PHASE 1:
COMPETITIVE ASSESSMENT
Submitted by Market Street Services, Inc.
www.marketstreetservices.com
September 2013
Phase 1: Competitive Assessment
TABLE OF CONTENTS
Advantage Louisville Overview .......................................................................................................................................................... 1
Competitive Assessment ...................................................................................................................................................................... 3
Moderate population growth but minimal diversification .................................................................................... 4
Building a sustainable workforce ..................................................................................................................................... 7
A less educated workforce, but gaining ground .................................................................................................... 12
Child well-being and the future of Greater Louisville .......................................................................................... 18
Growth in the core .............................................................................................................................................................. 26
Recession and recovery .................................................................................................................................................... 29
Greater Louisville as a distribution hub ..................................................................................................................... 33
Potential for economic diversification ........................................................................................................................ 38
Greater Louisville’s emerging entrepreneurial and innovative activity ......................................................... 43
“A big city with a small town feel” ............................................................................................................................... 50
Conclusion ............................................................................................................................................................................................... 54
Methodology Appendix ..................................................................................................................................................................... 57
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Phase 1: Competitive Assessment
LIST OF FIGURES
Population growth, 2000–2012 and 2007–2012 ......................................................................................................................... 4
Racial and ethnic composition, 2012 ............................................................................................................................................... 5
Cultural-generational gap, 2012........................................................................................................................................................ 6
Age distribution, 2012 ........................................................................................................................................................................... 8
Components of population change, 2000–2012 ..................................................................................................................... 11
Adult educational attainment, 2011 ............................................................................................................................................. 14
Adult educational attainment, 2006–2011 ................................................................................................................................. 16
Enrollment growth by Kentucky county district, 2002–2012 .............................................................................................. 19
Survey question: In your opinion, what is the Greater Louisville Region's greatest weakness or challenge to
overcome? ............................................................................................................................................................................................... 19
Average freshman graduation rates, 2008–2012..................................................................................................................... 22
Postsecondary outcomes for class of 2010–2011 by county district............................................................................... 23
Teenage idleness, 2000–2011 .......................................................................................................................................................... 23
Child poverty, 2001–2011.................................................................................................................................................................. 24
Total poverty, 2001–2011 .................................................................................................................................................................. 25
Poverty by county, 2001–2011 ........................................................................................................................................................ 25
County job growth and population growth, 2002–2012 ...................................................................................................... 28
Nonfarm employment index, 2000–2013 ................................................................................................................................... 30
Unemployment rate, 2007–2013 .................................................................................................................................................... 32
Labor force participation rate, 2000–2012 ................................................................................................................................. 33
Survey question: In your opinion, what is the Greater Louisville Region's greatest strength? ............................. 34
Air freight and mail volume, 2012–2013 ..................................................................................................................................... 36
Passenger air, 2013 .............................................................................................................................................................................. 37
Employment by sector, 2002–2012 ............................................................................................................................................... 40
Employment growth and wages, 2002–2012 ............................................................................................................................ 41
Job growth factors, 2000–2010 ....................................................................................................................................................... 42
Share of employment in companies with fewer than 50 employees, 2002–2012 ..................................................... 45
Share of employment in companies younger than 10 years old, 2002–2012 ............................................................. 45
September 2013
Phase 1: Competitive Assessment
Patent trends, 2001–2011 ................................................................................................................................................................. 46
University R&D expenditures, largest research universities, FY 2010 ............................................................................. 47
September 2013
Phase 1: Competitive Assessment
ADVANTAGE LOUISVILLE OVERVIEW
Proactive regional economic development, once simply a good idea, is now an absolute necessity.
Prior to the Great Recession, it was possible for metros to get by and even thrive on historical competitive
advantages and the rising tide of a strong national economy.
Today, a new normal has taken hold. The economy is changing in fundamental ways, threatening to
undermine existing strengths, and the continually sluggish recovery indicates that the communities that
will prosper in the coming years will be those that take the initiative themselves. As proven by their actions
in recent years related to infrastructure, collaboration, and economic diversification, it is clear that the
Greater Louisville region’s leaders understand the new economic reality. Still, there is much work to be
done to push Greater Louisville to the level of education, innovation, prosperity, and opportunity for which
it aspires.
The region, led by Greater Louisville Inc.—The Metro Chamber of Commerce (GLI) and in partnership with
Market Street Services, is now poised to translate the momentum into a comprehensive regional economic
development strategy—Advantage Louisville—that will further transform and focus Greater Louisville in
the coming years, and not a moment too soon. Competition has never been fiercer as regions jockey to
position themselves for success in an increasingly global economy and talent pool. Simply put, no
community can afford to rest on its laurels or wait for better times ahead.
The process to develop the Advantage Louisville regional economic development strategy will allow
Louisville’s leadership to explore in-depth the two-state metro’s strengths, weaknesses, opportunities, and
challenges. At the same time, the process will provide an opportunity to assess the full range of
organizational and programmatic structures within GLI that will continue the vital work of building an
economic and community development organization capable of achieving deep and meaningful change in
the region while remaining competitive in a rapidly evolving world.
A strong and visionary Steering Committee from the public, private, and non-profit sectors will guide the
Advantage Louisville planning process from start to finish. In addition, a group of key regional community
leaders and top GLI staff will provide insights and technical expertise at critical points in the development
of the Advantage Louisville Strategy.
