Building a Kentucky Workers Can Afford – Kentucky Center for Economic Policy

Report on Economic Strategy for Sustainable Development in Kentucky

Analysis of Current Economic Conditions and Alignment with Sustainable Development Goals (SDGs)

An examination of Kentucky’s economic landscape reveals a significant disconnect between labor force participation and economic prosperity for a large segment of the population. While workforce engagement is at a high, many workers face challenges that directly impede progress toward several key United Nations Sustainable Development Goals (SDGs). These challenges include wage stagnation, the rising cost of living, and insufficient access to essential services, creating barriers to achieving a sustainable and equitable future.

The prevailing economic model has resulted in conditions that are misaligned with the following SDGs:

• SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth): Wages have not kept pace with the cost of essentials, pushing many working families toward economic insecurity and undermining the principle of decent work for all.
• SDG 10 (Reduced Inequalities): A growing disparity exists where economic gains are disproportionately concentrated, while working-class families struggle. This is exacerbated by policies that favor corporate and wealthy interests over public needs.
• SDG 3 (Good Health and Well-being) and SDG 11 (Sustainable Cities and Communities): Lack of affordable housing, healthcare, and secure retirement options places significant stress on individuals and communities, hindering overall well-being and community sustainability.

Policy Recommendations for Inclusive and Sustainable Growth

A two-pronged strategy is proposed to foster an economy that aligns with the Sustainable Development Goals. This involves reforming economic rules to enhance job quality and worker empowerment, alongside collective public investment to address community needs and the cost of living. These strategies are designed to create a virtuous cycle of economic development, leading to increased affordability, job creation, expanded local spending, and enhanced workforce productivity.

Enhancing Job Quality and Economic Security (SDG 1, SDG 4, SDG 8, SDG 10)

To ensure decent work and reduce poverty, a series of targeted interventions is required to improve wages, working conditions, and access to skills development.

1. Improve Wages and Working Conditions:
   • Raise the state minimum wage to $17 per hour to directly benefit 26% of the workforce, advancing SDG 8 and SDG 1.
   • Increase the sub-minimum wage for tipped workers.
   • Enact and enforce stronger worker rights legislation, including addressing worker misclassification, ensuring overtime pay, mandating paid sick days, and improving access to unemployment insurance.
2. Promote Unionization and Collective Bargaining:
   • Repeal “right-to-work” legislation to strengthen unions, which are correlated with higher wages and better benefits, directly supporting SDG 8 and SDG 10.
   • Restore the prevailing wage law for public construction projects.
   • Expand collective bargaining rights for public sector employees.
3. Ensure Affordable Education and Training:
   • In alignment with SDG 4 (Quality Education), reinvest in public higher education to reverse funding cuts and reduce tuition costs.
   • Establish a “first dollar” scholarship program equivalent to two years of community college tuition to reduce student debt and increase degree completion.
   • Expand access to union apprenticeships and fund pre-apprenticeship programs to create pathways to skilled trades.

Strengthening Communities for Sustainable Development (SDG 4, SDG 7, SDG 11, SDG 13)

Building resilient and sustainable communities requires strategic public investment in housing, education, and climate adaptation.

1. Develop Affordable Housing:
   • Address the state’s housing deficit of 206,207 units to advance SDG 11 (Sustainable Cities and Communities).
   • Allocate $500 million from the Budget Reserve Trust Fund to the Affordable Housing Trust Fund to construct affordable, mixed-income housing.
   • Secure sustainable funding for the AHTF through mechanisms like a graduated real estate transfer tax and a tax on short-term rentals.
   • Implement a state-funded property tax circuit breaker to ease housing costs for low- and middle-income households.
2. Reinvest in Public Education:
   • To achieve SDG 4 and reduce educational inequality (SDG 10), restore public school funding to 2008 levels. An investment of $718 million annually would allow for teacher raises, hiring of additional staff, and funding for essential programs like school meals and mental health services.
3. Increase Climate and Community Resiliency:
   • In response to increasing natural disasters, and to advance SDG 13 (Climate Action) and SDG 11, invest an initial $300 million into a resiliency fund for mitigation projects.
   • Create a “Kentucky Colonels Corps” to provide living-wage jobs focused on community resilience projects.
   • Promote SDG 7 (Affordable and Clean Energy) by enacting a portfolio standard for utilities to increase energy efficiency and renewable energy adoption, thereby lowering energy costs for residents.

Supporting Families and Promoting Well-being (SDG 1, SDG 3, SDG 5)

Policies that support family stability and health are fundamental to achieving long-term sustainable development.

1. Enhance Child and Family Support Systems:
   • Establish a refundable state child tax credit to combat child poverty, a key target of SDG 1.
   • Implement a statewide paid family leave program of 12 weeks, a policy that supports SDG 3 (Good Health and Well-being) and SDG 5 (Gender Equality).
   • Phase in universal public pre-school and expand the Child Care Assistance Program to make childcare affordable for all families.
2. Control Healthcare Costs:
   • To make progress on SDG 3, leverage the state’s purchasing power to create a basic health plan for those above Medicaid eligibility, establish a reinsurance program for small businesses, and explore an employer public option.
   • Use regulatory authority to increase price transparency, set spending caps, and enact a Patients’ Bill of Rights to limit out-of-pocket costs and medical debt.
3. Expand Secure Retirement Options:
   • Address the retirement crisis by expanding the Kentucky Deferred Comp program to be available to all private-sector workers, promoting financial security in alignment with SDG 1 and SDG 3.
   • Increase access to home- and community-based care for the elderly to support aging in place.

