report

No. 41.

Abstract

Rapid employment growth betw^een 1974 and 1979 in a nine-county study

area of south central Kentucky provided job opportunities both for local residents and for persons with limited labor force experience. But, recent inmigrants held a disproportionate share of better paying executive jobs. This

case study, which examines the distributional effects of rapid employment

growth in a nonmetropolitan area, shows that inmigrants also held a disproportionate share of jobs in growing business establishments. Although manufacturing was the major economic force in the study area in January 1980,

jobs in the private service sector increased more than in other sectors.

Keywords

Inmigrants, rural employment growth, rural labor force, women, youth

Acknowledgments

Linda M. Ghelfi and Maurice R. Landes helped design the study. Douglas

Kleweno and Lawrence S. Williams participated in developing the sample

and survey materials. Howard Utter was the field data collection coordinator from the Louisville, Ky., office of the Statistical Reporting Service.

Robert Coltrane and Thomas A. Carlin supervised the study, and Donald K.

Larson was the project leader. Appreciation is extended to all enumerator

supervisors and enumerators whose tireless efforts toward completing the

interviews made this report possible. Joe Blackwell developed the variance

program used for statistical testing. Clevie Gladney and John Baumgartner

developed appropriate computer tapes for analyzing data, and Joyce Su provided programming assistance. Nita Kennedy, Sharon Black, and Sharon

Davis typed various drafts of the report.

Washington, D.C. 20250 August 1984
Contents

Page

Summary iii

Glossary iv

bitroduction 1

Background 1

Study Area 2

Survey Design 3

Study Area's Economy and People 5

Industrial Structure 5

Area Residents 7

Employment Growth 9

Sources and Distribution of New Jobs 10

Influence of Multiestablishment Firms 13

Employed Workers • 13

Residency Status 14

Establishment Types by Workers' Residency Status 15

Female Workers 17

Youth • 19

Older Workers • • 19

Recent Entrants to the Labor Force • . 21

Roles of Government in Employment Growth 22

Direct Employer • • 23

Provider of Infrastructure • 23

Source of Capital 23

Employment Services and Training 24

Potential Labor Force 25

Implications 27

References 30

Appendix A: Survey Design and Procedures 32

Appendix B: Calculation of Variance Statistics . 35
Summary

Rapid employment growth from 1974 to 1979 in a

nine-county area of south central Kentucky provided

job opportunities both for local residents and for

persons with limited labor force experience. But, recent inmigrants held a disproportionate share of

better paying executive and professional jobs. This

case study, which examines the distributional effects of rapid employment growth in a nonmetropolitan (nonmetro] area, shows that inmigrants also

held a disproportionate share of jobs in growing

business establishments.

Enumerators interviewed a representative sample of

business firms, government units, and households in

the Kentucky study area in December 1979-January

1980 to determine the impacts of employment growth

on rural residents. The Kentucky area reflects recent economic and demographic changes occurring

in many nonmetro areas. Manufacturing was the

Kentucky area's major economic driving force in

January 1980, providing jobs for a third of the workforce. But, the private service sector, which provided services to the manufacturing sector and to

the area's growing population, was an important

contributor to job growth between 1974 and 1979.

The advantages of recent inmigrants in obtaining

executive and professional jobs did not lead to higher

average weekly wages. Only early inmigrants had a

wage advantage over long-term residents. Many

early inmigrants may have held higher salaried jobs

because they moved to the area, specifically to take

managerial and highly skilled jobs, during a time of

rapid expansion of both new manufacturing firms

and other firms.

The expanding job market in the Kentucky study

area provided a favorable environment for women

and youth to enter the labor force. Most of these entrants had little previous labor force experience.

About 60 percent of the recently (1974-79] employed

were women, many of whom were 35 or more years

old, were married, and no longer had yoimg children

at home. Youth, including young women, accounted

for about 60 percent of the recently employed. The

recently employed generally held lower paying clerical and sales positions and frequently worked in

low-wage and private-sector establishments. They

were far more likely than experienced workers to

work in new and expanding establishments. Thus,

employment growth in the study area provided employment opportunities to people with limited labor

force experience. Both this finding and the finding

that long-term residents were able to achieve a proportionate share of employment suggest that these

rural residents had at least partly achieved the development goal of Federal rural development legislation—namely, that of improving the economic wellbeing of all residents.

About 20 percent of the area's estimated 4,500 employers began operations between 1974 and 1979.

An additional 20 percent expanded their operations.

Of the nearly 11,000 jobs created over the 5-year

period, half were created by new establishments

and half by ongoing units. Those jobs in expanding

establishments were primarily full-time positions in

goods-producing occupations, provided principally

by large units. By contrast, new establishments provided mostly technical, marketing, sales, clerical,

and service jobs that were more likely to be parttime positions in small service-producing units.

These results suggest that economic development

policy should not be solely concerned with attracting new establishments to an area, but must also

create a cHmate that encourages the expansion of

existing units.

Federal, State, and local government involvement

affects economic development, directly and indirectly. This survey does not provide all the necessary data for assessing government's full role in job

expansion; however, the survey data do suggest that

government played only a minor role in some important areas. Since 1969, nonfarm employers have not

widely used government-sponsored loan programs to

start up new businesses. Employers only occasionally used State employment offices to locate new

workers, and workers seldom used these employment offices to find work. However, information

from nonsurvey sources and from the analysts' personal observation suggests that government did help

finance the necessary infrastructure to support

private-sector economic activity and that local

development associations, chambers of commerce,

and other groups did make concerted efforts to attract employers to the area.
Glossary Type of estahlishment:

Statistical testing and survey design:

Significant difference:

A comparison between two variables was statistically significant at the 95-percent confidence level

in most cases when the observed difference was greater than twice the standard error of the difference.

The variables tested were in the form of totals, ratios, percentages, dollar values, and so forth.

Survey sample design;

Area frame. The area frame consisted of a twostage stratified cluster sample, where the first

stage involved sampling segments and the second stage involved sampling establishments and

households. The area frame provided a sample

of establishments and households not identified

by the list frame. The area frame and list frame

together represented the total population of

establishments and households.

List frame. The list frame sample was comprised

of a list of private-sector establishments and

government units located in the nine-county

area. A subsample of employees was drawn

from the surveyed list frame establishments

which subsequently became the list frame sample of households.

Primary sampJing unit. Primary sampling units

[PSU's] are associated with the frame sample.

For the list frame, establishments were the

PSU's; for the area frame, land segments of

varying size were the PSU*s. PSU's serve as the

base for deriving variances, as opposed to observations, in a complex survey design.

Employers, private and public sectors,

and related terms:

Establishments;

An establishment is an economic unit, generally located at a single location, where business is conducted or where services or industrial operations

are performed. A firm may consist of one or more

such units.

Goods-producing. Includes establishments in the

private sector engaged in construction, mining,

and manufacturing activities.

Services-producing. Includes establishments in

the private sector engaged in wholesale and

retail trade; TCPU (transportation, communications, and public utilities); FIRE (finance, insurance, and real estate); and all other services,

including hotels, personal, business, amusement,

health, legal, education, and social services.

Government. Includes civilian Federal, State,

county, city, or town governmental units. A unit

of government or a nonprofit organization

funded primarily with Federal, State, or local

government funds, which has sufficient management over its own affairs or taxing authority to distinguish it from the administrative

structure of other governmental units. Military

units were excluded from the survey.

Size of establishment;

SmaJl. Those units that employed 1-19 paid

workers in December 1979.

Large. Those units that employed 20 or more

paid workers in December 1979.

No paid employees. Those establishments totally operated by self-employed owners or partners in

December 1979 and referred to as establishments

with no paid employees. Some of these

establishments had paid employees in 1974.

Estahlishment wage levels:

Mean-wage establishments. The average weekly

wages paid full-time workers in the mean wage

establishments ranged from $181 ta $221 in December 1979. The authors calculated this wage

by adding and substracting 10 percent of the

mean weekly wage of $201 paid by all establishments.

Low-wage establishments. The average weekly

wage paid full-time workers was less than $181

in December 1979.

IV
High-wage establishments. The average weekly

wage paid full-time workers was greater than

$221 in December 1979.

Structure or age of establishment;

Multiestablishments. Private-sector establishments with two or more plants, branch offices,

or outlets for business. Data presented under

multiestablishments represent only information

collected from the unit supveyed.

New establishments. Estabhshments which began operation in the nine-county area after 1974.

Ongoing establishments. Estabhshments which

began operation in the nine-county area during

or before 1974,

Establishment employment change, 1974-79:

Growth. Establishments that increased employment by one or more persons between 1974 and

1979; also includes new units.

No-growth. Represents establishments where

employment levels did not change or declined

between 1974 and 1979.

Population and employee-related terms:

Households;

A group of persons, not necessarily related by blood

or marriage, whose usual place of residence is in a

house, an apartment, a group of rooms, or a single

room occupied as separate living quarters.

Annual household income. All income received

during the year by household members, except

income received from the sale of land, buildings, stock, or other capital assets.

Household member. Any person whose usual

place of residence is in the housing unit that

was surveyed. (A housing unit is a house, an

apartment, a group of rooms, or a single room

occupied as separate living quarters.)

Adult:

Any person who was 16 years of age or older in

January 1980.

Labor force;

Includes only the adult population who were employed and unemployed.

Employed. Employed persons who were working

for wages and salaries or who were self-employed

in their own businesses or professions or on

their own farms.

Unemployed. Unemployed persons who were

looking for work or on layoff waiting to be called

back to a job.

Employment rate. The proportion of the adult

population that was employed.

Unemployment rate. The proportion of the labor

force that was unemployed.

Residency status;

Long-term residents. Residents who lived in the

nine-county area continuously between December 31, 1964, and January 1980.

Early inmigrants. Residents who moved to the

nine-county area between January 1, 1965, and

December 31, 1974.

Recent inmigrants. Residents who moved to the

nine-county area between January 1, 1975, and

January 1980.

Return inmigrants. Residents who had moved -

from the nine-county area, lived outside the

area for some time, and then moved back to the

area after January 1, 1965.

New inmigrants. Residents who moved to the

study area between January 1, 1965, and January 1980, and who had not previously lived in

the area.

Employment status;

Full-time. Wage and salary workers who worked

30 or more hours per week.

Part-time. Wage and salary workers who worked

less than 30 hours per week.

Recent entrants to the labor force. Persons who

were not in the labor force in 1974 and who were

employed 1 or more weeks in 1979.
Experienced workers. Persons who were employed 1 or more weeks in both 1974 and 1979,

SeJ/-empJoyed. Persons who worked for profit or

fees in their own businesses or professions or

on their own farms.

Occupational groups:

Executive, Includes managerial, administrative,

engineering, scientific, teaching, and related occupations, including creative artists.

TechnicaJ. Includes technicians (except health],

clerical, sales, service, farming, forestry, fishing, and hunting occupations, and persons living in the area who were in the military.

Production. Includes production workers in

manufacturing, construction, extractive, transport, and related occupations.

Workers age:

YoutK Persons 16-24 years of age in January

1980.

Older workers. Persons 50 years of age and

older in January 1980.

Link-wage worJcer;

Persons who were sampled from the list frame establishments surveyed and who were working for

wages and salaries 1 or more weeks in 1979. Establishment data linked to the worker are for the unit

in which the worker worked the most days in 1979.
Distribution of Employment Growth

in Nine Kentucky Counties

A Case Study

Stan G. Daberkow, Donald K. Larson,

Robert Coltrane, and Thomas A. Carlin"^

Introduction

The U.S. nonmetropolitan (nonmetro) population

grew faster than the metropolitan (metro) population in the seventies [3p The rapid growth of nonfarm employment opportunities in the sixties and

seventies was a major factor influencing this rural

population turnaroimd. Both Federal and State rural development policies were initiated primarily to

increase employment opportunities and to raise income levels in rural areas, particularly for the

disadvantaged.

In this report, we examine the distribution of jobs

among rural residents during a period of rapid employment growth in a nine-county area in south central Kentucky. We focus on the employment situation

of long-term residents, inmigrants, women, the elderly, youth, and recent entrants into the labor

force. Economic development agencies, local and

State governments, Federal program managers, and

national policy officials will find the information in

this report useful in planning effective rural development strategies.

We discuss other topics related to the distribution

of jobs. Sources of new employment in rural areas

include: estabhshment of new businesses, relocation

of firms or branch establishments into the area, and

expansion of industries already in the area. We

identify the types of employers that contributed to

total employment in the Kentucky study area. We focus on the role of multiestablishment firms in providing new jobs. Research suggests that such firms,

if headquartered outside the local community, are

not sensitive to economic needs of the local area [291

Government plays an important role in the job creation process in a rural community* Government is

not only a major employer [27], but also provides

employment services and training to local residents

to help them both prepare for and find jobs. Government constructs and maintains transportation facilities, industrial parks, and other forms of necessary

infrastructure for private establishments to carry

on business. Government is also a source of capital

for new plant construction and plant expansion. We

examine the role of government in facilitating employment growth in the Kentucky study area.

Finally, we discuss the characteristics of persons of

labor force age who are not employed or actively

looking for work. This information is helpful when

one assesses the extent to which a local area can

sustain rapid employment growth without substantial inmigration.

Each major section reporting the study's results is

introduced by a summary of the section's major

points.

Background

Between 1960 and 1970, population in nonmetro

areas grew 4.4 percent, whereas that in metro

areas grew 17 percent. Conversely, between 1970

and 1980, nonmetro areas grew by 15,8 percent,

compared with 9.8 percent in metro areas. Although

464 nonmetro counties continued losing population

in the seventies, this figure represents a substantial

decline from the 1,296 counties that lost population

during the sixties.^ More than 80 percent of the

nonmetro counties gained population in the seventies, whereas less than 50 percent had gained

population in the sixties.

Employment, environmental, and cultural aspects of

nonmetro areas have facilitated, if not caused, the

rural turnaround. Employment growth, the perceived

quality of rural living, dissatisfaction with the urban environment, and the narrowing of urban-rural

gaps (in income levels, housing quality, communication, educational facilities, and other community

services] combine to form the magnets drawing people to rural areas f3, 9J.

*The authors are economists with the Economic Development

Division.

