Job Creation in the Bowling Green/Warren Countyarea

Kevin Croslin

Spring 2005

Philosophy 401

Job Creation in the Bowling Green/Warren CountyArea

Unemployment has been the topic of many studies. However, focusing on the level of unemployment in a given area is a fatally flawed tactic. For instance, unemployment rates do no include subtle indicators such as the reasons why a person is unemployed. [1] A person may be unemployed owing to personal frailties such as a low skill level or poor work ethic. These flaws do not reflect poor job opportunities, but rather poor employee potential. Because of the defects inherent in a study of unemployment, this project will focus alternatively on employment rates and job creation techniques in the Bowling Green/Warren County area. The main intent of this document is to provide a sufficient base upon which future research can expand.

The results of this project will depend heavily on information collected from United States Census Bureau along with state and local agencies devoted to the economic development of Bowling Green and the surrounding area. Additionally, this project will be subject to the scrutiny of the Western Kentucky University Department of Philosophy and Religion, specifically the Social Ethics Research Seminar headed by Dr. Alan B. Anderson.

Job creation often focuses on designing public policy to attract major corporations to certain areas. However, major corporations account for only twenty percent of the private sector workforce Nationwide. This type of job creation also involves lengthy periods of preparation including, but not limited to, the negotiation of tax incentives, preparing the necessary infrastructure to facilitate a large-scale operation, and the actual construction of the production facilities. The fatal problem with focusing on attracting large industry is location. New industries normally locate in industrial parks, which are often much too far away from those who need jobs the most.

“[Small Businesses] provide two-thirds to three-quarters of the net new jobs in this country and currently employ over half of private-sector workers.”[2] Because small business owners perform the heavy lifting when employing the available labor force, the majority of this document will detail the current small business environment in the BG/WC area and its ability to create new jobs. In addition, this project will present several techniques used to lessen the restraints placed on existing small businesses as well as attract small businesses from other areas to set up shop in the BG/WC area.

Bowling Green/Warren CountyJob Creation Institutions

Financial Assistance—

The Commonwealth Small Business Development Corporation is an organization committed to economic growth within the state of Kentucky. “The CSBDC works with state and local economic development organizations, banks, and the SBA to achieve community economic development through job creation and retention by providing long-term fixed asset financing to small business concerns.”[3] Businesses can borrow up to forty percent of project cost or $1,000,000 per project. The terms of the loan are set at twenty years for land and building, and ten years for equipment.

Currently in the City of Bowling Green, there exist three major institutions designed to provide financial assistance to employers. They are the Job Development Incentive Program, the Bowling Green Revolving Loan Fund, and the Community Development Block Grant. Each of these institutions provides a unique service to BG/WC area employers.

The Job Development Incentive Program provides a very specific set of criteria that must be met before an employer can collect benefits. The program is available only to new and existing services, industrial or technological companies. The following criteria must be met for eligibility: the company must create a minimum of twenty new jobs, from which $1,667,000 must be produced at the end of the five-year incentive period. Benefits can be obtained in the form of a credit or an upfront city loan. Acquired benefits may be put toward construction, renovation, machinery, working capital, land acquisition, and building. The amount of the benefits will generally be between fifty and seventy percent of the two percent City Occupational License fees withheld from employees during the five-year incentive period.

The Bowling Green Revolving Loan Fund was designed to create jobs within the city by offering low-interest loans of up to $10,000 per job created. Funded through the repayment of previous economic development loans from the state, the loan fund is only utilized by those willing to ensure that fifty-one percent of the jobs created go to low to moderate-income employees. The possible uses for the loans are synonymous with those of the Job Development Incentive Program.

By applying to the Kentucky Department of Local Government on behalf of an employer, the Community Development Block Grant program can provide incentives to employers for creating jobs in the BG/WC area. There are three types of benefits within this program. The first type comes in the form of a loan of up to $20,000 per job created. The stipulations are synonymous with that of the Bowling Green Revolving Loan Fund. The second type of benefit goes to “non-traditional” economic development: businesses such as day care, transportation, and educational programs. The final type of benefit goes to businesses that provide help for those willing to expand and create microenterprise operations.

Work Force Education Programs—

Education is the key to a healthy economy. By educating the available labor force, those who otherwise would be working menial low-paying jobs will have the skills and training necessary to advance into middle to higher income positions. This section will discuss the many different programs that are available to Kentucky residents.