Phase 1: Competitive Assessment & Stakeholder Input
The Competitive Assessment will answer the question: How is the Louisville region doing? It will provide a
detailed look at the Greater Louisville region’s demographic, socioeconomic, and economic trends in
recent years compared to the metro areas of Austin, Texas; Indianapolis, Indiana; Nashville, Tennessee; and
Richmond, Virginia as well as the United States. The realities of the regional economy and workforce, wellbeing of residents, and growth and development of place-based assets will be examined.
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Phase 1: Competitive Assessment
As part of this phase, extensive stakeholder input involved a wide range of regional leaders and
stakeholders to identify competitive issues and regional priorities through focus groups, interviews, and a
community survey to understand the opportunities, challenges, and priorities for the region:
Focus groups and interviews: In order to bring the quantitative data to life and understand more
acutely where Greater Louisville has been and where it is going, Market Street conducted a series
of focus groups and one-on-one interviews with key stakeholders from across the region as well
as the Advantage Louisville Steering Committee. This input informs the Competitive Assessment
and will also be leveraged extensively in the Advantage Louisville Strategy.
Online survey: In addition to in-person input solicited through focus groups, interviews, and
discussions with the Steering Committee, an online community survey was open to the public. This
survey, which received more than 1,100 responses, provided important insight into a wide range of
issues and opportunities facing the region and will be used to develop the Advantage Louisville
Strategy.
The Assessment will leverage new research and analysis, stakeholder input, and existing reports and plans
to tell the Greater Louisville “story,” highlighting the key opportunities and challenges facing the
community.
Phase 2: Target Sector Analysis & Marketing Review
The Target Sector Analysis will draw on Phase 1 research and input to provide a look at Greater Louisville’s
economy that goes beyond traditional measures of current and potential future economic activity. The end
result will be a well-refined list of business sectors that highlight the most important existing and the most
promising emerging targets for Greater Louisville to pursue.
The Marketing Review component will assess the Greater Louisville’s marketing efforts in the context of
national best practices and emerging economic development marketing programs.
Phase 3: Advantage Louisville Strategy
The Advantage Louisville Strategy will serve as a unifying tool for GLI and its regional partners for
economic development in the region. It will also be a holistic strategy, in that it will focus on a broad range
of areas and issues that require a team approach across the region.
The final Advantage Louisville Strategy, the product of Market Street’s work with the Steering Committee,
will be a detailed roadmap that includes goals, objectives, and actions to achieve over a five-year period.
Phase 4: Implementation Guidelines
The Implementation Guidelines activate the Advantage Louisville Strategy and answer the question: “How
do we get started and continue momentum?” It will detail capacity and resource needs, performance
metrics, partner roles, annual action plans, and other tools necessary to successfully implement the
Advantage Louisville Strategy with tangible, measurable results.
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Phase 1: Competitive Assessment
COMPETITIVE ASSESSMENT
This Competitive Assessment examines Greater Louisville’s recent dynamics as a region in the context of
three critical characteristics: the people, the prosperity—that is to say, its economic structure—and the
quality of its place. In this framework, Market Street identified ten “storylines” about Greater Louisville that
are explored and developed throughout the report and are meant to inform future phases of the
Advantage Louisville process.
Greater Louisville is at a turning point. It has emerged from the recession, but high unemployment persists.
While many of its growth trends are positive and mirror the national dynamics, the region is not keeping
pace with the other metros with which it competes for jobs and talent.
It is important in this Competitive Assessment to highlight some of the major challenges the region faces in
terms of both reality and perception because Greater Louisville is at a turning point. There are many bright
spots in its demographic and economic trends, but right now these are not robust enough to propel the
region ahead of its competitors and establish a resilient and innovative economic framework for the region.
Concerning factors must be recognized now in order to be strategically tackled by the Advantage
Louisville initiative.
The assessment benchmarks the 13-county, two-state Louisville/Jefferson County, KY-IN metropolitan
statistical area—referred throughout this report as “Greater Louisville” or “the Greater Louisville region”—
against the United States and four other metro areas1:
 Austin, Texas: Austin was selected as an “aspirational” region for Greater Louisville, as it gained
national recognition for its success in young talent attraction, quality of life, business growth with
high-paying jobs, technology diversification, and community character.
 Indianapolis, Indiana: Fewer than two hours away, Indianapolis competes with Greater Louisville
for many prospective business relocations and for talent. Indianapolis and Greater Louisville are wellpositioned for many similar business sectors including logistics and advanced manufacturing.
 Nashville, Tennessee: Like the Louisville Metro Government, the Metropolitan Government of
Nashville and Davidson County is a consolidated city-county government in the urban core of the
metro. Nashville has spring-boarded from its country music roots into a well-marketed and thriving
cultural hub that includes a growing food, beverage, and technology entrepreneurs. Nashville also
competes with Greater Louisville for jobs and talent.
 Richmond, Virginia: Richmond is a mid-sized region with deep roots in industrial production and
distribution along the James River. It is home to a fast-growing public urban research university,
Virginia Commonwealth University. Combined with the Northern Virginia portion of the Washington,
1
For a complete list of the counties and cities included in these metro areas, see the Methodology Appendix at the end of this report.
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Phase 1: Competitive Assessment
D.C. metro, this area is largely the economic engine for the Commonwealth of Virginia. Many of its
growth rates in terms of population and jobs are similar to Greater Louisville’s.
Brief summaries of input gathered through focus groups, interviews, and the online regional survey
are presented in blue text throughout this Competitive Assessment.
MODERATE POPULATION GROWTH BUT MINIMAL DIVERSIFICATION
Population growth
Between 2000 and 2012, the Greater Louisville region has added almost 140,000 residents, growing by 11.8
percent. In the most recent five year span (2007 to 2012), population growth slowed to less than one
percent per year. The regional trend mirrors what was happening at the same time at the national level
during the Great Recession, when, according to the Pew Research Center, household mobility was limited
and birth rates declined. Greater Louisville’s slow but steady growth was eclipsed by all of the comparison
metros examined, and more closely matched the national pace of population change.