^ItaUcized numbers in parentheses refer to items in the reference section.

^Based on the 1974 definition of Standard MetropoHtan Statistical Areas.
Daherkow, Larson, Coltrane, and Carlin

The growing number of job opportunities in nonmetro areas is a major force encouraging metro-tononmetro migration while slowing nonmetro-to-metro

migration, a common feature during the fifties and

sixties. Wage and salary employment grew by over

27 percent in nonmetro areas in the seventies compared with a 21-percent growth rate in metro areas

[40). In every major industrial sector—manufacturing,

services, and government—employment growth in

nonmetro areas exceeded growth in metro areas

between 1969 and 1979. Nonmetro growth in manufacturing employment was a dramatic 22 percent,

compared with a 5-percent metro growth. Government employment at the State and local level grew

faster in nonmetro areas than in metro areas, and

service employment grew over 40 percent in nonmetro counties compared v^ith 35 percent in metro

areas. The decentralization of manufacturing contributed to this nonmetro employment growth [14],

Recent rapid expansion of service jobs in nonmetro

areas is partly a response to earlier growth in manufacturing and mining employment. The following

factors combine to make nonmetro areas attractive

locations for job formation: a ready source of workers, positive attitudes of workers about work, lower

wage rates, less unionization, improved transportation and communication resources, and lower tax

and land costs [3, 31].

Recent rural development pohcy has focused on programs to increase employment opportunities and

generate income in rural areas. The Rural Developnent Act of 1972 and the Rural Development Policy

\ct of 1980 had expHcit goals for creating jobs and

ncreasing incomes of rural residents. These goals

vere to be attained by subsidizing capital, providing

iducation programs for rural people, and improving

lelivery of Federal programs to rural areas. Some

:ritics have questioned the need for and the success

if pubhc poUcy in influencing spatial distribution of

îconomic activity, particularly the rural turnaround

)f the seventies. But, the extent to which policy

joals are met remains a vital part of the evaluation

)f rural development f9, 12, 26], In other words, regardless of the extent of public involvement, are

obs created and incomes raised for targeted populations as an area's economy grows?

Past studies offer confhcting evidence on the distribution of economic benefits among rural residents

that resuh from rural employment growth or industrialization (17, 32, 33, 34j. Inmigration and incommuting are almost universa! responses to employment

growth in rural areas. Inmigrants compete with

long-term residents for new jobs. Estimates of new

jobs taken by inmigrants range from 19 percent to

nearly 50 percent [15, 21, 24, 28, 30].' Studies show

that inmigrants tend to be younger and better educated and to have higher skill levels than do long-term

residents; thus, they have a comparative advantage

in the local labor market [4, 24]. Some new jobs

were taken exclusively by inmigrants, incommuters,

or experienced local workers rather than by less

experienced local workers [5].

Some groups, such as the elderly living on small,

fixed incomes and female heads of households, were

found to be worse off after industrialization [4, 11,

32]. Total, median, and per capita income typically

increased as employment growth occurred, but the

distribution of income was not always more equitable

(21, 26],

Research has provided few conclusions on the impacts of rural industriahzation on employment and

income distribution among population groups. EarUer

studies often omitted critical issues, used inadequate methodology, or lacked a comprehensive analytical approach, resulting in conflicting conclusions.

Our study attempts to resolve some of these issues.

Nonmetro economies are diverse. The type of industry locating in nonmetro areas apparently influences

the distribution of employment among specific population groups f22J. Thus, the distribution of benefits

in agriculture- or mining-based economies is expected

to differ from those economies based on manufacturing or recreation and from those areas heavily

populated by retirees. To hold as many variables

constant as possible, one must investigate each of

the most common types of rural economies. These

separate studies taken together provide an overview

of population and employment growth in nonmetro

areas. Our study concentrates on one type of economy frequently found in nonmetro areas—that is,

a rapidly growing area with a manufacturing base.

The Economic Development Division will conduct

subsequent studies in areas with an agriculturemanufacturing mixed economy and with a recreationand retirement-based economy.

Study Area

A nine-county area (Russell, Clinton, Pulaski, Wayne,

Laurel, McCreary, Clay, Knox, and Whitley) in south

^Incommuting, inmigration, reduced outcommuting, and lack of

workers to fill job vacancies are factors leading to overestimates

of direct and indirect employment and income effects on long-term

residents in rural areas experiencing rapid job growth (29j.
Distribution of Employment Growth in

Nine Kentucky Counties.' A Case Study

central Kentucky was selected as the study site

(see figure). We used three criteria in selecting this

study site. First, the area had to have experienced a

population and employment growth rate in the upper quintile for all nonmetro counties during 1970-

75, That is, the study site had to be one of the most

rapidly growing nonmetro areas. Second, the area's

economy had to be based predominantly on manufacturing. Manufacturing was an important source

of past nonmetro employment growth and is one of

historical public policy interest [12, 17], Third, the

boundaries of the study area were to coincide with

the local labor market, thus minimizing incommuting

and outcommuting. This last criterion increased the

probability that individuals employed in the area

would also reside in the area, thus assuring an

analysis of the distribution of employment growth

among different segments of the resident population.

Clay, Knox, Whitley, and Laurel counties lie on the

southwestern edge of the eastern Kentucky coal

fields. The Daniel Boone National Forest transverses

the area in a north-south direction through McCreary,

Whitley, Laurel, and Pulaski counties. Clinton, Russell, Wayne, and most of Pulaski County are west of

the National Forest, are moderately hilly, and include Lake Cumberland. Local agriculture has historically been dominated by a large number of small

farms. Since 1950, eight of the nine counties have

been among the lower income nonmetro counties in

the United States.

About 226,800 people resided in the area in 1980

f38j. The area has experienced a nearly 30-percent

population growth since 1970, more than 2.5 times

the national population growth rate for the decade.

In contrast, during the sixties, the study area lost

about 2 percent of its population. The population resides in small towns and in the open country. Somerset, with 11,000 residents, is the largest town.

The nearest metro areas—Knoxville, Tenn., and

Lexington, Ky.—are about 80 miles away.

Total employment in the area increased 44 percent

between 1970 and 1979 f40j. Industries with the

largest employment growth in the seventies were

manufacturing, wholesale-retail trade, mining, and

services. Although the service sector has grown

considerably, the local economy still depends heavily on manufacturing.

Survey Design

The survey design differs greatly from those used in

previous studies. In previous studies, one could not

trace employment and income growth directly from

employers that created jobs to the individuals they

Nine-County Kentucky Study Site

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Daherkow, Larson, Coltrane, and Carlin

employed. The survey design in this study assured a

direct link between the employing unit and workers

and their households. This linkage necessitated two

surveys. The first survey focused on private establishments and public agencies that provided employment opportunities. The second survey involved

households and household members who were employed in the surveyed establishments.

Both these surveys provide the most recent data

available on the characteristics of rural employees

linked with information about their employers. Data

were collected from 1979 through the beginning of

1980, and only preliminary findings were available

until 1982 f35J. This report presents a more extensive analysis of the data.

The sample of employers was drawn from a list of

establishments compiled from information provided

by the Kentucky State Employment Security Office,

telephone books, records of local governments, and

other sources. To ensure a representative sample by

type of unit, we stratified the list by industry type

and number of workers.^ A sample of employers

within each stratum was randomly chosen for a personal interview. To account for incompleteness of

the employer list, enumerators interviewed a stratified area frame sample of establishments not on the

list. Combining the two frames gave total estimates

of the employer characteristics of the study area.

We designed the questionnaires, administered in

December of 1979 to both list and area frame businesses, to obtain private establishment and government agency data on the following: type of organization, current and 1974 employment levels, date the

unit began operation in the study area, occupational

structure of the unit, number of full-time and parttime employees, number of male and female employees, wages by occupation, fringe benefits, sources

of new hires, and participation in public economic

development and worker training programs.

An important requirement of the study was to link

or cross-reference information on the characteristics of business units and government agencies (size,

type, change in employment, and date established]

and on the characteristics of their workers (age,

sex, work experience, education, residency status,

and household income). Those employers in the hst

frame sample were asked to provide a current list

of the unit's employees.^ Enumerators selected a

random sample of employee names with addresses

from the list and later conducted a personal interview at the employee's residence, using the household questionnaire. Hence, all employees selected

for interview were linked to their employer.

The employee and household members, aged 16

years and older, were asked to provide demographic

data such as age, sex, and education; current and

historical employment information; residence history;

and the extent of participation in selected welfare

and training programs. The employer and household

surveys represented a comprehensive sample of the

local labor market and provided a 5-year historical

perspective of the study area as it underwent rapid

growth and development.' We used the data linking

employers and employees to answer employment

distribution questions wherever appropriate.

Enumerators used an area frame sample to obtain

information from those households not having an

employee in one of the units that appeared on the

list of establishments. These households included

those where all members were unemployed, out of

the labor force, employed in establishments not on

the list, or employed outside the study area. The list

and area establishment and household sample frames

together represented the study area's entire

population.

Because the data were derived from a survey rather

than a census, all estimates of totals, proportions,

and means in this report are subject to sampling error. Even though a given estimate differs between

two or more subpopulations or variables, the differences may not be statistically significant due to

sampling variation. Statements of comparison in the

text are based on differences statistically significant at the 95-percent confidence level, unless

otherwise noted. When there are fewer than 30

sampled establishments, households, or persons

associated with a given attri^bute, statistical testing

was not attempted. The tables show when establishment, household, and person estimates are based on

fewer than 10 sample observations. Such estimates

typically have extremely large standard errors and

should be interpreted with care. However, for most

estimates, the coefficient of variation does not exceed 15 percent. Appendix B explains the statistical

tests.

^See appendix A for more detail on survey design and procedure.

^A list of employees was not obtained from establishments interviewed in the area frame part of the survey.

*^The survey was conducted in December 1979 and January

1980. All respondents were asked to recall data back to 1974.

However, a complete picture of the area's 1974 labor market cannot be produced, as some of the estabhshments or Individuals in

the area in 1974 have gone out of business, died, or moved from

the area.
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

Study Area's Economy and People

Manufacturing was the major driving force of the

area's economy, providing jobs for a third of all employed persons at the time of the survey. The trades

and service sectors (private and government)

developed after the manufacturing sector and were

the major sources of new jobs. Most establishments

were small, but a few large units accounted for

over two-thirds of wage and salary jobs. Wage

levels were generally well below national levels.

About 20 percent of all the jobs identified in 1979

were jobs that had been added since 1974. Of these

new jobs, half were in new units that began operations after 1974.

The study area's rates of population and employment growth were large during the seventies, and

reverse migration flows were typical of those reported for other nonmetro areas. Most inmigrants

had lived in the area prior to 1965, moved away,

and then returned. Females and youth particularly

benefited from rapid job expansion. Major economic

indicators suggest the area still has income and employment problems despite impressive employment

growth rates.

The following discussion elaborates on these survey

results.

Industrial Structure

Data from the establishment survey represent an estimated 4,280 private-sector establishments and 220

government units in the study area (table 1). The

private-sector employment mix in the study area is

similar to aggregate U.S. nonmetro employment by

major industry group [27]. The proportion of the

area's total employment in government is also similar to that of all nonmetro areas.

Manufacturing provided more wage and salary jobs

in the area than any other industrial sector, and its

annual payroll exceeded that of any other sector.

The manufacturing sector included plants producing

apparel, textiles, wood products, primary and fabricated metal products, processed food, and electrical

and nonelectrical machinery. Although manufacturing was the major economic driving force in the

area, about two-thirds of total employment was in

the trades, services, and government sectors.

About 75 percent of all manufacturing establishments in the area in December 1979 were operating

under their current management in 1970. Only 57

percent of the trade and service units were in business at that time. This sequencing of growth parallels

the stages of growth for nonmetro areas in general.

Coal mining was important only at the eastern edge

of the area, and agriculture was comprised mostly

of small, part-time farms. Neither coal mining nor

agriculture provided more than a modest amount of

full-time employment. Most private-sector trade and

service establishments and government units were

in business to provide services to the area's businesses and people.

About 92 percent of the establishments were small,

employing fewer than 20 workers. But, these small

units had 32 percent of the wage and salary jobs.

Thus, a few large establishments, those employing

20 or more workers, provided about 68 percent of

the wage and salary jobs. Manufacturing employers

were generally large, employing an average of 92

workers. Over 75 percent of the government units

were small, but most of government employment

was in large units—for example, public school

systems and the State Highway Department's regional offices. Most employers in the private service

sector were small, employing an average of about

eight workers per unit.

The local area's economy offered a variety of jobs.

About 9 percent were held by self-employed workers.^

Wage and salary jobs represented the remainder.

About 15 percent of these wage and salary jobs

were held by executives, managers, and administrators. These occupations were more

prevalent in government units than in the private

sector. Of the wage and salary jobs, 44 percent

were in production and related occupations, indicating the area's manufacturing base. The rest

were in technical occupations, and most were in the

private service sector.^

Wage levels of most area establishments were below the national wage level. Wages paid full-time

workers averaged $201 per week, compared with

^Self-employed farmers are not included in table 1. They were

surveyed only through the household survey; thus, farm operators

are not included in the estabUshment data.

^See glossary for details about the specific occupations making

up each aggregate group. All occupational aggregations were

based on the groupings found in the 1977 Standard Occupational

Classification Manual [41].
Daberkow, Larson, Coltrone, and Carlin

Table 1—Distribution of estimated establishments and employment, by selected characteristics, December 1979

Establishments

Employment

Item Total Wage and salary

Number Percent Number Percent Number Percent

Total 4,500 100.0 53,510 100.0 48.510 100.0

Type of establishment:

Goods-producing

Construction, mining

Manufacturing

550

390

160

12.2

8.7

3.5

17,870

2,940

14,930

33.4

5.5

27.9

17,260

2,500

14,760

35.6

5.2

30.4

Services-producing

Wholesale, retail trade

TCPU, FIRE'

Other services^

3,730

2,140

480

1,110

82.9

47.5

10.7

24.7

25,580

16,320

3,260

6,000

47.8

30.5

6.1

11.2

21,190

13,450

2.940

4,800

43.7

27.7

6.1

9.9

Government^ 220 4.9 10.060 18.8 10,060 20.7

Size of establishment:

1-19 paid employees

20 or more paid employees

No paid employees^

2,970

350

1,180

66.0

7.8

26.2

18,770

33,100

1,640

35.1

61.9

3.0

15,580

32.930

32.1

67.9

— = Not applicable,

'TCPU is transportation, communications, and public utilities. FIRE is finance, insurance, and real estate.