“The Bluegrass State Skills Corporation's (BSSC) basic purpose is to improve and promote employment opportunities for the residents of the Commonwealth through training grants and investment credits for skills training programs which create partnerships with business and industry who absorb a share of program costs.” [4] The BSSC offers two programs: Grant-in-Aid and Skills Training Investment Credit.

The Grant-in-Aid program is provided to manufacturing, non-manufacturing, public hospitals, non-profit hospitals, and consortia for the training of their employees. The company must match or exceed the loan amount and a final reimbursement is expected.

“The Skills Training Investment Credit Act is an economic development initiative which aids existing companies in their efforts to develop a skilled workforce. It allows companies to recover fifty percent (50%) of their approved costs for occupational and skills upgrade training costs through an income tax credit limited to $500 per Kentucky resident employed not to exceed $100,000 per company per biennium.”[5] This program is available to a large variety of employers. However, an eligible applicant will have been in existence for no less than three years prior to the application submission. Any employer who expects reimbursement from the employee for any training that he or she has received will not be eligible for benefits under the Skills Training Investment Credit Act.

Positive Effects of State and Local Policy

Bowling Green currently ranks third in Site Selection 2003’s Top U.S. Small Towns for corporate expansion. Kentucky currently holds seventh place for the lowest overall business cost in the nation. Chart one below details the current economic growth in the Bowling Green/Warren County area. Notice the amount of growth in jobs since 2002.

Potential Problems in the Bowling Green/Warren CountyArea

There are three census tracts in Bowling Green that have poverty levels that are above the area average for the Bowling Green/Warren County area. While the poverty level has declined in the years between the 1990 and 2000, the level of segregation has declined at a much slower rate. Because of social institutions such as slavery and Jim Crow, concentrated populations of blacks have come to be areas of concentrated crime. Slavery and Jim Crow forced blacks into ghettos and devastated their upward mobility. Concentrated poverty acts as a breeding ground for social ills such as the abuse of government welfare programs, pregnancy out of wedlock, and gang violence.

In order to alleviate the Bowling Green/Warren County area of problems related to segregation, certain programs should be instituted. Following the example of Montgomery County, Maryland, the BG/WC area should require that low to moderately priced homes be built in all new subdivisions.[6] This technique is called inclusionary zoning. This would allow blacks living in poverty-stricken areas to move to neighborhoods that are more affluent. Affluent neighborhoods attract affluent job centers. Inclusionary zoning provides better access to already existing job centers. As a bonus, a middle-income environment coupled with strict property maintenance codes will force residents to upgrade their living situation. A sustained middle class living situation will be more conducive to affluence in future generations than that in a concentrated poverty scenario.

Overall, the economic situation in the Bowling Green/Warren County area is on the upswing. However, unemployment also seems to be on the upswing. This is not absolute cause for alarm. Unemployment can be increased for a number of reasons that are not controlled by governmental ordinance. Also, the aforementioned job creation plans are still very young in nature and have not had ample time to take full effect. With the help of some major building requirements, the BG/WC area will be well on its way to becoming an integrated, affluent community. For the purposes of reference for future research, there are two charts attached to this project in order to provide a more detailed look at Bowling Green’s economic situation.

Table 1

Summary of Recent Locations and Expansions, 2002-Present
Reported
Companies / Jobs / Investment
Manufacturing Location / 3 / 413 / $170,459,017
Manufacturing Expansion / 28 / 1,895 / $323,328,884
Supportive/Service Location / 3 / 220-420 / $3,816,060
Supportive/Service Expansion / 1 / 30 / $0
Click here for detailed location and expansion information.
Note: Totals include announced locations and expansions.
Source: Kentucky Cabinet for Economic Development (03/23/2005).
Employment by Major Industry by Place of Work, 2002
WarrenCounty / Labor Market Area
Employment / Percent / Employment / Percent
All Industries / 49,166 / 100.0 / 143,650 / 100.0
Agriculture, Forestry, Fishing and Hunting / 64 / 0.1 / NA / NA
Mining / 171 / 0.3 / NA / NA
Construction / 2,559 / 5.2 / 6,664 / 4.6
Manufacturing / 8,619 / 17.5 / 36,729 / 25.6
Trade, Transportation, and Utilities / 10,206 / 20.8 / 27,238 / 19.0
Information / 619 / 1.3 / 1,530 / 1.1
Financial Activities / 1,986 / 4.0 / 5,255 / 3.7
Services / 16,805 / 34.2 / 41,667 / 29.0
Public Administration / 1,851 / 3.8 / 5,151 / 3.6
Other / 16 / 0.0 / NA / NA
Source: U.S. Department of Labor, Bureau of Labor Statistics.

