Kentucky Job Growth Stalls; Workforce Participation Declines

LEXINGTON, Ky. — New federal employment data shows Kentucky has posted no net job growth over the last two years, a troubling shift from the robust recovery that followed the COVID-19 pandemic, according to research from the Kentucky Center for Economic Policy.

The revised data from the Bureau of Labor Statistics reveals that job growth has weakened across all major Kentucky industries, with net job losses in manufacturing, construction, trade, transportation, utilities, and professional and business services. Nearly all remaining job growth is concentrated in the health care sector. The slowdown reflects the end of federal stimulus spending and economic strain from tariffs, trade uncertainty, price spikes, and other policy headwinds.

While Kentucky's unemployment rate stood at 4.2 percent in February 2026, economists caution the figure masks a deeper problem. The state's labor force participation rate has declined by 0.5 percent in just the last three months, indicating that fewer Kentuckians are actively seeking work. The University of Kentucky's Center for Business and Economic Research noted that recent unemployment improvements "appear to reflect workers leaving the labor force rather than finding jobs."

The statewide trends mirror national patterns, as strong post-pandemic growth has given way to economic uncertainty. Consumer confidence has hit record lows, and federal budget cuts from recent legislation are expected to deepen in the coming decade. These warning signs have emerged even as the broader economy has avoided a recession.

In Lexington, the city enjoyed strong job growth during the pandemic recovery, with employment rising by 8,359 people from 2020 to 2022. The Greater Lexington region has maintained its top 10 ranking among mid-sized U.S. metros for economic development activity, though growth is expected to moderate from pandemic-era levels.