^See glossary.

the national average of $220 per week paid by private-sector industries f42J,^ Weekly wages differed

markedly by type of establishment and by employers

within the same industry. Of the employers having one

or more full-time workers, 60 percent were low-wage

units; 20 percent fell into the mean-wage category;

and 20 percent were high-wage units (table 2).^°

Across the three wage categories, full-time wage

and salary jobs were distributed differently than

were employers. Workers in government units tended toward the mean- and high-wage categories;

workers in goods-producing industries were more

^Although methods used to estimate area and national wages

differ, the difference was judged not serious enough to prohibit

the comparison. An industry wage level for nonmetro areas is not

available.

'"The wage classification, low-, mean-, and high-wage refers to

relative wage levels of estabUshments in the area only. The classification is not intended to indicate wage differences of establishments within and outside the area. Full-time employees in low-wage

establishments were paid weekly wages averaging less than $181;

full-time employees in mean-wage establishments were paid average weekly wages of $181 to $221; and in high-wage establishments, full-time employees were paid wages averaging more than

$221 per week.

prevalent in the mean-wage group; and private service sector workers fell generally in the low-wage

category. Yet, among the goods-producing employers,

half the manufacturing jobs fell in the mean-wage

class, whereas 65 percent of construction and mining jobs were in the high-wage group. Private service employers also displayed a large range in

wages. Transportation, communications, and public

utilities (TCPU) and finance, insurance, and real

estate (FIRE] jobs were more prevalent in the highwage class, whereas trade and other service jobs

were concentrated in the low-wage class.

About a fifth of the wage and salary, jobs (10,850)

existing in 1979 were created after 1974 (table 3],

About half of these new jobs were in establishments

starting operations in the previous 5 years, and half

were in older units. A fourth of the private-sector

establishments surveyed in 1979 did not exist in

1974." New job growth was primarily in the private

'^information was collected only from employers in operation at

the time of the survey. No data were obtained from employers in

operation in 1974, but not in operation between 1974 and the time

of the survey, or from employers starting and ending operations

between 1974 and December 1979.
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Table 2—Average weekly wage levels of full-time wage and salary workers

in private-sector establishments and government units, December 1979

Type of industry

Wage level' Goods-producing Services-producing

Total

Total

Mining and

construction Manufacturing Total

Wholesale,

retail trade

TCPU and

FIRE^

Other

services^

Government^

Establishment^ 3,000

Low-wage (less than $181 per week) 60.0

Mean-wage ($181-$221 per week) 20.3

High-wage (more than $ 2 21 per week) 19.7

470

57.4

21.3

21.3

Full-time wage and salary workers' 42,040 16,940

Low-wage (less than $181 per week) 38.8

Mean-wage ($181-$221 per week) 36.0

High-wage (more than $ 2 21 per week) 25.2

310

48.4

22.6^

29.0

2,280

34.4 20.2

46.1 14.4'

19,5 65.4

160

75.0

18.8

6.2^

14,660

36.6

51.0

12.4«

Number

2,310 1,330

Perceni

63.6 67.7

19.5 19.5

16.9 12.8

Number

16,480 9,910

Percent

55.9 59.5

23.1 22.2

21.0 18.3

390

38.5

20.5'

41.0

2,620

26.0

32.7«

41.3

590

71.2

18.6^

10.2'

3.950

66.6

18.9«

14.5«

220

27.3

27.3

45.4

8,620

14.6

40.9

44.5

'Represents workers working 30 or more hours per week.

^TCPU is transportation, communications, and public utilities; FIRE is finance, insurance, and real estate.

^See glossary.

includes only establishments with full-time wage and salary workers.

'Estimate based on fewer than 10 unweighted establishment observations.

""Estimate of workers based on fewer than 10 unweighted establishment observations.

service sector and in large units with 20 or more

paid employees. About a third of the new establishments had no paid employees at the time of the survey. Self-employed owners and/or partners comprised the employment in these units.

Across all industries, 50 percent of the new job

growth was in new establishments. But, 77 percent

of the new jobs in the private service sector were in

new units. In contrast, only 18 percent of the new

employment growth in the goods-producing sector

came from new establishments. Although no new

government units were created after 1974, about 14

percent of the area's job growth was in the government sector. Job growth in old establishments (those

operating in the area in 1974) was primarily in

large units, in low- and mean-wage units, and in

goods-producing units. Over half the establishments

interviewed had no employment increase from 1974

to 1979.

Area Residents

Data from the surveyed households represent about

61,500 households and nearly 175,000 persons (table 4). About 99 percent of the population was white

and non-Hispanic in origin. Almost three-fourths

was of labor force age; that is, 16 or more years

old. The age structure of the area closely resembled

that of the Nation and of Kentucky.

Most of the adult population were long-term residents; that is, they had lived in the area continuously since 1964. About 25 percent of the adult

population moved to the area after January 1, 1965;

over 50 percent of these moved in after January 1,

1975. About 70 percent of all inmigrants were return migrants; that is, they had lived in the area

sometime prior to 1965, moved away, and then returned after 1965.

Household size in the nine-county area averaged 2.8

persons, similar to that for all nonmetro areas.

Households averaged 1.1 income earners, which

was below the national average of 1.6 [39]. The

mean household income in 1979 was about $12,000,

over $5,000 less than that for all U.S. nonmetro

households [37], About 28 percent of households surveyed were classed as poor in 1979, considerably

higher than the 13.6-percent level for all U.S. non-
Daherkow, Larson, Coltrane, and Carhn

Table 3—Employment change, by selected establishment characteristics, 1974-79

Employment change by:

NewCharacteristic jobs

in 1979 since

1974^

New

estabUshments,

1974-79

EstabUshments

increasing

employment,

1974-79

Establishments

decreasing or

not changing

employment,

1974-79

Number

Total wage and salary jobs 10,850 5,330 7,560 - 2,040

Jobs in—

Establishments by

wage category:^

Low-wage 5,850 3,580 2,990 -720

Mean-wage 3,250 860 2,650 -260

High-wage 1,780 820 1,830 -870

No full-time workers -30 70 90 -190

Establishments by type:

Goods-producing^ 3,200 590 3,490 -880

Services-producing' 6,170 4,740 2,330 -900

Government^ 1,480 0 1,740 -260

Establishments with:

1-19 paid employees 3,450 2,460 1,730 -740

20 or more paid employees 7,490 2,870^ 5,830 -1,210

No paid employees^ -90 — — -90

— = Not applicable.

^Employment for 1974 and 1979 is based on establishments in the study area during December 1979, but excludes the 530 ongoing establishments starting under new management or new ownership during the 1975-79 period, for which 1974 employment data are not available (see

table 5). 'Based on average wages paid to full-time workers working 30 hours or more per week. ^See glossary. ^Estimate based

on fbwer than 10 unweighted establishment observations.

metro areas in 1979 (36^^ The below-average number of income earners per household probably contributed to the relatively low household income level.

Slightly over half of the January 1980 adult population was in the labor force, either working or looking for work (table 5). The balance had no direct

attachment to the labor force. Most of the employed

worked at jobs within the nine-county area. Only

3,700 persons, or 6.3 percent of the employed, commuted to jobs outside the area. Males in the study

area had a much higher labor force participation

rate than females, but both male and female labor

force participation was below the rate for all nonmetro males and females [27]. Most employed persons were single job holders and were employed as

wage and salary workers. Only 10 percent of the

'We used the Bureau of the Census' standard poverty thresholds for 1979 to determine the poverty status of the surveyed

households.

employed listed farming as either a primary or a

secondary job, and only 7 percent were classed as

multiple job holders at the time of the survey.

About 20,700 persons were recent entrants to the

labor force; that is, they were employed sometime in

1979, but they were not in the labor force in 1974.

The majority of these recent entrants were females

and youth.^^ Recent female entrants were older than

recent male entrants. Most males entering the labor

force had just reached working age or had just finished school. The rapid entry of females into the

area^s labor force parallels that observed in other

nonmetro areas during the seventies [27].

About 11 percent of the labor force in the nine-county

area was unemployed, a rate higher than in all nonmetro areas [27]. The unemployment rate was about

^^Youth were defined as those adiilts 16-24 years of age at the

time of the survey.
Table 4—Study area population, January 1980

Item Unit

Estimated total persons

Persons, by years of age:

Under 6

6-10

11-15

16-24

25-34

35-54

55-64

65 and over

Adult population,

older

16 years and

Residency status:^

Long-term resident

Inmigrant

Early inmigrant

Recent inmigrant

Return inmigrant

New inmigrant

Estimated households

Mean household income

Mean per capita household

income^

Percent

do.

do.

do.

do.

do,

do.

do.

do.

do.

Percent

do.

do.

do.

Number

Dollars

do.

Amount

Number 174,930

8.7

8.9

8.5

14.7

15.4

21.6

9.7

12.5

Number 129,280

95,220

34,060

48.8

51.2

71.0

29.0

61,520

11,980

4,840

'See glossary for distinctions based on residency status.

Total household income divided by number of members in the

household at time of the survey.

Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Table 5—Labor force status of adult population,

fanuary 1980

Item Unit Amount

Adult population

Labor force

Employed^

Unemployed

Not in labor force

Labor force participation rate

Unemployment rate

Males

Labor force

Employed^

Unemployed

Not in labor force

Labor force participation rate Percent 66.7

Unemployment rate do. 11.3

Number 129,280

do. 65,950

do. 58,620

do. 7,330

do. 63,330

Percent 51.0

do. 11.1

Number 62,380

do. 41.620

do. 36,930

do. 4,690

do. 20,760

Number 66,900

do. 24.330

do. 21.690

do. 2,640

do. 42,570

Females

Labor force

Employed^

Unemployed

Not in labor force

Labor force participation rate Percent 36.4

Unemployment rate do. 10.9

'Employed is equivalent to the number of employed individuals

estimated from the household survey, as opposed to the number of

jobs estimated from the establishment survey.

the same for both males and females. However, the

unemployment rate among recent inmigrants was

twice that of long-term residents, suggesting that

some recent inmigrants had not totally adjusted to

the area's labor market situation.

Employment Growth

The area's service estabUshments provided nearly

twice as many new jobs as goods-producing establishments between 1974 and 1979. The public sector

added 14 percent of the new jobs after 1974, Thus,

the Kentucky area appears to follow the national

trend toward a service-oriented economy.

Survey results provided three major insights on the

nature of employers creating jobs in the nine-county

Kentucky area over the 5-year period. First, only 40

percent of the area's employers contributed to job

expansion. Establishments expanding employment

were generally in the private service sector, had

less than 20 paid employees, and paid relatively low

wages. However, large establishments provided

most of the new jobs.

Second, half the new jobs created were provided by

new estabhshments and half were provided by ongoing units. New and ongoing units differed both in

the characteristics of the employer and in the types

of jobs offered. Most new establishments were in

the private service sector, had few employees, and

paid full-time workers relatively low wages. These

new units relied heavily on part-time employment

and provided proportionally more employment in

technical, marketing, sales, clerical, and service occupations. By contrast, job opportunities in expanding ongoing units were in larger units that hired
Daberkow, Larson, Coltrane, and Carlin

primarily full-time workers and engaged in goods

production.

Finally, branch establishments with headquarters

outside the study area created about a third of all

new jobs, a proportion close to their share of total

employment. Although no single large firm dominated the manufacturing sector, the manufacturing

sector could be most affected by decisions regarding employment levels and plant location that firms

headquartered outside the area made.

The following discussion elaborates on these survey

results.

units employed fewer than 20 workers or had no

paid employees. Those new establishments with

wage and salary employees paid their full-time

workers low wages compared with other area

employers. Another 20 percent of the area's

establishments were in business in 1974, and they

showed employment gains between 1974 and 1979.

Most of these expanding units were also in the

private service sector. About 12 percent of all

establishments could not provide information on

their operations in 1974; thus, their contribution to

job growth could not be assessed. The remaining 48

percent were in business in 1974, but employment

either did not change or declined. The vast majority

of this last group reported no employment change

between 1974 and 1979.

Sources and Distribution of New Jobs

Generating jobs has been called the heart of development in rural areas [34]. However, neither the

process by which jobs are created nor the types of

establishments which create job opportunities are

well documented f6J. Several studies have used aggregate firm or establishment data to identify sources

of employment growth by employment size, age of

firm, and ownership structure by industry [1, 6]. Results from these studies are inconclusive on the

types of establishments that create jobs [7],

New and expanding establishments were sources of

new jobs in the study area. These two sources of

new employment were offset by establishment contractions and closings. As this process netted new

jobs, it created employment opportunities both for

new labor force entrants and for workers displaced

from contracting, moving, or dying units.

Establishment age and employment growth varied

considerably among the surveyed units. Some establishments had started operations in the area for the

first time after 1974; others were in business in

1974 and had employment increases; and others in

business in 1974 either did not change or declined

in employment. At least one other study found that

the life cycle of many firms starts wdth only a few

employees, increases employment as the firm ages,

and then enters a stable employment period [6]. In

this latter stage, mature firms do not contribute

much to an area's employment growth.

About 20 percent of the establishments in the study

area were new; that is, they started local operations between 1974 and 1979 (table 6). Most new

units were in the private service sector. The new

Other research has shown that new establishments

are not solely responsible for job creation and that

public policy should not overlook the contribution of

ongoing units to employment growth [16]. The results

of the Kentucky study support this conclusion. The

net increase in the number of jobs was about equally

divided between new and ongoing establishments

(table 3p^

Over half the new jobs were added in the private

service sector. For each new job added in goodsproducing industries, about two were added in service establishments. The dramatic increase in new

service sector jobs reflects changes in the Nation

and in nonmetro areas in general [27]. Manufacturing growth in the area in the sixties may have peaked

in the middle and late seventies. As the exportoriented manufacturing base grew in the sixties and

seventies, the service sector expanded in response

to demand from manufacturing firms and demand

for services from a growing population. Manufacturing still seems the major growth stimulus, but the

study area may follow the national trend toward a

service-oriented economy fl2J.