POPULATION GROWTH, 2000–2012 AND 2007–2012
Change 2000-2012
Total Population
2012
Change 2007-2012
#
%
#
%
Louisville
1,301,116
137,095
11.8%
51,405
4.1%
Austin
1,834,303
584,340
46.7%
256,447
16.3%
Indianapolis
1,798,634
273,517
17.9%
103,322
6.1%
Nashville
1,644,703
375,985
29.6%
178,482
12.2%
Richmond
1,282,305
185,192
16.9%
59,535
4.9%
313,914,040
32,489,440
11.5%
12,682,833
4.2%
United States
Source: U.S. Census Bureau, Population Estimates
The relatively slow population growth in Greater Louisville underscores how critical it is for the
region to invest in its homegrown population and develop quality opportunities that retain and
attract individuals and families to the region as it competes with other mid-sized and larger
markets.
Growth and diversification
Population growth in the United States is linked to increased racial and ethnic diversification. This trend is
propelling the nation towards “majority-minority” status, which, according to U.S. Census Bureau
projections, is anticipated to occur for the first time in 2043. However, many U.S. counties and cities have
already reached such a tipping point, representing the leading edge of demographic expansion. Between
2002 and 2012, the national population grew by over 25 million people; within that growth, non-Hispanic
whites accounted for less than four percent. The remaining 96 percent of growth is attributed to expanding
minority populations, with over half of that from the Hispanic population alone.
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Phase 1: Competitive Assessment
Population growth in the Greater Louisville region between 2002 and 2012 reflected a different
narrative as growth among non-Hispanic whites accounted for almost 40 percent of total regional
growth. In fact, the Greater Louisville region accounts for 0.4 percent of the national population, but
captured more than five percent of the total white population growth between 2002 and 2012. The
resulting demographic profile of the Greater Louisville region is one that has the largest share of white
residents (78.4 percent) of the comparison geographies.
RACIAL AND ETHNIC COMPOSITION, 2012
100%
90%
80%
5.0%
13.8%
31.9%
70%
60%
6.4%
6.8%
15.1%
15.3%
5.3%
5.0%
16.9%
29.5%
12.3%
7.1%
50%
40%
78.4%
30%
74.0%
73.5%
54.0%
20%
59.5%
63.0%
Richmond
United States
10%
0%
Louisville
White, Not Hispanic
Austin
Indianapolis
Black, Not Hispanic
Nashville
Hispanic
Asian, Not Hispanic
Other
Source: U.S. Census Bureau, Population Estimates
Still, minority populations in the Greater Louisville region are in fact growing rapidly. Between 2002 and
2012, all minority groups in the region increased at a faster rate than the national rate for the
cohort. In Greater Louisville, the Hispanic population has more than doubled with 115 percent growth
(36.8 percent nationally), and the Asian population grew by 61.7 percent (38.1 percent nationally).
International immigration has contributed to the region’s racial and ethnic diversification, a topic that will
be discussed in detail in the following section. However, despite the rapid population growth, minority
populations accounted for just over 60 percent of total growth in the region between 2002 and 2012, as
compared to 96 percent of national population growth during the same period.
The “racial/cultural divide” of Greater Louisville was frequently cited as one of its major challenges to
overcome. “The biggest impediment to Greater Louisville feeling like a diverse, welcoming place is the 3way geographic split between East, South and West. There doesn't seem to be any real racial/ethnic mixing
in the community, and that contributes to low-level, constant tension,” observed a survey respondent.
There is a need for leaders to “carry the race conversation, which has to be had.” When asked for one
recommendation for strengthening the effectiveness of the community’s leadership, one input participant
wrote, “Issues of race and class must be discussed openly and honestly. Leadership must be intentional
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Phase 1: Competitive Assessment
about breaking down race/class barriers. White people need to stand up and speak up about racial/class
inequality and take action to bridge the divides. That would be a ‘bridges project’ that would really benefit
the entire community!”
The segregation of the region along race and socioeconomic lines was a recurrent theme in stakeholder
input. “We are diverse, but also divided. Integration is a challenge we are still dealing with in lots of ways.”
The “feel” of Greater Louisville as a diverse, welcoming place is seriously impeded by the geographic splits
between east, south, and west in Jefferson County and between Jefferson and its neighboring counties.
“There doesn’t seem to be any real racial/ethnic mixing in the community, and that contributes to lowlevel, constant tension.”
Minority survey participants indicated that while, on the whole, they do feel attached to the region, they
still felt slightly less attached than total survey respondents.
This growth in minority residents and the implications of these dynamics can be further understood by
analyzing the youngest group of people in Greater Louisville. The racial and ethnic makeup of those under
the age of 18 provides insight into the characteristics of the next generation to enter the workforce and
leadership positions and the degree to which this generation differs from the oldest population cohort.
In the Greater Louisville region, as one would expect, the population under the age of 18 is more diverse
than the population over the age of 65. The trend is also evident among the comparison metros, especially
in Austin where whites account for less than half of those under the age of 18.
While the demographics of those under the age of 18 are most similar to the older generation in the
region relative to the comparison metros and nation, it is clear that the next generation of those
working, living, starting families, and leading in Greater Louisville will look different than those who
preceded them.