Fostering Fiscal Equity and Strong Institutions (SDG 10, SDG 16)

Funding these initiatives requires a balanced and equitable tax system that supports public investment and strengthens democratic institutions.

• Reform the State Tax Code: To advance SDG 10 (Reduced Inequalities) and SDG 16 (Peace, Justice and Strong Institutions), the state must rebalance its tax structure. Currently, working-class Kentuckians pay a higher share of their income in state and local taxes than the wealthiest residents.
• Generate Revenue Equitably: Revenue for the proposed investments can be raised by:
  1. Restoring a graduated income tax.
  2. Implementing taxes on concentrated wealth, such as on wealth proceeds and large estates.
  3. Closing corporate tax loopholes to ensure corporations contribute their fair share to public needs.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article discusses several interconnected economic and social issues in Kentucky that are relevant to multiple Sustainable Development Goals (SDGs). The analysis identifies the following SDGs:

• SDG 1: No Poverty: The article highlights that many workers are not getting ahead, paychecks don’t reflect their efforts, and wages aren’t keeping up with the cost of living, leading to struggles with essentials like groceries and housing. It also proposes a child allowance to lift children out of poverty.
• SDG 3: Good Health and Well-being: The text points to unaffordable health care, rising medical debt, and the need for a universal health care system. It also mentions addiction as a consequence of industry closures.
• SDG 4: Quality Education: The article addresses the skyrocketing costs of higher education, significant student loan debt, and cuts in state funding for both higher education and public schools, which has led to a teacher shortage and lower pay.
• SDG 8: Decent Work and Economic Growth: This is a central theme. The article focuses on the lack of good jobs with living wages, suppressed wages, the decline of union membership, and the need to improve working conditions, raise the minimum wage, and protect workers’ rights.
• SDG 10: Reduced Inequalities: The article explicitly describes an economy “rigged by the powerful few,” where wealthy corporations and the ultra-wealthy benefit from tax breaks and policies that leave the working class struggling. It points out the disparity in the tax burden between the wealthy and working-class Kentuckians.
• SDG 11: Sustainable Cities and Communities: The text identifies a severe housing affordability crisis, a growing homeless population, and a significant deficit of affordable homes and apartments.
• SDG 13: Climate Action: The article notes that Kentucky has experienced a high number of natural disasters and proposes investments in resiliency plans, infrastructure improvements to protect against extreme weather, and a shift towards clean renewable energy.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the problems described and the solutions proposed in the article, the following specific SDG targets can be identified:

1. Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions. This is addressed by the proposal for a child tax credit that would “lift approximately 20% of Kentucky’s kids above the poverty line.”
2. Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all. The article’s call to fight rising healthcare costs, reduce medical debt, and explore options like a basic health plan and a universal system directly aligns with this target.
3. Target 4.3: By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university. The article’s focus on making higher education and training affordable, reinvesting in public universities, and reducing student debt supports this target.
4. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. The call to raise the minimum wage to a living wage ($17/hour), ensure fair pay, and create “family-supporting jobs” is central to this target.
5. Target 8.8: Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment. The article supports this by advocating for the repeal of “right-to-work” laws, growing unions, enforcing rules against worker misclassification, and requiring paid sick days.
6. Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality. The proposal to rebalance the “upside-down tax code” by restoring a graduated income tax and closing corporate loopholes directly addresses this target.
7. Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums. The article’s proposal to build affordable housing to cut the state’s housing gap and create a state-funded property tax circuit breaker program aligns with this target.
8. Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. This is addressed by the recommendation to develop resiliency plans and invest in infrastructure improvements to protect against flooding, tornadoes, and wildfires.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article provides several specific data points and statistics that can serve as or imply indicators for measuring progress.

• For SDG 1 (No Poverty): The article states a proposed child allowance could lift “approximately 20% of Kentucky’s kids above the poverty line.” This implies using the proportion of children living below the national poverty line (related to Indicator 1.2.1) as a key metric.
• For SDG 4 (Quality Education): The article mentions that state funding for higher education has been cut by “one-third over the last 15 years” and there has been a “20% decline in average pay for Kentucky teachers.” These figures can be used as indicators to track government expenditure on education as a percentage of total government expenditure and teacher salaries relative to other professions (related to Indicator 4.c.1).
• For SDG 8 (Decent Work): The article provides several clear indicators:
  • The current minimum wage of “$7.25 an hour” versus the proposed “$17 an hour.” This directly relates to measuring average hourly earnings (Indicator 8.5.1).
  • The decline in union membership from “26% in 1979 to 11% today.” The union density rate is a key indicator of labor rights (related to Indicator 8.8.2).
• For SDG 10 (Reduced Inequalities): The article includes a graph showing “taxes as a share of income” for different income levels. This directly visualizes the effective tax rate by income quintile, which can be used to measure the progressivity of the fiscal system (related to Indicator 10.4.1).
• For SDG 11 (Sustainable Cities and Communities): The article quantifies the housing crisis by stating Kentucky “lacks an estimated 206,207 apartments and homes.” This housing deficit number is a direct indicator of the lack of adequate housing (related to Indicator 11.1.1).
• For SDG 13 (Climate Action): The statement that “Kentucky has had more declared natural disasters than any state since 2000” implies that the number of declared natural disasters can be used as an indicator to track the state’s vulnerability to climate-related hazards (related to Indicator 13.1.1).

4. Table of SDGs, Targets, and Indicators

Source: kypolicy.org