There is major controversy among industry analysts

over the relative contribution of small and large

firms to job creation [1, 6]. In the Kentucky study

area, establishments with 20 or more employees accounted for only 8 percent of the total units, but

had about 62 percent of the area's nonfarm employ-

^*The survey results would not permit a complete analysis of net

job creation because information on establishment deaths was not

available. In addition, managers of those 530 establishments

which had come under new ownership or management were uncertain of their establishment's employment in 1974.

10
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Table 6—Establishments, by selected characteristics, 1979

Characteristic Establishments

New

estabUshments,

1974-79

Estabhshments

increasing

employment,

1974-79

Establishments

decreasing or

not changing

employment,

1974-79

Estabhshments

for which 1974

information

was not

available^

Number

Total 4,500 890 890

Percent

2,190 530

Wage category of estabhshment:^

Low-wage

Mean-wage

High-wage

No full-time workers

40.0

13.6

13.1

33.3

37.1

11.2

9.0

42.7

46.1

24.7

20.2

9.0.

38.8

11.0

13.7

36.5

39.6

9.4^

5.7^

45.3

Type of establishment:

Goods»producing^

Services^producing^

Government*

12.2

82.9

4.9

10.1

89.9

0

16.9

71.9

11.2

12.3

82.2

5.5

5.7^

94.3

0

Size of establishment in 1979:

1-19 paid employees

20 or more paid employees

No paid employees*

66.0

7,8

26.2

56.2

7.9^

35.9

83.1

16.9

0

62.6

5.9

31.5

67.9

0

32.1

These establishments changed ownership or management between 1974 and 1979. The 1974 employment was not available for these

establishments. ^Based on average wages paid to full-time workers working 30 or more hours per week, ^Estimate based on fewer

than 10 unweighted establishment observations. ''See glossary.

ment. These same large establishments contributed

about 70 percent of the new jobs during 1974-79.

Although large establishments created most of the

new jobs, they added new jobs in about the same

proportion as their share of employment. This result

is similar to the conclusion of the study by Armington and others [1] and contrasts with that by Birch

[6] who found that small establishments account for

nearly two-thirds of all new employment even though

small units account for less than one-third of total

employment.

The survey results show that new establishments

were important in job creation and that most jobs in

the new units were in the private-service sector.

The type of jobs created is also an important element in the economic development process. Because

the type of job is not only important to the vitality of

the local economy but also to the economic wellbeing of the work force, we compared the characteristics of workers and jobs in new and ongoing

establishments to determine whether significant differences existed.

The attributes of the new and ongoing establishments include occupations, wage levels, full- and

part-time workers, employment size, and distribution of employees by sex (table 7). Compared with

ongoing establishments, new units—particularly the

new service establishments—offered proportionately more job opportunities for part-time employment and for employment in technical, marketing,

sales, clerical, and service occupations. Wages paid

to workers in these occupations were also significantly lower in the new establishments. The average weekly wages paid workers in production and

related occupations were significantly higher in

new establishments than in ongoing units, but the

ongoing units had a significantly larger share of

their employment in production-type jobs. The average weekly wage of all full-time workers did not differ

significantly between new and ongoing establishments. Jobs offered in ongoing units which expanded

employment during the 1974-79 period were primarily full-time, predominantly in large units and in

units engaged in goods production. About half the

jobs in ongoing expanding units were in production

occupations.

11
Daberkow, Larson, Coltrane. and CarJin

Table 7—Selected characteristics of wage and salary workers in new and ongoing establishments, 1979

Itemi All New

Ongoing establishments

es.abll»hn,e„U »».ablistaenU ^^¿P-/^"«, "^.p^"*!?

Total wage and salary

workers 48,510

Number

5,330 27,940 15,240

Percent

Male

Female

Full-time workers

Part-time workers

Wage and salary workers

in establishments with:

1-19 paid employees

20 or more paid employees

Wage and salary workers in:

Goods-producing establishments

Services-producing establishments

Government

Wage and salary workers by

occupation:

Executive, administrative,

managerial, professional

Technical, marketing, sales,

clerical, service

Production and related

occupations

Average weekly wage of all

estabhshments' 201

53.4

46.6

49.5

50.5

49.6

50.4

62.8

38.2

86.7

13.3

59.1

40.9

91.6

8.4

87.4

12.6

32.1

67.9

46.2

53.8^

18.9

81.1

51.4

48.6

35.6

43.7

20.7

11.1

88.9

0

46.3

28.2

25.5

24.5

56.3

19.2

15.7 7.9 18.7 13.0

40.8 66.4 33.0 46.1

43.5 25.7 48.3 40.9

DoJJars

183 207 194

Average weekly wage, by

occupation:^

Executive, administrative,

managerial, professional 298 268^ 298 308

Technical, marketing, sales,

clerical, service 155 130 162 163

Production and related occupations 197 231 199 196

*See glossary for definitions, ^Includes 530 establishments with new management or ownership between 1975 and 1979.

^Estimate based on fewer than 10 unweighted estabhshment observations. ''Based on wages received by full-time workers

in private-sector establishments and government units.

The new establishments, which were primarily

service-oriented, relied heavily on part-time employment. This feature gave the new units-greater flexibility in responding to changing economic conditions,

but it also meant that workers tended to work fewer

hours per week compared with workers in ongoing

units. Thus, a large proportion oi all employees in

new establishments had reduced average weekly

wages.^^

'^Average weekly wage data are available only for full-time

workers.

12
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Total nonfarm employment in the services-producing

establishments did not differ significantly from employment in the goods-producing industries in 1979,

but the service units provided nearly twice as many

nevy^ jobs as the goods-producing sector between

1974 and 1979. This trend toward a service-oriented

economy is similar to the nationwide trend. Governments provided about 20 percent of total employment in 1979, but this sector added less than 15

percent of the new jobs since 1974.

Influence of Multiestablishment Firms

Branch units of multiestablishment firms employ a

significant part of the labor force in several nonmetro areas, and they play an important role in creating jobs [6, 13], Multiestablishment firms interest

pohcy officials partly because they supply many of

the jobs in nonmetro areas. Officials are concerned

that the absentee owners of branch establishments

seem more likely to move from areas with less regard

for community welfare than do owners of locally

owned plants, particuarly when economic conditions

warrant such a move [2], Smith and Summers point

out that: "While this speaks well for the superior

organizational longevity of multiple location firms, it

also points to the limited ability of the local community to control or influence decisions made by absentee owners of industry that influence longevity

and stability of branch plants" [29],

Branch units with headquarters outside the Kentucky study area accounted for over 40 percent of

private-sector employment, but no single firm dominated the economy (table 8). However, branch units

in the goods-producing sector with headquarters

outside the study area were the most vulnerable to

employment decisions by outside groups. These establishments had 66 percent of the total employment

in the goods-producing sector.^^ In comparison, only

23 percent of those employed in the private service

sector worked for multiestablishment firms with

headquarters outside the study area.

The manufacturing sector in the study area appears

susceptible to decisions about employment and plant

location made at headquarter locations outside the

area. Because the service sector has developed primarily to provide services to local firms and population, major changes in employment by a few large

I'^The survey did not provide information on actual establishment closings. Therefore, we could not compare the relative rate

of closings of estabUshments with headquarters outside the area.

manufacturing firms can affect the overall economy.

But, because there are many large multiestablishment employers in the area, the decisions of a single

multiestablishment firm will likely have much less

impact on the local economy than it would if it were

the only large employer in the area.

Branch establishments are usually the largest employers in nonmetro areas. Thus, if local leaders

can attract such a branch establishment to their

community, job opportunities grow much faster than

if a single-establishment firm opens. However, the

area's economy will likely depend more on decisions

made outside the local area regarding employment.

Of the establishments surveyed in the study area,

single units had about 6 employees per firm,

whereas branch units with headquarters outside

the area averaged 42 employees. The difference is

even greater if one makes a similar comparison by

industry. Each multiestablishment branch averaged

229 employees in the goods-producing industries

and nearly 14 employees in the service sector.

Single-establishment firms employed an average of

only 9 employees and 4,5 employees in the goodsproducing and service sectors, respectively. Both

branch establishments and single establishment

firms were important contributors to the area's

employment growth. Branch units of firms with

headquarters outside the Kentucky study area were

estimated to have created about a third of all new

jobs, roughly corresponding to their share of total

employment in the area.

Employed Workers

The area's long-term residents were able to find employment at about the same rate as were inmigrants. However, early inmigrants had higher average wages than did either long-term residents or recent inmigrants. Proportionately more long-term residents than inmigrants were employed in low-wage

establishments. Relatively more inmigrants held jobs

in mean-wage units, but neither residency group

had a job advantage in high-wage establishments.

There was no significant difference in the rate at

which long-term residents and inmigrants were

employed in new establishments, but inmigrants

were employed at a greater rate than long-term

residents in growth establishments.

Women, youth, and persons with little labor force

experience (recent entrants) were able to take advantage of job growth in the area. Women held

13
Daherkow, Larson, Coltrane, and Carlin

Table 8—Estimated number of private-sector establishments and employment, by location of headquarters,

1979

Type of

establishment

All private-sector establishments

Single establishments

Multiestablishments

Headquarters in area

Headquarters not in area

Total

Type of industry

Goods-producing

Establish- Employments ment

Services-p

EstabHshments

reducing

EstablishmentsEmployment

Employment

Number

4,280 38,450 570 17,270

Percent

3,710 21,180

85.8

14.2

5.1

9.1

49.3

50.7

8.3

42.4

84.2 26.1

15.8 73.9

7.0^ 7.6^

8.8 66.3

86.0

14.0

4.9

9.1

68.2

31.8

8.9

22.9

'Estimate based on fewer than 10 unweighted estabhshment observations.

more professional jobs (for example, teachers) in

the public sector w^hereas men more often held

executive or administrative positions. Few v^romen

held jobs in mining and construction, but over half

the production jobs were filled by women. Women

wage workers were more likely than men to hold

part-time jobs, and their average weekly earnings

were substantially lower. Youth in the study area

tended to hold lower paying jobs and were more

likely to work part-time than were older workers.

Recent entrants were primarily youth and women,

and they were concentrated in technical, marketing,

sales, clerical, and service occupations. These occupations corresponded to the job opportunities created by the area's new and expanding serviceproducing industries.

Discussions about the relative merit of policies designed to stimulate rural employment growth often

focus on the question of who benefits from industrial growth in rural areas [24, 26, 29, 32, 34]. Understanding who benefits involves examining how jobs

are distributed among the population subgroups.

The following discussion focuses on five specific

subgroups in the Kentucky study area: long-term

residents, women, youth, elderly, and recent entrants to the labor force.

Residency Status

Debate on rural development suggests that inmigrants, because of better training, skills, and education, have an advantage over long-term residents in

the local labor market [4, 5, 15, 21, 24, 23, 29, 30J.

This means that inmigrants compete more successfully

for jobs, take the higher wage and more desirable

jobs, and leave the less desirable jobs to long-term

residents. This conclusion implies that rural development benefits inmigrants more than long-term

residents.

The survey data suggest that this conclusion does

not hold for the nine-county Kentucky study area.

Long-term residents were able to compete with inmigrants for jobs. This finding parallels that of Olsen

and Kuehn who found that inmigrants competed on

a limited scale with local residents for jobs in four

industrializing rural areas (241 Persons moving to

the Kentucky area after 1964 (defined as inmigrants)

comprised about 28 percent of those employed in

January 1980, about the same proportion as in the

total adult population (table 9). And, the rate at

which adult long-term residents were employed did

not differ significantly from the employment rate for

inmigrants (table 10). Recent inmigrants had a higher

labor force participation rate than did long-term

residents, but they also had the highest unemployment

rate of the three residency groups. Thus, recent inmigrants in the labor force had the most difficulty

finding employment.

Long-term residents successfully competed for jobs

despite certain comparative advantages of inmigrants. The educational level attained by inmigrant

14
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

Table 9—Employment status of the adult population» by residency status, January 1980

Residency status Adult

population

Employment status

Employed Unemployed Out of labor

force

All residents

Number

129,280 58,620 7,330

Percent

Long-term residents 73.7 72.0 58.3

All inmigrants 26.3 28.0 41.7

Early inmigrants 12.8 13.4 13.0

Recent inmigrants 13.5 14.6 28.7

63,330

76.9

23.1

12.4

10.7

workers surpassed that of long-term residents, a

finding which parallels that observed in other nonmetro areas [4, 24], More inmigrants than long-term

residents had some college training, particularly advanced college training beyond the 4 years usually

required for a bachelor's degree.^^ More inmigrant

workers than long-term resident workers had also

participated in recent formal job training programs

sponsored by a school, the military, or any special

private-sector or government-sponsored program.

Educational attainment was associated with some

comparative advantages for inmigrants over longterm residents in the types of jobs held. The proportion of recent inmigrants, but not early inmigrants,

holding higher status executive and related occupations was significantly higher than that for longterm residents (table 10).^^ However, residency had

no effect on employment in technical and production

occupations. The proportion of workers in technical

and production occupations did not differ significantly among residency groups.

The apparent advantages of recent inmigrants in

obtaining executive and related jobs did not necessarily result in higher average weekly wages for reicent inmigrants relative to long-term residents. Only

the average weekly wages of early inmigrant work-

^^Âverage years of education between long-term residents and

both inmigrant residency groups differed significantly at the

95-percent level (table 10). Long-term residents lived continuously

in the area between December 31, 1964, and January 1980; early

inmigrants moved to the area between January 1, 1965, and December 31, 1974; and recent inmigrants moved to the area between January 1, 1975; and January 1980.

^^See glossary for more details about specific occupations associated with the three aggregated groups defined for this study.

ers were significantly higher than those of long-term

residents. Many early inmigrants may have held

more of the higher salaried jobs because they moved

to the area specifically to take managerial and supervisory jobs at a time of rapid expansion in both

new manufacturing and other establishments. Over

one-third of the manufacturing establishments and

30 percent of the other units began operations under current management between 1965 and 1974.