CULTURAL-GENERATIONAL GAP, 2012
% age 0-17 who are white
% age 65+ who are white
alone
alone Cultural-generational gap
Louisville
71.2%
88.1%
16.9
Austin
40.8%
76.4%
35.6
Indianapolis
66.5%
85.9%
19.4
Nashville
65.9%
86.3%
20.4
Richmond
53.1%
71.6%
18.5
United States
53.0%
79.5%
26.5
Source: U.S. Census Bureau, Population Estimates
Note: The “cultural-generational” gap is the percentage point difference between the percentages of those who are white alone age 65+ and
those who are white alone between the ages of 0 and 17.
This underscores the urgency of regional leaders to ensure the workforce, leadership, and other
major structures are aware of and embracing the emerging demographics and their impact on the
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Phase 1: Competitive Assessment
talent, businesses, and residents who choose to stay and invest in Greater Louisville for the long
term.
Stakeholder input participants were optimistic about the “emerging young people” in Greater
Louisville who see it “evolving.” There was an understanding of a changing cultural approach to attract
and engage young people that is different from what has worked in the past. Many survey respondents
listed the involvement of young people in leadership positions as critical to strengthening the effectiveness
of community leadership.
While 18.4 percent of all survey respondents said it is not likely their children, once grown, will want
to live in the area, this rate was 32.4 percent for black survey respondents. Most cited economic and
career opportunities as the issues that might keep their children from staying in Greater Louisville. “The
ethnicity of the city is transitioning, on many cultural levels. My children feel they don't want to commit to
what they think it's going to turn out to be. They would go somewhere that's past the transition phase.”
While there is still a “lack of young people leading the community” there is a sense that “many young
people now are returning to live and work here” and adding vibrancy to the regional economy and
quality of place.
BUILDING A SUSTAINABLE WORKFORCE
Age diversity and sustainability
The United States is in the midst of a historic shift as the aging Baby Boomer generation is exiting out of
the workforce. According to the Pew Research Center, 10,000 Baby Boomers reach the age of 65 every day
and the trend will continue until 2030. While all communities will face aging trends, those that are able to
attract and retain younger residents will be able to replace retirees from careers and leadership roles more
quickly and efficiently, mitigating potential shortages.
In the Greater Louisville region, age dynamics indicate that the number of younger residents is
insufficient to fully replace working-age residents who are closest to retirement. The share of
residents between the ages of 25 and 44 (26.6 percent) is smaller than the cohort between the ages 45 and
64 (27.7 percent). This dynamic is mirrored only in Richmond, among the metros benchmarked. In addition,
the proportion of residents age 65 and up is larger in Greater Louisville than in any of the comparison
metros.
Further compounding the challenges Greater Louisville faces, the competitor metros of Austin, Nashville,
and Indianapolis have larger populations of those between the ages of 25 and 44 than those between the
ages of 45 and 64, demonstrating workforce sustainability.
At the national level, the 25–44 age group is numerically the same size as the 45–64 age group, but the
United States overcomes this demographic challenge through international immigration. In the same way,
metros can overcome disadvantageous age compositions through net in-migration from other parts of the
U.S. and internationally. Communities with disadvantageous age dynamics and net out-migration will see
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their workforce necessarily shrink. Those like Austin that have sustainable age composition and high inmigration will thrive as businesses flock to a growing and sustainable pool of young talent.
AGE DISTRIBUTION, 2012
100%
90%
80%
70%
13.5%
27.7%
8.7%
23.1%
11.4%
11.4%
13.0%
13.7%
25.9%
26.0%
27.8%
26.4%
28.0%
28.9%
26.6%
26.4%
60%
50%
40%
30%
20%
10%
26.6%
32.4%
8.7%
10.9%
8.8%
9.6%
9.7%
10.0%
23.5%
24.9%
25.8%
24.0%
22.7%
23.5%
Louisville
Austin
Indianapolis
Nashville
Richmond
United States
0%
0-17
18-24
25-44
45-64
65+
Source: U.S. Census Bureau, Population Estimates
Over the past 10 years, the Greater Louisville region has experienced a constriction in the supply of young
workers. In 2002, the population between the ages of 25 and 44 was larger than the population between
the ages of 45 and 64. This is no longer true. This development indicates that the movement of residents
into older age brackets is happening at a faster rate than they can be replenished by younger cohorts into
the region. The shift in the Greater Louisville region is similar to the dynamics evident at the national level,
indicating that while Greater Louisville may face more acute aging-related obstacles than its competitor
metros, its issues mirror the national direction.
The age distribution makeup in Greater Louisville complements the population growth trends examined
earlier in the Competitive Assessment, including the region’s slowdown in population growth in the most
recent five years.
New residents moving into a region for career opportunities are typically under 65 years old and therefore
contribute to a growing cohort of working-age adults (and potentially school-aged children) in a given
metro. Greater Louisville’s age and migration dynamics speak to a larger issue of population and
workforce sustainability. The regional child and young adult populations must not only be retained
but be further developed to attract new young residents.
Survey respondents noted that developing and recruiting an educated workforce as well as keeping
young, educated people in the region are two of Greater Louisville’s greatest challenges. These issues
were often tied to available career opportunities for young workers and the perceptions of Greater
Louisville and Kentucky.
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One respondent wrote that the biggest challenge facing the regional economy is “attracting high potential
young talent into the area from other areas. We need to round out our talent pool and Louisville
doesn’t have the national recognition it needs. It isn’t thought of as an up and coming, great place
to work, although it could be!”