Table 2

Chart 1: Breakdown of Bowling Green/Warren County

Neighborhood

Population

Median

Property Values

Median Family Income1

Racial Makeup2

High School Graduates

Poverty

1990 Population

1990 Poverty Level 3

1990 Racial Makeup3

WarrenCounty / 92,522 / $100,400 / $36,151 / 87% white / 80.3% / 15.4% / 76,673 / 17.4 % / 90.9% white
Bowling Green / 49,296 / $104,200 / $ 27,655 / 80.8% white / 77.9% / 21.8 % / 40,641 / 23% / 86% white
Census tract 101 * / 2,433 / $85,800 / $ 13,295 / 74.8% white / 58.9% / 41.7% / 2,289 / 49.8% / 84.9% white
Census tract 102* / 4,107 / $57,400 / $ 17,000 / 43.3% white / 53.1% / 39.2% / 3,680 / 52.1% / 46.1% white
Census tract 103* / 3,562 / $48,600 / $ 21,219 / 72.3% white / 47.5% / 36.9% / 3,407 / 38% / 84.5% white
Census tract
104* / 4,231 / $95,800 / $ 19,833 / 83.4% white / 97.5% / 36.1% / 3,262 / 42% 4 / 91.4% white
Census tract 105* / 2,268 / $95,600 / $ 23,832 / 89.4% white / 84.7% / 26.6% / 2,200 / 28.6% / 92.8% white
Census tract 106* / 3,781 / $99,700 / $ 35,068 / 90.3% white / 85.7% / 11.3% / 3,827 / 6.5% / 95.1% white
Census tract 107* / 7,395 / $136,900 / $ 37,190 / 86.2% white / 89.3% / 12.7% / 5,234 / 10.2% / 92.3% white
Census tract 108* / 7,861 / $143,000 / $ 50,047 / 92.0% white / 89.0% / 10.7% / 5,474 / 10.3% / 94.1% white
Census tract 109* / 3,953 / $99,200 / $ 38,561 / 94.2% white / 88.5% / 12.4% / 3,770 / 12.7% / 96.5% white
Census tract 110* / 6,601 / $87,100 / $ 26,692 / 81.0% white / 79.2% / 24.2% / 4,631 / 25.4% / 89.6% white
Census tract 111* / 4,130 / $91,300 / $ 44,688 / 90.0% white / 84.7% / 11.8% / 3,710 / 10.2% / 93.2% white
Census tract 112 / 3,947 / $72,900 / $ 34,036 / 74.5% white / 71.9% / 19.4% / 3,923 / 19.7% / 82.5% white
Census tract 113 / 3,390 / $83,000 / $ 33,125 / 88.8% white / 74.6% / 17.7% / 3,079 / 20.9% / 93.3% white
Census tract 114* / 7,065 / $163,300 / $ 58,887 / 95.1% white / 94.9% / 5.6% / 4,858 / 2% / 97.3% white
Census tract 115 / 5,387 / $105,100 / $ 49,702 / 97.1% white / 87.5% / 3.8% / 4,243 / 10.3% / 97.6% white
Census tract 116 / 5,223 / $85,700 / $ 41,076 / 89.9% white / 76.9% / 8.8% / 4,659 / 14.3% / 90.7% white
Census tract 117 / 6,127 / $74,300 / $ 32,821 / 92.3% white / 74.6% / 13.9% / 5,624 / 16% / 95.7%
White
Census tract 118 / 5,841 / $84,100 / $ 37,334 / 98.1% white / 75.5% / 14.5% / 5,145 / 11.4% / 99% white
Census tract
119* / 5,220 / $99,600 / $ 48,529 / 94.9% white / 82.8% / 5.6% / 3,588 / 9.6% / 94% white

Source-Lockhart, Caleb “An Analysis of Bowling Green by Neighborhood”

[2] Price, Deborah, “Small Business” Office of Congresswoman Deborah Price.

[3]ThinkKentucky-Cabinet for Economic Development “The BluegrassState Skills Corporartion”

[4]ThinkKentucky-Cabinet for Economic Development “The BluegrassState Skills Corporartion”

[5]ThinkKentucky-Cabinet for Economic Development “The Grant in Aid Program”

[6]Rusk, David Inside Game, Outside Game. Washington D.C: Brookings Institution Press 1999.