Although recent inmigrant workers had more training and higher levels of education than did long-term

resident workers, their average weekly earnings

neither exceeded those of long-term resident workers nor did they match the earnings of early inmigrants. Perhaps some recent inmigrants had less

time to advance in their work than did early inmigrants. Some recent inmigrants were willing to accept lower wages in the nine-county area than they

received for jobs they had before moving to the

area. About 20 percent of the recent inmigrants received lower weekly wages upon moving to the ninecounty area, which suggests that for some inmigrants

the nonmonetary benefits of the area outweighed

shortrun monetary expectations.

Establishment Types By Workers' Residency Status

The survey sampling procedures permitted some

worker data collected through the household survey

to be directly matched or linked with employer information collected through the establishment survey. The linked sample represents 42,050 workers

who were employed 1 or more weeks in 1979; 41,370

linked workers worked for wages and salaries, and

the balance were self-employed owner-operators

15
Daherkow, Larson, Coltrane, and Carlin

Table 10—Selected characteristics of adult population, by residency status, January 1980

Total

Residency status

Characteristic Long-term

residents

All

inmigrants

Early

inmigrants

Recent

inmigrants

Number

Adult population 129,280 95,220 34,060

Percent

16,610 17,450

Labor force participation rate

Employment rate

Unemployment rate^

51.0

45.3

11.1

48.8

44,3

9.2

57.1

48.2

15.7

Number

52.9

47.1

10.8

61.2

49.1

19.8

Employed persons 58,620 42,220 16,400

Percent

7,830 8,570

Major occupation;

Executive, administrative,

managerial, professional

Technical, marketing, sales,

clerical, service

Production and related occupations

Average age

Average education

Average weekly earnings, 1979^

14.8 13.1 19.2 17.4 20.9

44.1 45.6 40.3 42.8 38.0

41.1 41.3 40.5

Years

39.8 41.1

38.0 39.5 34.1 37.3 31.2

11.4 11.1 12.2

Doiiars

12,2 12.2

209 200 232 263 206

Percentage of the labor force unempioyed.

^Based on earnings of full-time wage and salary workers.

(table 11). We use the term **linked v^orker" when

referring to data from the linked sample. About 73

percent of the linked wage and salary workers were

long-term residents. This percentage did not differ

significantly from the percentage of long-term residents employed in wage and salary positions 1 or

more weeks during 1979.

The distribution of linked workers based on their

residency status varied mainly by the employer's

wage level and employment change category (table

111. Proportionately more long-term residents than

inmigrants were employed in low-wage establishments.

Among the mean-wage industries, proportionately

more jobs were held by inmigrants than long-term

residents. However, the proportions of linked longterm resident workers and linked inmigrant workers

holding jobs in high-wage units did not differ

significantly.

The wage level of estabhshments was related to

their predominant occupations. Low-wage units

characteristically had a high proportion of

employees in technical, marketing, sales, and service positions. Low-wage units with linked workers

had 47 percent of their wage and salary employees

within one or more of these occupations compared

with only 32 percent for the mean-wage and 26 percent for the high-wage establishments. The percentage of executive, managerial, and professional jobs

increased proportionally as the employer's wage

level increased. In the low-wage establishments,

16
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

Table 11—Selected characteristics of linked wage

and salary workers, by residency status, 1979^

Residency status

Characteristic Total Long-term All

residents inmigrants^

Number

Total hnked workers 41,370 30,400

Percent

10,970

Establishment

characteristics:

Wage category—

Low-wage 36.5 39.5 28.1

Mean-wage 35.4 32.9 42.4

High-wage 28.1 27.6 29.5

Type—

Goods-producing 35.6 36.1 34.3

Services-producing 38.2 38.5 37.3

Government 26.2 25.4 28.4

Size—

1-19 paid employees 39.4 40.8 35.5

20 or more paid

employees 60.6 59.2 64.5

Employment change,

1974-79—

New estabhshments 8.9 9.2 7.9

Growth

establishments^ 62.8 58.2 75.8

No-grov^h

establishments^ 28.3 32.6 16.3

'Wage and salary workers sampled from the employment roles

of the surveyed estabhshments.

^There were less than 30 early and recent inmigrant observations for most of the establishment characteristics.

^Represents private and public ongoing establishments.

these higher status occupations accounted for only

8 percent of all v^age and salary jobs. This proportion increased to 19 percent in the mean-wage units

and to 34 percent in the high-v^age establishments.^^

Long-term residents were able to obtain jobs both in

new establishments and in those expanding their

work force between 1974 and 1979, partly because

many long-term residents entered the labor force between 1974 and 1979. There was no significant difference in the rate at which long-term residents and

inmigrants were employed in new units, but the percentage of inmigrants employed in growth establishments was significantly greater than that of longterm residents (table 11).

Inmigrant linked workers had no comparative advantage over long-term resident linked workers

regarding jobs by type of industry or size of establishment (table 11).2° However, occupational structure and wage levels varied considerably among

establishments within each broad industry type.

Thus, employer wage levels may be more important

in indicating the economic impact on the local economy and its people than is the type of industry,

when one assesses the benefits from employment

growth.

Female Workers

One of the most significant changes that occurred in

the nonmetro labor force during the sixties and seventies was the increased participation of women. At

the national level, women accounted for almost 90

percent of nonmetro employment growth between

1960 and 1970 flOJ. Between 1973 and 1979, increases

in female employment accounted for about 60 percent of the increase in employment iti U.S. nonmetro

areas [27]. Much of the growth in jobs held by women

was in low-paying occupations such as clerical and

service work. The extent to which women in the

nine-county Kentucky area participated in the labor

force and benefited from employment growth over

the 1974-79 period is important in this research.

Women constituted 37 percent of total employment

in January 1980. Their labor force participation

rate was 36 percent, substantially below that for

males in the study area and below the average for

all nonmetro areas [27]. The study area's employed

females had more years of education and were

younger than male workers. Migrancy status had no

differential effect on the employment rate of males

or females (table 12).

The proportions of men and women workers in executive, administrative, managerial, and professional

occupations did not differ significantly. Within that

'^The proportion of executive occupations differed significantly

among each employer's wage level.

^"Proportions of workers in each residency group (long-term,

early inmigrant, recent inmigrant] did not differ significantly by

each type of industry (goods-producing, services-producing, government) and size of estabhshment.

17
Daherkow, Larson, Coltrane, and Carlin

Table 12—Selected characteristics of workers,

by sex, January 1980

Characteristic Total Male Female

Number

Total adult population 129,280 62,380

Percent

66,900

Labor force participation rate

Employment rate

Unemployment rate'

51.0

45.3

11.1

66.7

59.2

11.3

Number

36.4

32.4

10.9

Employed persons 58,620 36,930 21,690

Residency status:

Long-term resident

Early inmigrant

Recent inmigrant

72.0

13.4

14.6

Percent

71.5

13.8

14.7

72.9

12.6

14.5

Wage workers working:

Full-time^

Part-time

73.0

9.7

69,6

6.5

78.8

15.2

There were significant differences between males

and females among some industry characteristics,

based on the linked worker sample (table 13). Women

were less likely to be employed in high-wage establishments, goods-producing units, and units with

fewer than 20 employees. The proportion of men

and women employed in low-wage establishments

and in government agencies did not differ

significantly.

Women in the public sector held more of the professional jobs, whereas men were more often executives or administrators. Public school systems were

a major employer of women, who held most of the

teaching jobs. Among the goods-producing industries, women held few, if any, jobs in mining and

construction industries. Yet, among the area's manufacturing establishments, over half the production

occupations were filled by women. Many of these

women were employed in apparel and textile manufacturing establishments. The private service sector

Self-employed workers 17.3

Major occupation:

Executive, administrative,

managerial, professional 14.8

Technical, marketing, sales,

clerical, service 44.1

Production and related

occupations 41.1

Average age 38.0

Average education 11.4

Average weekly earnings 1979^ 209

23.9

13.3

34.3

52.4

Years

38.7

11.0

DoJJors

231

6.0

17.2

60.9

21.9

36.9

12.1

158

Table 13—Selected characteristics of linked wage

and salary workers, by worker's sex, 1979

'Percentage of the labor force unemployed.

^Worked 30 hours or more per week.

^Based on earnings of full-time wage and salary workers.

group, however, men were more likely to hold executive, managerial, and administrative positions,

whereas women were more likely to have professional positions (teacher, nurse, or social worker].

Women were more likely than men to be employed

in technical, sales, clerical, and service occupations. By contrast, male workers were more prevalent in production-related occupations. Women were

less likely to be self-employed and, among wage

workers, were more likely to work part-time. Men's

average earnings exceeded women's by $73 per

week. This partly reflects the fact that women tended

to hold lower skilled jobs than did men.

Characteristic Total Male Female

Total linked workers^

Establishment characteristics:

Wage category—

Low-wage

Mean-wage

High-wage

Type—

Goods-producing

Services-producing

Government

Size—

1-19 paid employees

20 or more paid employees

Employment change, 1974-79-

New establishments

Growth establishments^

No-growth establishments^

Number

41,370 25,320 16,050

Percent

36.5

35.4

28.1

35.6

38.2

26.2

39.4

60.6

8.9

62.8

28.3

36.5

32.0

31.5

41.2

34.5

24.3

41.9

58.1

10.1

58.1

31.8

36.5

40,8

22.7

26.7

44.0

29.3

35.3

64.7

6.9

70.3

22.8

'Wage and salary workers sampled from the employment roles

of the surveyed establishments.

'Represents private and public ongoing establishments.

18
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

contained many clerical and service jobs typically

held by women. Although men were significantly

less likely than women to hold jobs in the private

service sector, the relatively large number of men in

this sector suggests that growth in services does expand job opportunities for both men and women.

Among the linked workers, a higher proportion of

employed women were working for new and expanding establishments. This finding suggests that

women were able to take advantage of job growth

in the area.

Youth

Labor market problems of youth in metro and nonmetro areas center around high levels of unemployment and low-paying, unstable employment [23],

Unemployment of nonmetro youth is substantially

higher than that of the whole nonmetro labor force,

and youth employment is skewed toward lower status occupations. For those rural areas experiencing

outmigration, youth have typically been the most

likely to leave.

About 52 percent of the youth population (persons

16-24 years old in January 1980) were in the labor

force in the nine-county area. This rate is substantially below 68 percent, the rate for youth in all U.S.

nonmetro areas [23], Of the youth in the labor force,

about 80 percent were employed, a rate below that

for all U.S. nonmetro areas. The vast majority of

employed youth were wage workers, and they were

more likely to hold part-time jobs than were workers 25 years old and over. Youth were employed almost exclusively in technical and production occupations. Within these broad occupational groups,

youth held the lower paying jobs as evidenced by

their substantially lower average weekly earnings

relative to workers 25 years old and over (table 14).

Youth linked workers were most frequently employed

in low-wage establishments and private servicesproducing units (table 15). Youth held fewer jobs in

the government sector than did workers 25 years

old and over. Most of youth workers were employed

in new and existing establishments that expanded

employment opportunities in the area. The proportion of youth employed in these units was consistent

with the proportion of youth in the work force. This

finding suggests that youth did participate in the

area's employment growth.

Table 14—Selected characteristics of youth,

January 1980

Total

Age

Characteristic 16-24

years

25 years

and over

Number

Total adult population 129,280 25,750

Percent

103,530

Labor force participation rate

Employment rate

Unemployment rate^

51.0

45.3

11.1

52.5

42.4

19.4

Number

50.6

46.1

9.0

Employed persons 58,620 10,910

Percent

47,710

Residency status:

Long-term resident

Early inmigrant

Recent inmigrant

72.0

13.4

14.6

73.6

2.4^

24.0

71,7

15.9

12.4

Wage workers working:

Full-time^

Part-time

73.0

9.7

76.2

18.0

72.2

7.9

Self-employed workers 17.3 5.8^ 19,9

Major occupation:

Executive, administrative, managerial,

professional

Technical, marketing,

sales, clerical, service

Production and related

occupations

14.8

44.1

41.1

5.3

52,5

42.2

Years

16.9

42.2

40.9

Average age

Average education

38.0

11.4

21.2

11.9

Dollars

41.8

11.3

Average weekly earnings,

1979^ 209 159 221

^Percentage of the labor force unemployed,

estimate based on fewer than 10 unweighted observations,

Worked 30 hours or more per week.

^Based on earnings of full-time wage and salary workers.

Older Workers

About 37 percent of the area's adult population was

50 years of age and older. The labor force participation rate for older persons was 28 percent, less

than half that for younger adults (table 16). Over 90

19
Daherkow, Larson, Coitrane, and Carlin

Table 15—Selected characteristics of linked wage

and salary youth workers, 1979

Table 16—Selected characteristics of older persons,

January 1980

Age

Characteristic Total 16-24

years

25 years

and older

Total linked workers^

Establishment characteristics:

Wage category—

Low-wage

Mean-wage

High-wage

Type^

Goods-producing

Services-producing

Government

Size—

1-19,paid employees

20 or more paid

employees

Employment change,

1974.79_

New establishments

Growth establishments^

No-growth establishments^

Number

41,370 7,400 33,970

Percent

36.5

35.4

28.1

35.6

38.2

26.2

39.4

60.6

8.9

62.8

28.3

47.0

36.1

16.9

33.8

49.7

16.5

47.8

52.2

14.9

64.8

20.3

34.1

35.3

30.6

36.0

35.7

28.3

37.5

62.5

7.5

62.4

30.1

^Wage and salary workers sampled from the employment roles

of the surveyed establishments.

^Represents private and public ongoing establishments.

percent of all older vv^orkers were long-term residents. Of the self-employed, 44 percent were older

workers, twice the proportion of older workers

among the total employed. Older workers were less

likely than other wage workers to work full-time.

Older workers were more likely to be in technical

occupations, but younger workers were more likely

to be in production occupations. However, the percentage of younger and older Vv/orkers in executive

occupations did not differ significantly. Finally, the

average weekly earnings of the younger and older

full-time workers did not differ significantly.