Survey respondents mentioned some of the impediments to attracting and retaining young professionals
in the region as perceptions of the public schools, “lack of opportunities for career advancement,” and
planning and development that favors less dense land uses. Greater Louisville is “a great place to raise a
family but not so much for the young single professional besides bars and nightclubs.” “For young
professionals of all ethnic backgrounds, there still needs to be more professional and social opportunities
to develop a sense of community. This city is very much a family-oriented city, which causes single, young
professionals (with no children) to feel somewhat marginalized.”
On quality of life factors, survey respondents ages 25–39 rated the region’s housing, amenities, and
infrastructure only slightly lower than the total response average. “Less sprawl and more revitalization of
the urban core would make the city and region more attractive and efficient and help make public transit
more feasible.” “I recently moved back home from Chicago and was unable to find any decent apartments
for rent near downtown that weren't either a studio or a penthouse. Options in between are needed for
young professionals.” “Create great neighborhoods and interesting areas to live in the city and
showcase that to regional talent.”
Young adult survey respondents were less certain about staying in the region for the long term. Just
64.7 percent said it is “very likely” they will continue to live in Greater Louisville, as opposed to 74.1
percent of all survey respondents.
When asked what the region needs to do to attract and retain young professionals, suggestions included
development with more emphasis on density and public transit accessibility, technology sector jobs, jobs
with more competitive wages and advancement opportunities, diversity in quality housing options, and
increased entertainment options. Many also spoke of mentoring as a critical need for young professionals
and emerging leaders. “I see a disconnect between established professionals and the next generation of
talent and leaders.”
Another element of population sustainability is the rise in the youngest segment of the population, those
under the age of 18. In the Greater Louisville region between 2002 and 2012, growth of the population
under the age of 18 accounted for 20.5 percent of total regional population growth. At the national level,
this population cohort accounted for just 3.3 percent of total growth.
The growth of this young population group in Greater Louisville has many implications. Perhaps most
relevant to talent pipeline trends is that while this group is, by age, removed from careers and
workforce engagement, they will be a decisive long-term (post 2030) workforce solution. This age
group must be developed, advanced, and engaged to consider Greater Louisville a top option as a
place to work and live.
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Physical health and life expectancy are also major factors in workforce sustainability. Without a physically
healthy, thriving workforce, Greater Louisville’s productivity and prosperity will be seriously
impeded. The Greater Louisville Project’s recent report “Building a Healthier Louisville” ranked the region
10th among 15 peer metros and found that health behaviors—smoking, diet and exercise, and alcohol
use—were some of the region’s biggest challenges to overcome in terms of health outcomes. The report
also examined the close correlations among education, geography, employment and health, finding that
higher levels of educational attainment and engagement in the workforce have positive implications for
physical health. Greater Louisville’s less competitive educational attainment levels and its relatively low
labor force participation rate—analyzed later in the Competitive Assessment—are linked to trends that
further challenge its workforce sustainability.
Migration
Regions with disadvantageous existing age dynamics can overcome these challenges through net inmigration population. Greater Louisville’s population growth trajectory is better understood through how
its population moves in, out of, and around the region. Between 2000 and 2012, the Greater Louisville
region registered over 60,000 net new residents, accounting for 48.7 percent of total population growth.
The rest of its population growth came from natural change (births over deaths).
Relative to most of its comparison metros, Greater Louisville depends much more on its homegrown residents to sustain its population growth. In the comparison metros of Austin, Nashville, and
Richmond, in-migration had a much larger impact on population changes than natural change, over 60
percent of total growth. Gains in Austin and Nashville are reflective of migration patterns to the Sun Belt.
Texas and Tennessee, according to Atlas Van Lines 2012 Migration Patterns, are perennial destination
regions that tend to have more inbound movement than outbound. Migration in Indianapolis exhibits a
more even split, reflective of trends in the Greater Louisville region.
Many stakeholder input participants remarked on the positives of Greater Louisville’s size as a community.
“One asset is that we are the right size of place to make a difference. We have huge opportunities
with talent attraction in that sense.”
“Community loyalty,” “residents’ strong commitment to their community,” and “strong family ties” were all
mentioned as Greater Louisville’s greatest strengths. In fact, 96 percent of survey respondents indicated
that they are very likely or somewhat likely to continue to live in the region. One survey respondent noted:
“Most residents clearly love Louisville. There is immense affection for this place.”
Many stakeholders providing input said that although some young adults may leave Greater Louisville for
college or jobs, they are often attracted back to the community at some point. “It is a great place to raise a
family,” said a participant in a focus group session, “But I’d like to add to that comment by saying that
Louisville has a unique way of drawing people back. Young people might move away for college or after
college for a few years, but they seem to return—or want to return—when they start their own families. I’ve
never seen anything like it.”
A positive inflow of migrants to the Greater Louisville region is notable as nearby Rust Belt cities have been
hit hard by population declines over the past decade. And while Greater Louisville’s population growth
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Phase 1: Competitive Assessment
dynamics are not as dominated by in-migration as is some of its peer metros, a larger share of its
new residents move in from outside of the United States.
A closer look at components of regional population change since 2000 show that international inmigration is more significant proportion in Greater Louisville than elsewhere. Over 18 percent of
population change came from the nearly 23,000 net new international residents in the region. While the
sheer number of new international residents is smaller in Greater Louisville than in the comparisons,
these new members of the community make a proportionally much larger impact on overall
changes in the population.