Among linked employees, older workers were more

likely than younger workers to be employed in government units and in no-growth establishments

(table 17). Few older workers were employed in new

units, but over half the older workers worked in

Item

Age

Total Less than 50 years

50 years and over

Adult population

Labor force participation

rate

Employment rate

Unemployment rate'

Employed persons

Residency status:

Long-term resident

Early inmigrant

Recent inmigrant

Wage workers working:

Full-time^

Part-time

Self-employed worker

Major occupation:

Executive, administrative, managerial,

professional

Technical, marketing,

sales, clerical,

service

Production and

related occupations

Average age

Average education

Average weekly earnings,

1979'*

Number

129,280 81,130

Percent

51.0

45.3

11.1

58,620

72.0

13.4

14.6

73.0

9.7

17.3

14.8

44.1

41.1

38.0

11.4

209

64.5

56.1

13.1

Number

45,540

Percent

66.0

16.0

18.0

78.5

9.0

12.5

14.2

41.7

44.1

Years

32.2

11.8

Dollars

210

48,150

28.3

27.2

3.9^

13,080

92.9

4.2^

2.9^

53,7

12.4

33.9

16.7

52.6

30.7

58.3

10.1

207

'Percentage of the labor force unemployed.

^Estimate based on fewer than 10 unweighted observations.

^Worked 30 or more hours per week.

^Based on earnings of full-time wage and salary workers.

growth establishments. However, older workers did

not participate in employment growth to the extent

that youth and women did.

20
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Table 17—Selected characteristics

of older linked workers, 1979

Table 18—Selected characteristics of recent

entrants and experienced workers, 1979

Total

Age Employed in 1979'

Item Less than 50 years

50 years and over

Employed Not employed

Characteristic in 1979 Total in

1974

in 1974 •

(recent entrants)

Number Number

Total linked workers^ 41,370 33,480

Percent

7,890 Employed persons 68,810 48,110

Percent

20,700

Establishment

characteristics:

Residency status:

Long-term resident

Inmigrant

70.9

29.1

71.1

28.9

70.1

29.9

Wage categories—

Low-wage 36.5 36.3 37.1 Sex:

Mean-wage 35.4 36.0 33.1 Male 60,9 70.3 39.1

High-wage 28.1 27.7 29.8 Female 39.1 29.7 60.9

Type—

Goods-producing

Services-producing

35.6

38.2

37.3

37.9

28.1

39.4

Age:

16-24 years

25-34 years

35 years and older

22.6

28.7

48.7

6.3

31.5

62.2

60.4

22.2

17.4

Government 26.2 24.8 32.5

Education:

Size— Less than high school 41.6 42.1 40.7

1-19 paid employees 39.4 38.1 44.7 High school 34.7 33.3 37,7

20 or more paid Beyond high school 23.7 24.6 21.6

employees 60.6 61.9 55.3 Wage workers working;

Employment change,

Full-time^

Part-time

73.0

11,7

72.4

7.5

74.3

21.4

1974-79—

New establishments

Growth

establishments^

8.9 10.1 3.8^ Self-employed 15.3 20.1 4.3

62.8 64.9 54.0 Major occupation:

No-growth Executive, administraestablishments^ 28.3 25.0 42.2 tive, managerial,

professional

Technical, marketing,

13,4 15.5 8.5

sales, clerical, service 44.4 39.4 55.9

»Wage and salary workers sampled from the employment roles Production and related

of the surveyed establishments. occupations 42.2 45.1 35.6

estimate based on fewer than 10 imweighted observations.

^Represents private and pubhc ongoing establishments. Dollars

T» a. 1-?_A M.^ A_ A'L.. T ^ 1 t?

Average weekly earnings^ 201 111 141

An important premise of policies intended to stimulate employment growth in rural areas is that they

extend job opportunities to persons with little labor

force experience. Survey data suggest that employment growth did provide job opportunities for persons with little labor force experience. Of those persons employed 1 or more weeks during 1979, 30 percent had not been in the labor force during 1974

(table 18). This group is referred to as recent

entrants.

About 60 percent of the recent entrants were youth,

persons 16-24 years old in 1979 (table 18). Also,

about 60 percent of the recent entrants w^ere women,

which is significantly greater than their employment

rate in 1979. Many women 35 years old and older

'Includes persons working 1 or more weeks sometime in 1979.

^Worked 30 or more hours per week.

^Based on earnings of full-time wage and salary workers working 1 or

more weeks in 1979.

with little recent labor force experience became employed between 1974 and 1979. These women were

generally married and most no longer had young,

preschool children. There was no significant difference in residency status and educational levels

between recent entrants to the labor force and experienced workers.

During the survey, persons of labor force age in

1979, but not employed or looking for work in 1974,

were asked to give reasons why they did not participate in the labor force in 1974. The most frequent

21
Daherkow, Larson, Coltrane, and Carlin

response (37 percent] was, "I was less than 16 years

old in 1974." Another third stated they were not interested in paid employment in 1974. About 21 percent, primarily women, reported they were caring

for their famihes in 1974 and could not participate

in the paid work force. The balance, about 9 percent, indicated that health problems in 1974 restricted

their entry into the labor force.

Recent entrants reported an average weekly wage

of $141, which was only about 60 percent of that reported by experienced workers. This low average

wage was commensurate with the types of jobs held

by recent entrants. Recent entrants were concentrated in technical occupations, but within that category they tended to hold lower paying clerical and

service positions. Among wage workers, recent entrants were more likely to work at part-time jobs

than were experienced workers. And, very few recent entrants were self-employed. Over 90 percent

of the self-employed jobs were held by experienced

workers, considerably higher than the percentage of

experienced workers in the work force. Linked recent entrants were more likely to be employed in

low-wage establishments and in private service

units than were experienced workers (table 19).

But, they were much more likely to be employed in

new and growth establishments. Thus, those establishments that provided new jobs in the area appear

to have enhanced the ability of persons with little

recent labor force experience, primarily youth and

women, to find employment.

Table 19—Labor force experience of workers,

by selected characteristics of industries

in which workers were employed, 1979

Linked worker's

employment status

Characteristic Total m 1979

Recent

entrants

Experienced

workers

Number

Total linked workers' 41,370 9,670

Perceni

31,700

Establishment characteristics:

Wage category—

Low-wage 36.5 45.0 33.9

Mean-wage 35,4 33.8 35.9

High-wage 28,1 21.2 30.2

Type—

Goods-producing

Services-producing

Government

35.6

38.2

26.2

28.1

47.0

24.9

37.9

35.5

26.6

Size—

1-19 paid employees

20 or more paid employees

39.4

60.6

43.5

56.5

38.1

61.9

Employment change, 1974-79—

New establishments 8.9 13.8 7.3

Growth establishments^ 62.8 68.9 61.0

No-growih establishments' 28.3 17.3 31.7

'Wage and salary workers sampled from the employment roles of the

surveyed establishments.

^Represents private and public ongoing establishments.

Roles of Government in Employment Growth

The government sector [Federal, State, and local)

was a major employer, accounting for 21 percent of

all nonfarm wage and salary employment in 1979.

Government also contributed about 14 percent of

the area's new jobs between 1974 and 1979. The

government sector played a lesser role in other activities. Government-sponsored loan programs for

nonfarm business were not widely used. State employment offices were not frequently used for

worker placement by either employers or employees. Participation in formal government training

programs was small. However, local development

associations and chambers of commerce made extensive efforts to attract new employers and to develop public facilities supporting growth. The

following discussion elaborates on these survey

results.

Government plays a multiple role in job creation in

most nonmetro areas. It employs workers directly,

which adds to an area's total employment and income levels. In all nonmetro areas, government

accounted for 24 percent of the net change in employment between 1973 and 1979 and for 16,8 percent

of all nonmetro employment in 1979 [27], Government indirectly influences employment levels through

construction and maintenance of transportation facilities, industrial parks, and other forms of infrastructure necessary for private-sector establishments

to function efficiently. It is also a source of capital

for new construction and plant expansion. Federal

economic development programs for business assistance of the Economic Development Administration,

Farmers Home Administration, and Small Business

Administration made $2.9 biUion in grants and loans

available to nonmetro areas in 1979 [25]. In most

States, funds for industrial expansion are also available from local and State industrial bond sales.

22
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Government also contributes to economic development by providing employment services through

local employment offices and by providing training

programs for unemployed and low-skilled workers.

The Work Incentive Program (WIN), Targeted Jobs

Tax Program, and Comprehensive Employment and

Training Act Programs (CETA) were operating at

the time of the survey.

Direct Employer

Federal, State, and local governments were important as direct employers of workers in the study

area, accounting for about 21 percent of all nonfarm wage and salary employment in 1979. Furthermore, government employees were more likely to

work for high-wage employers than were employees

in the private sector. About 45 percent of the area's

government employees worked for high-wage employers, whereas about 20 percent of private-sector employees worked in high-wage establishments (table

2].

Provider of Infrastructure

Although the survey questionnaire did not provide

data on government-financed infrastructure that

supported the area's economic activity, information

from other sources [18, 19] and the analysts' personal

observations revealed both extensive development

of public facilities supporting growth and concerted

effort by local development associations and chambers of commerce to attract new employers. These

groups, in cooperation with State economic development offices, furnished detailed information on the

area's resources to prospective new employers. Local development associations issued industrial

bonds to raise funds to build industrial parks which

had electric, gas, water, sewer, highway, and rail

transportation services available. New industrial

parks which could aid growth in the area were also

being planned at the time of the survey.

Interstate 75 runs through the area in a north-south

direction. A four-lane major east-west artery was

completed through part of the area and was under

construction through the rest of the area at the time

of the survey. Rail and truck transportation was

available throughout the area, and regularly scheduled commercial air service was available at one

airport. The town of Somerset owned and operated

a natural gas pipeline linked to municipal-owned

natural gas wells in the eastern Kentucky gas fields.

Somerset sells the gas to residential and commercial

users. The Small Business Administration provided

capital for the construction of the line. Commercial

companies provided natural gas to users in other

parts of the area.

Source of Capital

The survey questionnaire provided information on

the sources of capital of private-sector establishments which began operations in the area after

1969 (table 20). In comparison with internal savings

and private-sector financial institutions, government

economic development programs, including State

and local industrial revenue bond issues, were not

frequently used by new establishments as a source

of capital. Only 10 percent of the new establishments reported using public agency funds, and on

average less than 3 percent of their funds were obtained from government agencies. Too few of the

surveyed estabhshments used public capital sources

for our study to make statistical tests of comparison

by establishment characteristics.

Savings of establishment owners, which included

personal savings and retained profits of corporations, and loans from the study area's private-sector

financial institutions were the most frequently reported sources of capital used by new establishments. Except for establishments with 20 or more

paid employees, relatively few establishments used

private-sector financial institutions located outside

the study area as sources of capital. Even for those

large units obtaining capital from outside private financial institutions, only about 25 percent of their

funds came from this source.

Since 1969, approximately 790 establishments reported making capital expenditures for land, buildings,

or equipment that resulted in the unit's expanding

its workforce.2^ Only about 10 percent of these units

reported using direct loans or loan guarantees from

the public sector. Most establishments reported using savings and/or retained earnings and local lenders as sources of capital to finance plant expansion.

Few employers went to lenders outside the study

area to satisfy their capital needs.

2'About 300 of the establishments that used capital to expand

operations after 1969 also started operations in the nine-county

area after that date. There were too few observations of establishments using capital for expansion to permit detailed analysis.

23
Daherkow, Larson, Coltrane, and Carlin

Table 20—Distribution of establishments, by sources of capital used to begin operation since 1969 and by

establishment characteristics

Starts since

1969

Percentage of establishments

using capital from^

Type of

private-sector

establishments

Establishments

Employees

in 1979

Savings of

owners or

corporations

Private financial

institutions

Inside Outside

study study

area area

Pubhc

agencies

Number

All establishments 2,300 15,670

Establishment wage category:

Low-wage 940 8,840

Mean-wage 230 3,160

High-wage 240 3,400

No full-time employees 890 270

Type of industry:

Goods-producing 330 6,370

Services-producing 1,970 9,300

Size of industry:

1-19 paid employees 1,470 7,250

20 or more paid employees 130 8,420

No paid employees^ 700 —

Percent

71

63

87

58

78

67

72

67

46

83

63

60

57

67

66

58

63

61

62

67

10^ 10^

14^ 132

22^ 17^

11^ 8^

3' 42

12 92

10^ 10^

IV 12^

38 8^

42 6^

— = Not applicable.

'Private sources of capital include banks and savings and loan institutions. Public sources of capital include loan guarantees or capital borrowed directly from such public agencies as the Small Business Administration, Farmers Home Administration, Economic Development Administration, Kentucky Development Finance Authority, or through State or local bond issues. An estabhshment may have used more than one

source. Thus, the percentages may not add to 100.

^Estimate based on fev^er than 10 unweighted observations,

^Establishments operated by self-employed owners or partners with no paid employees.

Employment Services and Training

State employment offices helped some establishments

in the study area locate workers, but most of the

new workers were located through other sources

(table 21). Only about 14 percent of the employers

in 1979 reported locating workers by using State

employment offices. The methods employers most

often used to locate new workers were welkins and

referrals of workers by friends or relatives of employers and referrals by other establishments.

Workers most often used direct inquiries with establishments and referrals by friends and relatives

as a means of locating jobs.

The rate of participation by both estabhshments

and adults in formal employment and training programs was small Since 1969, only 15 percent of the

employers participated in a CETA or other subsidized employment program, and only 10 percent of

the adult population participated in WIN, CETA, or

other formal employment or job training programs

offered by vocational schools, the military, or other

organizations. No attempt was made during the survey to collect information on why establishments

and adults chose not to participate in job-training

programs. However, adults were questioned about

the value of the job-training programs in which they

participated. About half the participants said these

programs helped them obtain jobs. Most people who

participated in formal job programs had at least a

high school education.

The low rate of participation in Federal training

programs did not mean that area workers were always highly qualified to perform available jobs.