COMPONENTS OF POPULATION CHANGE, 2000–2012
100%
90%
80%
52.0%
70%
60%
28.9%
30.4%
50%
30%
20%
13.7%
14.9%
14.4%
36.0%
64.0%
57.0%
51.2%
34.4%
10%
46.1%
14.0%
18.3%
40%
47.1%
38.1%
39.5%
Nashville
Richmond
0%
Louisville
Austin
Indianapolis
Natural change (births over deaths)
International in-migration
United States
Domestic in-migration
Source: U.S. Census Bureau, Population Estimates
A 2006 Urban Institute report examined the growth and profile of Greater Louisville’s international
immigrant community. Most of its momentum is tied to Louisville’s designation as a hub for a large federal
refugee resettlement program. Follow-up studies in 2009 and 2012 conducted by GLI indicated the need to
continue connecting international residents with the larger Greater Louisville community.
While some stakeholder input participants were concerned with brain drain to other more “international”
metros, Greater Louisville is in fact becoming more international itself. The growing number of languages
spoken in the public schools was often cited as an example of Greater Louisville’s globalization.
Still, divisions persist between foreign-born and native-born residents. “With regard to the vast
opportunities here, Louisville tends to be a little cliquish. As an international professional, at times it is
difficult to feel included. With as much diversity that internationals have to offer it would benefit all to have
social engagements where Americans/locals were more involved with and truly interested in getting to
know us.”
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Phase 1: Competitive Assessment
These social and professional challenges seem to be taking a turn, though: “While this has improved a
great deal over the last few years, we still have a way to go on embracing our international
population.”
In general, more awareness is needed to understand, embrace, and celebrate this growing international
presence in Greater Louisville. “Residents don't always appreciate the diversity of our population, especially
with regards to the internationals that are coming into the region in significant quantities,” said a survey
respondent. Another commented, “I think more could be done to highlight Louisville's diversity such as
more highlights of restaurants and businesses that are owned by internationals or have an international
theme, and celebrating other festivals.”
Greater Louisville’s domestic and international in-migrants tend to be younger than existing residents.
According to the U.S. Census Bureau, between 2010 and 2011, 78.1 percent of migrants moving to the
Greater Louisville region from another county in Kentucky, out of state, or abroad were under the age of
44. The migrants who came from outside of Kentucky were the youngest cohort of in-migrants, with a
median age of 27.7.
Greater Louisville’s migration as a share of total population change decreased between 2010 and 2012,
with natural change driving 60 percent of population growth.
The migration dynamics for Jefferson County indicate that people are coming primarily from nearby
states and from within the Commonwealth of Kentucky. Since 2005, the metros that have had a net
loss of residents to Jefferson County include Nashville, TN; Lexington, KY; Fort Wayne, IN; Paducah, KY; and
Indianapolis, IN, among others. This demonstrates that much of Greater Louisville’s net in-migration is
driven by movement from nearby metros. Destinations for Jefferson County out-migrants tend to be larger
metros, including Atlanta, GA; Miami, FL; Cincinnati, OH; and Chicago, IL.
Although the region has many noted assets and attributes, survey respondents indicated that Louisville is
affected by external perceptions of Kentucky. Many agree that more needs to be done to communicate the
impressive moves the region is making. One respondent said, “Louisville is not seen as a ‘destination’
city or region. Getting experienced talent to move here is very difficult. Most company growth has to
be organic, which is limiting.”
A LESS EDUCATED WORKFORCE, BUT GAINING GROUND
Educational attainment
Greater Louisville is at a significant disadvantage in terms of educational attainment relative to its
competitors, but it is gaining ground and improving faster than the competition. Young residents
between the ages of 25 and 34 are not as highly educated as their counterparts nationwide, and inmigrants are not as highly educated as those moving into peer communities. Meanwhile, there are
significant gaps in educational attainment by race and ethnicity.
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Phase 1: Competitive Assessment
Migration flows support workforce sustainability, but the regional workforce’s skill sets are key to being
able to compete on a national and global scale. Educational attainment, as measured by the prevalence of
degree holders, is a crucial indicator of the supply of talented and skilled workers in a region.
At the national level, 28.5 percent of adults over the age of 25 hold a bachelor’s degree or more. Among
the comparison metros, the percentage of adults with at least a bachelor’s degree is greatest in Austin
(40.6 percent) while the rate in the Greater Louisville region is much lower at 25.5 percent—the lowest
among all the geographies examined. The importance of bachelor’s degrees to the region is paramount
because, according to the Brookings Institution, 39.1 percent of job openings in the Greater Louisville
region require at least a four-year degree.
In addition to bachelor’s and graduate degrees, the value of two-year degrees and certificates cannot be
understated. An associate’s degree provides a more direct school-to-career pathway and is often critical to
many high-paying quality manufacturing, healthcare, and other technical occupations. The percentage of
adults holding an associate’s degree in the Greater Louisville region (7.5 percent) is the largest of the
comparison metros and close to the national average (7.8 percent). However, as reported by the Brookings
Institution, the share of job openings that require an associate’s degree or some college in the region (33.5
percent) is smaller than those requiring at least a four-year degree.
At the other end of the educational spectrum, Greater Louisville has the highest rate of adults with only a
high school diploma and the second highest rate of adults with no high school diploma at all. Of the
regional job openings, just 27.3 percent required a high school diploma or less. Further, those without any
post-secondary education comprised over half of the unemployed in the region in 2012 and as a group
had an unemployment rate of 14.4 percent (compared to 8.5 percent overall unemployment).
Page 13 – September 2013
Phase 1: Competitive Assessment
ADULT EDUCATIONAL ATTAINMENT, 2011
100%
90%
80%
70%
60%
50%
10.6%
0%
11.4%
10.6%
20.6%
20.3%
20.5%
17.9%
7.4%
6.0%
6.4%
7.8%
20.5%
21.5%
20.8%
21.2%
29.9%
29.1%
27.4%
28.4%
12.1%
11.2%
12.6%
13.4%
14.1%
Austin
Indianapolis
Nashville
Richmond
United States
7.5%
26.4%
22.7%
6.8%
21.3%
31.5%
19.2%
20%
10%
10.4%
14.9%
40%
30%
10.5%
14.2%
12.8%
Louisville
No High School Diploma
Some College
Bachelor's Degree
High School Diploma
Associate's Degree
Graduate or Professional Degree
Source: U.S. Census Bureau, American Community Survey
Adding complexity to these dynamics are the disparities in educational attainment among specific groups
driving population growth in the region. In 2011, 29.7 percent of Greater Louisville’s in-migrants had a
bachelor’s degree or higher—more than four percentage points higher than degree attainment levels of
existing residents. Among Black and Hispanic adults, 18.3 and 14.6 percent, respectively, had these
qualifications. Without a strategic combination of more in-migration of educated adults and an
amplified number of post-secondary graduates retained in the region, Greater Louisville will
become increasingly less attractive for quality, skilled technical and professional jobs.
Educational attainment by age offers another view of the Greater Louisville workforce as it provides a
snapshot of the regional pipeline of workers.
Greater Louisville’s young working population (ages 25 to 34) demonstrates much more
pronounced extremes in educational attainment and indicate the alarming potential for current
racial, geographic, and socioeconomic disparities to become more deeply entrenched in the region
as this generation replaces retiring workers and leaders. Young adults in Greater Louisville are
achieving higher educational attainment levels while also exhibiting elevated high school dropouts. In
2011, 29.6 percent of those between the ages of 25 and 34 in the Greater Louisville region had a bachelor’s
degree or higher. At the same time, 10.5 percent of the same population had not completed high school, a
slightly larger share than high school dropouts between the age of 45 and 64 (9.9 percent).
As stable, good-paying job opportunities for workers without the most basic educational credential
dry up nationally and within the region, this group of the young adult population of Greater
Louisville will face much steeper odds in finding, keeping, and advancing in a living-wage job. In
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Phase 1: Competitive Assessment
2011, the most recent year for which poverty rates are available, the federal poverty threshold for a family
of four with two children was $22,811. The national average income for high school dropouts is $18,794.
Based on these figures, it is clear that a single-income earning household headed by a high school dropout
is likely on a path to poverty in this country. This then impedes the Greater Louisville region’s ability to
attract and grow skilled jobs, lower poverty rates, and increase the tax base for future investments in the
region’s schools, infrastructure, and services.
These dynamics support the need for ongoing and holistic educational attainment initiatives as young
workers are falling into extremes of very low attainment and high attainment. This signifies the potential for
serious long term disparities in the career advancement, opportunity availability, and earning power for this
generation of workers.
When survey respondents were asked for their recommendations for strengthening the effectiveness of
community leadership (public or private), many proposals were centered on the inclusion and visibility of
young leadership. This emphasis by stakeholders highlights the importance of the educational attainment
and long-term advancement potential of the region’s youth and young adults. “Would like to see more
diversity (gender, race and ethnicity, age) in the visible leadership. This will attract young professionals,”
said one comment. “The local community needs more young people in leadership roles, as they will be
more creative and not just veterans sticking to the same ways of running the area and its programs.” “New
ideas, new young leadership in Southern Indiana to help us become a desirable community.” “Connect
younger people with capable and willing mentors.”
Educational attainment distribution changes
Despite challenges in overall educational attainment, the region is making great strides and
improvements to educational outcomes relative to the average American community. Between 2006
and 2011, the Greater Louisville region benefitted from increases in the proportion of adults with
educational attainment at or above a bachelor’s degree. The relative percentage point increase of those
with graduate degrees was the highest of all comparison metros.
Further, the Greater Louisville region had the sharpest percentage point decrease in those without high
school diplomas of all the comparison metros and the nation. Positive change in educational outcomes
is measurable, but the momentum needs to accelerate if the Greater Louisville region is to compete
at the level it envisions.
The following chart illustrates five-year gains made in adult educational attainment in Greater Louisville
relative to the nation. The region is clearly raising the bar on postsecondary degrees at rate that matches or
surpasses national averages, while the share of adults without a high school diploma is on a faster decline.
Page 15 – September 2013
Phase 1: Competitive Assessment
ADULT EDUCATIONAL ATTAINMENT, 2006–2011
100%
90%
80%
70%
60%
9.1%
10.6%
9.9%
10.6%
14.1%
14.9%
17.1%
17.9%
7.5%
7.4%
7.8%
22.7%
19.5%
6.8%
21.6%
50%
21.2%
40%
30%
0%
Bachelor's Degree
Associate's Degree
Some College
33.0%
31.5%
30.2%
28.4%
20%
10%
Graduate or Professional Degree
High School Diploma
No High School Diploma
15.4%
12.8%
15.9%
14.1%
2006
2011
2006
2011
Louisville
United States
Source: U.S. Census Bureau, American Community Survey
Leaders in the Greater Louisville region are aware of the educational attainment disparities and have begun
an aggressive public-private partnership to elevate the number of residents with post-secondary degrees.
The initiative 55,000 Degrees was established in 2010 and is working toward a goal of 40,000 additional
bachelor’s degrees and 15,000 additional associate’s degrees in the region by 2020. The overarching 55,000
degree benchmark has been adopted and targeted by other organizations.