About 30 percent of the employers surveyed indicated

24
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Table 21—Methods used by establishments to

locate employees and by employees

to find jobs

Item

Establishments

reporting hires

in 1979^

Workers

starting jobs

since 19742

Number

Estabhshments and workers 1,370 23,630

Percent

Methods used to locate

hires or jobs:^

State employment

agencies 14.4 8.6

Walk-ins 60.9 54.6

Local or national ads 15.3 10.8

Referrals^ 52.8 38.0

Other sources^ 14.4 6.2

'Of the new and ongoing establishments with one or more paid

employees, 41 percent had new hires in 1979.

^Data were not obtained from persons who were employed in

their current primary job prior to 1974.

^Because some estabhshments and persons used more than one

source, percentages will not sum to 100.

^Includes referrals by friends, relatives, and other estabhshments.

^Includes vocational schools, unions, colleges or universities,

private employment agencies, and other sources not already

identified.

that they had difficulty finding qualified persons to

fill positions (table 22). Mean-wage establishments

reported difficulty finding qualified workers more

often than did either low-wage or high-wage units.

Large employers, employers in the goods-producing

sector, government units, and establishments with

employment growth between 1974 and 1979 were

more likely to have difficulty locating qualified persons than were the service sector, small employers,

and units not having employment growth.

Jobs in production occupations were most frequently

reported by establishments as difficult to fill. Manufacturing establishments were the most likely to report difficulty filling production jobs. Private service

establishments reported difficulty filling some clerical, sales, and service positions. All types of establishments reported difficulty in filling some clerical,

executive, managerial, and professional positions.

Training provided by formal training and educational programs apparently did not satisfy the training needs of employers. Employers with difficulty

Table 22—Establishments reporting difficulty

finding qualified persons,

by establishment characteristic, 1979

Characteristic

Total

estabhshments

Percentage of

establishments with

difficulty finding

quahfied workers

Number Percent

Establishments with one

or more employees 3,320' 29.5

Establishment wage

category:

Low-wage

Mean-wage

High-wage

No full-time employees

1,800

610

590

320

28.3

44.3

30.5

6.3^

Type of establishment:

Goods-producing

Services-producing

Government

510

2,590

220

37.2

27.4

36.4

Size of estabhshment:

1-19 paid employees

20 or more paid

employees

2,970

350

26.9

51.4

Employment change,

1974-79:^

New establishments

Growth establishments*

No-growth establishments*

890

890

1,500

29.2

42.7

22.7

'Represents establishments with one or more employees. Establishments

operated by self-employed owners or partners are excluded from this table.

^'Estimate based on fewer than 10 unweighted establishment observations.

'Excludes ongoing establishments starting under new ownership between

1975 and 1979,

'Private and public ongoing establishments with employment growth.

filling positions attributed the problem to workers

not having sufficient training required for the job,

workers lacking specific skills, workers lacking experience or special knowledge, or workers having

qualifications not matching job requirements. One

or more of these four reasons were reported 75 percent of the time by those employers with problems

filling a position. Reasons listed 25 percent of the

time included low wages and poor or dangerous

working conditions.

Potential Labor Force

The nine-county Kentucky area has a relatively

large potential labor force which could support employment growth without substantial inmigration.

However, new or expanding establishments may

have to look to employed residents or inmigrants for

experienced executives and managers. But, expanding or new establishments will likely find willing em25
Daherkow, Larson, Coltrane, and Carlin

ployees with experience in production, sales, clerical, and service occupations. The following discussion elaborates on these survey results.

trators, or managers. Most who had worked previously had been employed in sales, clerical, service,

and production occupations.

Employment growth depends on both increases in

job opportunities and the availability of qualified

workers. In nonmetro America, including the Kentucky study area, a substantial portion of the available jobs have been taken by inmigrants in recent

years. Between 1970 and 1975, 11 percent of nonmetropolitan residents employed had moved to nonmetro from metro areas [8]. By 1979, 28 percent of

the employed persons in the nine-county study area

had moved into the area from both metro and nonmetro areas since 1964. A central issue related to

employment growth in many nonmetro areas is

whether they can continue to grow without a sustained flow of inmigrants.

In the absence of inmigration or outmigration, the

nine-county area contains a fairly large potential

labor force. The survey data do not permit a thorough assessment of the qualifications of these potential workers for specific occupations, but some characteristics of the workers are evident (table 23). At

the time of the survey, the number of unemployed

people who would have accepted employment if available was unknown, but their reasons for not working or for not looking for work were surveyed.

At the time of the survey, about 71,000 adults 16

years and over were not employed. An additional

15,000 people will reach labor force age by 1985.^^

Approximately 10 percent of the adults were unemployed and looking for work; thus, this group was

available for immediate employment.

Almost all the unemployed were under 55 years of

age, with a third less than 25 years old. The average age was 35.8 years. As a group, the unemployed

had completed 10.4 years of formal schooling. About

63 percent had less than a high school education,

but some of these were still in school. About 88 percent of the unemployed had labor force experience

and 81 percent had worked since lanuary 1974. Of

the unemployed with previous work experience, less

than 5 percent had worked as executives, adminis-

^^This number was not adjusted for deaths in this age group

during the 5-year period.

Most of the nonworking adults were not actively

looking for employment; that is, they were not in the

labor force (table 23). About 21 percent of the nonemployed adults were not actively looking for work,

but had worked sometime in the 5 years between

1974 and 1979. Most of this group were women.

About half the group was 25-54 years of age, and

over half had less than a high school education.

When asked why they were not looking for work, 56

percent of those who had worked in the previous 5

years said that they were not interested in paid employment and 28 percent said they could not work

because of health reasons (table 24), The others

were not looking for work because they believed

jobs were not available to themvthat is, they were

discouraged workers, or they could not work because of family responsibilities or because transportation was not available. Only about 4 percent of

these persons had ever been employed as executives, administrators, or managers, but most had

worked at technical, sales, clerical, or service jobs.

Of the nonworking adults, 17 percent were not looking for work and had not been employed since January 1974 (table 23). This group was comprised mainly

of older persons, many of whom were retired. Their

average age was 62.8 years. Most of these persons

could not work because of ill health or they were

not interested in paid employment (table 24). It is

unlikely that many potential labor force participants

were in this group.

About 52 percent of the nonworking adults were not

in the labor force and had never been employed

(table 23). About 23 percent of this group were less

than 25 years old, and some were still enrolled in

high school or college. However, about 45 percent

were 55 years old or older and unlikely to enter the

labor force. About 95 percent of the never employed

group had poor health or were not interested in

paid employment (table 24).

At the time of the survey, the study area had about

13,000 residents who were either unemployed, discouraged workers or who would like to work but

could not because of family responsibilities or lack

of transportation. The other adults not working

were not interested in employment or had poor

26
Distribution of EmpJoymení Growth in

Nine Kentucky Counties: A Case Study

Tablé 23—Adult population, 16 years and older, not employed in January 1980, by previous work experience

Persons not employed

Total Unemployed

Not in labor force

Characteristic Worked sometime

between January

1974 and

January 1980^

Worked prior

to January

1974^

Never

employed

Number

Adult population 70,660 7,330 15,080

Percent

11,840 36,410

Male

Female

36.0

64.0

64.0

36.0

32.2

67.8

69.7

30.3

21.0

79.0

Age in 1979:

16-24 years

25-54 years

55 years and over

21.0

35.0

44.0

35.7

62.9

1.42

25.5

47.7

26.8

0

9.7

90.3

23.0

32.4

44.6

Education:

Less than high

school

High school

Beyond high

school

71.2

19.9

8.9

63.2

30.4

6.4^

54.5

29.1

16.4

Years

89.5

6.4

4.P

73.7

18.3

8.0

Average age

Average years of

school completed

Average length of

time since last

worked

46.0

9.1

35.8

10.4

3

36.2

10.1

2.2

62.8

7.4

13.4

47.6

9.1

— = Not applicable.

'Includes persons who worked 1 or more weeks for pay or were self-employed,

estimate based on fewer than 10 unweighted observations.

^Average not shown because the unemployed includes 910 persons who had never worked; 81 percent of the unemployed workers had

worked since January 1974.

health. The number of residents who were interested in employment (13,000) were about 22 percent

of the residents employed at the time of the survey.

About 80 percent of this group had previous work

experience. However, very few of these potential

workers had held executive, administrative, or managerial jobs. Some had been employed in technical

occupations, but most had worked in clerical, sales,

production, or service jobs. New establishments

starting operations in the area or existing units

planning to expand may have to look to either employed residents or to inmigrants for experienced

executives and managers. However, new or expanding establishments may find willing employees with

work experience in production, sales, service, and

related occupations. The survey data suggest that

increases in the availability of child day-care services, nursing services for ill and aged adults, and

transportation services could encourage a small

group of adults to seek employment.

Implications

This study provides some important insights into the

rural development process in terms of employment

growth. Readers must interpret these findings

within the context of the economic structure of the

nine-county Kentucky area and the way its economy

27
Daherkow, Larson, Coltrane, and Carlin

Table 24—Reasons given for not looking for work by the adult population, 16 years and older, by previous

work experience

Reason Total

Persons not in the labor force, January 1980

Previous w^ork experience

Worked sometimes Worked

between January prior to Never

1974 and January employed

January 1980^ 1974^

Adult population 63,330 15,080

Number

Percent

11,840 36,410

Discouraged worker^ 6.6 12.1 9.7 3.2

111 health 30.0 27.7 77.5 15.5

Not interested in paid employment 61.6 56.4 11.8 80.0

Interested in paid employment but

could not work^ 1.8 3.8" 1.0" 1.3"

^Inciudes persons who worked 1 or more weeks for pay or were self-employed.

^Includes persons who had stopped looking for work because they beheved none was available.

^Includes persons who were interested in paid employment, but had to care for a child or a sick or aged adult or who had no transportation to and from a work place. ^Estimate based on fewer than 10 unweighted observations.

has evolved in the past 5-10 years. Economic Development Division research on other growth areas

will determine the extent to which these conclusions

apply to other rural areas.

This study shows that rural employment growth enhances employment opportunities for local residents

and for persons with limited labor force experience.

This conclusion is based on the finding that longterm residents were able to obtain jobs in new and

expanding older establishments. Long-term residents

did not have a representative share of higher paying executive and related positions compared with

recent inmigrants, but long-term residents were not

disadvantaged in obtaining these higher paying jobs

in comparison with early inmigrants. Most inmigrants were not newcomers to the area. About 70

percent had lived in the area previously and were

returning home. This result tempers the popular notion that rural employment growth benefits outsiders, not the indigenous population. The study also

showed that persons with little labor force experience, particularly women and youth, could find jobs

in the area. Thus, the major goal of enhancing the

economic well-being of all rural residents as articulated in major Federal rural development legislation was at least partially realized in the study

area.

This study demonstrated that new establishments

were important to job growth, but so were older

units. About half the new jobs added to the area's

economy between 1974 and 1979 were added in

older ongoing establishments. These results suggest

that economic development policy at local, State,

and Federal levels should be concerned about ways

to encourage existing businesses to expand employment as well as with activities to attract new ones.

It is frequently assumed that government plays a

major role in the employment growth of local areas

as a direct employer, as a provider of infrastructure necessary to support growth, as a source of

capital for expansion of economic activity, and as a

provider of employment services and training. As a

direct employer, governments were important in the

area's economy, providing about 21 percent of all

nonfarm wage and salary employment and over 10

percent of the net addition to employment between

1974 and 1979. Government financial infrastructure—

roads, industrial parks, and utilities—supported

private-sector economic activity. But, government's

role was not extensive in some other activities.

Government-sponsored loan programs were not

widely used by nonfarm businesses, and government

employment offices were not frequently used for

28
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

worker placement. The results of other studies in

this series will show if these findings are unique to

the Kentucky study area or if they also describe

other areas.

Conclusions about the extent to which rural development affected household income and poverty status must await further analysis of the data. But,

preliminary information suggests that the recent

rapid employment growth in the study area has not

eliminated the area's income and poverty problems.

Part of the reason for this may be that much of the

recent job growth, particularly in the private service sector, was part-time employment in low-paying

jobs. But, the apparent conflict of attempting to enhance income levels by expanding lower paying jobs

in the service sector is a problem inherent in the

national economy rather than a problem unique to

the study area.

29
Daherkow, Larson, Coltrane, and CarJin

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1982.

(2) Barkley, D. The Factors Contributing to industrioJ Outmigration From BuraJ Areas of Iowa.

Unpublished Ph.D. dissertation, Iowa State University, 1976.

(3) Beale, G. *'A Further Look at Nonmetropolitan

Population Growth Since 1970," American Journal o/Agricultural Economics, Vol. 58, No. 5,

Dec. 1976.

(4) Beck, E., G. Summers, and L. Dotson. **Effects

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(5) Bender, L., B. Green, and R. Campbell. "Trickledown and Leakage in the War on Poverty,"

Growth and Change, Vol. 2, No, 4, 1971.

(6)

[7]

Birch, D. The Job Generation Process, Cambridge, Massachusetts: Program on Neighborhood and Jîegional Change. Report prepared for

the Economic Development Administration, U.S.

Department of Commerce. Cambridge, Mass.:

Massachusetts Institute of Technology, 1979.

"Who Creates Jobs," The Entrepreneurial Economy, Vol. 1, No. 1, July 1982

(8) Bowles, G. K. "Contributions of Recent Metro/

Nonmetro Migrants to the Nonmetro Population

and Labor Force," Agricultural Economics Research, VoL 30, No. 4, Oct. 1978.

(9) Bradshaw, T., and E. Blakely. flesources of

Recent Migrants to Rural Areas for Economic

Development: Policy Implications. University of

California, Division of Agricultural Sciences,

Sept. 1981.

(10) Brown, David L., and Jeanne M. O'Leary. Labor

Force Activity of Women in Metropolitan and

Nonmetropolitan America. RDRR-15. U.S. Dept.

of Agr., Econ. Stat. Coop. Serv., Sept. 1979.

(11) Clemente, F., and G. Summers. Rapid industrial

Development, Competition, and Relative Economic

Status: A Study in Human Ecology. Working

Paper Series RID 73.1. University of Wisconsin,

Center of Applied Sociology, 1973.

(12) Edwards, C. "The Bases for Regional Growth,"

Survey of Agricultural Economics Literature.

Vol. 3: Economics of Welfare, Rural Development and Natural Resources in Agriculture,

1940's to 1970's (ed. Lee Martin). Minneapolis:

University of Minnesota Press, 1981.

(13) Erickson, R., and T. Leinbach. "Characteristics

of Branch Plants Attracted to Non-metropolitan

Areas," Nonmetropolitan Industrialization (ed.

Richard E. Lonsdale and H.L. Seyler). New

York: John Wiley and Sons, 1979.

(14) Garrison, C. "Industrial Growth in the Tennessee Valley Region: 1959 to 1968," American

Journal of Agricultural Economics, Vol. 56,

No. 1, 1974.

(15) Gray, I. "Employment Effect of a New Industry

in a Rural Area," Monthly Labor Review, Vol.

92, No. 6, June 1969.

(16) Gunter, D., B. Deaton, and M. Badenhop. Employment Patterns Resulting From New Manufacturing Plant Locations and Subsequent Plant

Expansions in Rural Communities of Tennessee.

Unnumbered report. University of Tennessee,

Department of Agricultural Economics, 1975.

(17) Jansma, D., H. Gamble, J. Madden, and R. Warland. "Rural Development: A Review of Conceptual and Empirical Studies," Survey of Agricultural Economics Literature." Vol. 3: Economics

of Welfare, Rural Development and Natural

Resources in Agriculture, 1940's to 1970's [ed.

Lee Martin). Minneapolis: University of Minnesota Press, 1981.

(18) Kentucky Department of Commerce. Industrial

Resources, London, Kentucky. Division of Research and Planning in cooperation with LondonLaurel County Development Association and

Laurel County Industrial Development Authority, 1976.

30
Distribution of Employment Growth in

Nine Kentucky Counties; A Case Study

(19) Industrial flesources, Somerset and

Burnside, Kentucky. Division of Research and

Planning in cooperation with the SomersetPulaski County Chamber of Commerce and the

Burnside Area Chamber of Commerce, 1977.

(20) Kish, L. Survey Sampling. New York: John Wiley

and Sons, 1965.

(30) Stevens, J., and L. Wallace. Impact of Industrial Development on Howard County, Indiana.

Agricultural Experiment Station Bulletin 784.

Purdue University, 1964.

(31) Summers, G. *'Industrialization," Rural Society

in the U,S. Issues for the 1980's (ed. Don Dillman and Daryl Hobbs). Boulder, Colo.: Westview Press, 1982.

(21) Kuehn, J., L. Bender, B. Green, and H. Hoover. ^^^^

Impact of Job Development on Poverty in Four

Development Areas. AER-225. U.S. Dept, of

Agr., Econ. Res. Serv., June 1972.

(22) Maitland, S., and R. Friend. ñuraJ Industrialization. AIB-252. U.S. Dept. of Agr., Econ. Res.

Serv., Nov. 1961.

(23) Nilsen, Sigurd R. Nonmetro Youth in the Labor

Force. RDRR-27. U.S. Dept. of Agr., Econ. and

Stat. Serv., Mar. 1981.

(24) Olsen, D., and J. Kuehn. Migrant ftesponse to

Industrialization in Four Rural Areas, 1965-1970.

AER-270. U.S. Dept. of Agr., Econ. Res. Serv.,

1974.

(25) Reid, J., C. Hendler, and E. Whitehead. Federal

Funds in 1979: Geographic Distribution and Recent Trends. Staff Report No. AGES820105.

U.S. Dept. of Agr., Econ. Res. Serv., Apr. 1982.

and others. Industrial invasion of

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Richards. "Industrialization, Income Benefits,

and the Rural Community," Rural Sociology,

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(27) Schaub, J. The Nonmetro Labor Force in the

Seventies. RDRR-33. U.S. Dept. of Agr., Econ.

Res. Serv., 1981.

(28) Shaffer, R., and L. Tweeten. Economic Changes

From Industrial Development in Eastern Oklahoma. Agricultural Experiment Station Bulletin

B-715. Oklahoma State University, 1974.

Nonmetropolitan America. New York: Preager

Pubhshers, 1976.

(33) Till, T. "Industrialization and Poverty in Southern Nonmetropolitan Labor Markets," Growth

and Change, Vol. 5, Jan. 1974.

(34) Tweeten, L., and G. Brinkman. Micropolitan Development Ames: Iowa State University Press,

1976.

(35) U.S. Department of Agriculture, Economic Research Service. Employment and Population

Growth in Nine Nonmetro Kentucky Counties.

ERS Staff Report. No. AGES811210. Jan. 1982.

(36)

(37)

(38)

(40)

(41)

(29) Smith, E., and G. Summers. How New Manufacturing Affects Rural Areas. Rural Development (42)

Series No. la. Southern Rural Development

Center, Mississippi State University, Sept. 1978.

U.S. Department of Commerce, Bureau of the

Census. Characteristics of the Population Below

the Poverty Level: 1979. Current Population Reports, Series P-60, No. 130. Dec. 1981.

. Money income of Households in the

United States: 1979. Current Population Reports,

Series P-60, No. 126. 1981.

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(39) Unpublished data from the March

1980 Current Population Survey.

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Statistics. Employment and Earnings, Vol. 27,

No. 1, Jan. 1980.

31
Daberkow, Larson, Coltrane, and Carlin

Appendix A: Survey Design and Procedures

Researchers from the Eeonomic Research Service

designed the study, developed the questionnaires,

edited the data, and conducted the analysis. Statisticians from the Statistical Reporting Service [SRS)

participated in developing the sample and survey

materials. Data were collected by enumerators from

the Louisville, Ky., SRS office.

A random stratified multiple-frame design was used

to survey employers and households. The establishment list frame was composed both of private-sector

and public-sector employers.^ Military installations

were excluded from the list frame. A sample of

establishments was selected for interview. The

characteristics of employers were based on this

sample. A sample of persons employed in the sample establishments was selected for interview in the

household survey. This sample of employees became

the list frame for the household sample and the basis for the linked worker sample.

Area frames were used to account for the incompleteness of the list frames. The establishment area

frame was used to estimate those establishments

not included on the list. The household area frame

was used to collect data on those households whose

members were either all unemployed, out of the labor force, self-employed, employed by establishments

not on the list, employed by establishments on the

list that refused to participate in the survey, or employed outside the study area.

The establishment sample was stratified by Standard Industrial Classification (SIC) and by three size

groups as measured by the number of employees.

There were nine SIC groups: [1] mining, (2] construction, (3) manufacturing, (4) transportation, communication, and public utilities, (5] wholesale trade,

(6) retail trade, (7) finance, insurance, and real

estate, (8] other services, including agricultural services, and (9) government units. The three establishment size group were: (1) 19 or fewer employees,

(2) 20 to 99 employees, and (3) 100 or more employees (app. table 1).

The employer size groups were not proportionately

distributed; thus, each employer size group was

'The list frame of establishments was constructed from telephone directories, a State Employment Security list of employers,

Government census list, and contact with local officials.

sampled at a different rate to assure a representative sample. Private and public establishments with

19 or fewer employees were sampled at the rate of

1 in 10. Units with 20-99 employees were sampled at

a rate of 1 in 4, and large establishments with 100 or

more employees were all enumerated. When a list

frame establishment with fewer than 100 employees

refused to participate in the survey, a replacement

was drawn from the same SIC and size group. Information collected from the establishments included

principal products or services provided, total employment for 1974 and 1979, and employment characteristics such as occupations of workers, male

and female workers, part-time and full-time workers, and average wage and salary of full-time

workers.

Before the enumerator concluded the interview with

a sampled list frame establishment, the enumerator

drew a random sample of employees from the establishment's list of current employees. Each employee

selected from the list became part of the list frame

for households and was interviewed in his or her

home. Enumerators collected information on household composition, characteristics of household members, employment status, employment history back

to 1974, type of job held by all household members

16 years of age and older, residency status, and

household income. The establishment's identification

was included on the employees' questionnaire, thereby

assuring that linkage could be made with the unit's

characteristics during data analysis.

The sajnpling rate of employees also varied by establishment size. Employees in establishments employing 19 or fewer employees were sampled at a

rate of 1 in 4, employees in establishments with

20-99 employees were sampled at a rate of 1 in 10,

and employees in establishments with over 100 employees were sampled at a rate of 1 in 40.

The supplemental area frame sample for households

and establishments was stratified into three classes,

or strata, based on three land use patterns in the

nine-county Kentucky site (app. table 2). The three

strata were urban, suburban, and rural. Each segment was a parcel of land varying in size by strata.

In the urban stratum, a segment was approximately

a city block; in the suburban stratum, the segment

was about one-eighth of a square mile, and in the

rural stratum, a segment was about 1 square mile.

The segments were sampled at a rate of 1 in 25 in

the suburban segments, 1 in 17 in the urban segments, and 1 in 50 in the rural segments. The household sampling rate within the sampled segments

32
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Appendix table 1—List frame universe and sample of establishments» employees, household members and

employer-employee link sample, by strata

Industry

and

size

strata^

Establishment

universe

Establishments

(primary sample units)

Completions

Out of

business^

Employee household Employer-employee

Employee members completions link sample

household age 16 years and

completion^ over

Mining:

Small

Medium

Large

Construction:

Small

Manufacturing:

Small

Medium

Large

TCPU:^

SmaU

Medium

Large

Wholesale trade:

Small

Large

Retail trade:

Small

Medium

FIRE:^

Small

Medium

Service:

Small

Medium

Large

Government:

Small

Medium

Large

Total

160

23

3

408

136

47

37

211

14

2

235

1

1,162

69

173

22

705

12

4

171

25

21

3,641

26

9

9

31

13

4

1

19

1

82

10

15

5

52

2

4

16

5

19

337

11

30

1

0

0

0

78

Number

15

11

22

144

12

14

8

18

4

54

23

11

14

42

8

38

38

21

120

628

30

Employers Employees

16 6 8

4 2 2

2 1 1

13 15

26 5 11

55 7 21

331 26 144

29 10 12

33 3 14

20 1 8

44 13 18

7 Í 4

125 33 54

60 6 21

27 9 11

31 5 14

91 27 41

16 2 8

81 3 38

89 14 38

47 5 21

269 18 120

,433 210 624

'Small, fewer than 20 employee?; medium 20-99 employees; and large, 100 or more employees.

^Establishments which were part of the sample, but had terminated operation by the survey date.

^In situations where a household had more than one member employed by a Hst frame employer, the household expansion factor was

adjusted to reflect the household's increased probability of being selected.

"TCPU is transportation, communications, and pubhc utilities.

^FIRE is finance, insurance, and real estate.

was 1 in 6 in the urban stratum, 1 in C in the suburban stratum» and 1 in 2 in the rural stratum. Enumerators interviewed all establishments not included

on the list frame of establishments that were found

in the sampled segments.

The survey field work was divided into three phases.

Phase I involved identifying households and establishments in the area frame. The area frame sample

was a two-stage stratified cluster design, where the

first stage of sampling was the segment and the sec33
Daherkow, Larson, Coitrane, and Carlin

ond stage was the household or estabhshment. Phase

2 involved interviewing the selected list frame establishments and obtaining the employee list. Phase

3 required screening area frame households and

area frame establishments and interviewing qualifying households and establishments. During Phase 3,

enumerators also interview^ed employee households

obtained from employer lists during Phase 2. They

collected data by personal interviews conducted

during December 1979 for establishments and January 1980 for households.

The questionnaires from households and employers

were edited to detect and correct omissions and inconsistencies. Questionnaires for which data entries

could not be verified were deleted from the sample.

Before a questionnaire was deleted, respondents

were recontacted for additional data, and in some

cases missing data were estimated. Completed questionnaires were obtained from 364 private-sector establishments, 40 public-sector units, and 900 households which contained 1,961 persons aged 16 and

over (app. table 3).

Appendix table 2—Area frame universe, sample segments and completions for establishments and

households, by stratum

Stratum' Segment

universe

Segments

sampled

Establishments

Segments

with

one or more

completions

Employer

completions

Households

Completions

Segments

with

one or more

completions

Households

Household

members

age 16

years and

over

Number

Suburban 4,568

Urban 1,160

Rural 3,283

Total 9,011

183

69

66

318

27

19

15

61

28

32

7

67

112

32

55

199

119

33

120

272

223

63

242

528

Appendix table 3—Questionnaires completed by establishments and households, by sample frame

Sample frame

Establishment

questionnaires

completed

Household

questionnaires

completed

Questionnaires completed

for household members

16 years old and over

Number

Establishments:

Private sector

List frame

Area frame

Public sector

List frame

Total establishments

364

297

67

40

40

404

Households:

List frame

Area frame

Total households

628

272

900

1,433

528

1,961

Not applicable.

34
Distribution of Employment Growth in

Nine Kentucky Counties: A Case Study

Appendix B: Calculation of Variance Statistics

The complexity of the survey design precluded using

simple random sample formulas to calculate certain

variance statistics that were required to compute

confidence intervals and to test differences between

means, proportions, and totals. We used the formulas given below to approximate the variances required for statistical testing.

We used the same formulas to calculate variances

for subclasses. In situations where the subclass size

was considerably less than the total number of primary sample units or observations, the resulting

estimate may have seriously underestimated the

subclass variance [20]. Unless otherwise noted, no

statistical testing was done unless the subclass contained at least 30 observations.

For the variance of total estimates, the formula is:

v[Y) - E (1 - y FL

h=i nh- 1 1 = 1

hi

^h

where:

(1 - f^) = the finite population correction

factor,

Uj^ = the number of primary sample units

in hth strata, and

Yj^j = the variable to be estimated within

the ith primary sample unit and

hth strata

where:

i = l

For the variance of ration means, the formula is;

V(R) = V^^ x^ L

X.V)J

V(Y] + W V(X]

- 2R COV (X

For the variance of difference between two ratio

means or two totals, the formula is:

V(R - R') - V(R) + V(R^) - 2 COV (R,R^)

i^ = the primary sample unit sampling

rate for the hth strata,

F^ = the expansion factor for the hth

strata,

In all comparisons in the report, we assum.ed the covariance to be zero. Although the clustering aspect

of the survey design may underestimate the variance if the covariance term is not included, the bias

vv^as not serious [20].

35
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