 Degrees at Work: This effort, housed within Greater Louisville, Inc., has a goal of helping 15,000
working adults complete bachelor’s degrees by 2020. Of the comparison metros, the Greater
Louisville region has the largest share of adults who have completed some college (7.5 percent)
 15K Degrees Initiative: This initiative aims to increase the number of African American degree holders
by 15,000 by 2020. The disparity of attainment is evident as less than 20 percent of African
Americans in the region hold a bachelor’s degree or higher and 47.8 percent have not progressed
beyond high school.
 Behold 1,500 Latinos – Everyone Graduates!: This program is aimed at increasing the educational
attainment of Latinos in the region. In 2011, Hispanic residents had the lowest educational
attainment of all racial and ethnic groups in the region: less than 15 percent had a bachelor’s degree
or higher, and 69 percent had either not finished high school or not progressed into post-secondary
education.
Stakeholders could easily reference the intention and value of the 55,000 Degrees program, indicating high
awareness of the initiative. “The educational profile of the region has grown,” said one input participant of
the 55,000 Degrees initiative, University of Louisville’s (U of L) growing athletic and academic profile, and
the Go Higher program for adults enrolling in higher education.
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Phase 1: Competitive Assessment
“Double down on 55,000 degrees efforts,” suggested a survey respondent. Some saw long-term potential
in extending 55,000 Degrees to help adults go back and finish their diplomas or postsecondary degrees.
Others saw the need to match degree growth with job opportunity growth. “We do want to improve
educational attainment,” said an input participant, “But our educated children are going to leave us
if they can't find good jobs here. It's a chicken and egg thing, I know, but we have a lot of highly
educated young people on the verge of leaving because they can't find career-path work. Meanwhile, we
are trying to educate more of them. We need a 55K Good Jobs program to go along with 55K degrees.”
“There has been amazing growth in degree production,” remarked a stakeholder. “Despite that, we’re
losing people with bachelor’s degrees in Jefferson County. We have a much cooler environment than we
ever had. There is a mismatch that we need to dig into.”
U of L’s expanding research centers, rapid construction on new facilities, and high-profile basketball and
football programs were cited as great examples of its growing powerhouse status as an urban research
institution. The School of Medicine, J.B. Speed School of Engineering, and College of Business matriculate
graduates prepared for Greater Louisville’s businesses.
Input participants saw University of Louisville as instrumental in raising the bar on educational
attainment and Greater Louisville’s reputation for academic success. “As University of Louisville
continues to reinvent itself, people will continue to stay here. It’s becoming a better school. The investment
in athletics has boosted the impact, but will that have an impact on bringing people here from the
outside?”
Others were upbeat about the Metropolitan College program between UPS, Jefferson Community and
Technical College (JCTC), and U of L for part-time workers in UPS Next Day Air operations. Metro College
provides in-state tuition, textbook reimbursements, and academic completion bonuses. The program has
been scaled for other major employers in the region including Humana and ResCare.
Stakeholders who had direct contact with JCTC had positive impressions. “JCTC has been great to work
with” on workforce training, said one employer. However, one respondent complained that the JCTC
campus is in poor condition—“the worst community college campus in Kentucky”—and needs major
facility upgrades.
One JCTC official shared that there is a gap in what the community wants from the college and what it can
provide in terms of workforce, coupled with doubt that the college can deliver. Healthcare programs are
strong while some manufacturing specialties have challenges. Despite some misalignments with
community expectations, JCTC is seeing the quality of its student body improve significantly.
“JCTC has a master plan and the government and business need to team up to develop it,” said a survey
participant. Effectively convening the region and its business community around the two largest
public higher education institutions—JCTC and U of L—and their distinct roles in advancing
educational attainment will be a long-term victory for Greater Louisville.
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Phase 1: Competitive Assessment
Plans for Simmons College of Kentucky, a private historically black college, were seen as an important
factor in affordable higher education and advancing degree attainment among the region’s AfricanAmerican students. “Simmons is on the brink of becoming a major path out of poverty,” said an
interviewee regarding the college’s upcoming accreditation in February 2014. With open enrollment, low
tuition, and articulation agreement with U of L for credit transfers, Simmons College “potentially
could be a game changer if the rest of the city advocates for it.”
Over 47 percent of survey respondents rated regional two- and four-year colleges and universities as
above average or excellent in terms of helping businesses meet their workforce needs, but 43 percent
considering these institutions to be average as workforce development resources. Over half of survey
respondents considered the availability and affordability of local two- and four-year college programs to
be an advantage for the region.
CHILD WELL-BEING AND THE FUTURE OF GREATER LOUISVILLE
K–12 enrollment growth
Between 2002 and 2012, the number of children under 18 in the U.S. increased by 1.1 percent, which
accounted for 3.3 percent of total population growth. Standing in stark contrast, the same age group in the
Greater Louisville region grew by 9.5 percent and accounted for one-fifth of total regional growth. The
difference in demographic patterns is important as demands on schools will be more acute than in other
communities. The large share of recent population growth in Greater Louisville in those under the
age of 18 requires extra attention to ensure these future workers, business owners, entrepreneurs,
and community leaders are placed on a path for success.
School enrollment growth has been uneven across the region as the bulk of the growth occurred in a few
counties.2 Between 2002 and 2012, enrollment grew the fastest in Oldham County (31.2 percent), Shelby
County (37.4 percent), and Spencer County (26.9 percent). Collectively, enrollment growth in these counties
accounted for 30 percent of total regional enrollment growth.
Enrollment in Jefferson County increased by 11.2 percent but accounted for almost 60 percent of new
students in the region. Over the next five years, Jefferson County Public Schools expect enrollment to
exceed 103,000 students, continuing a 15-year upward enrollment trend.
The concentration of growth in a few districts, especially in Jefferson County, will increase pressure to
ensure that all schools have adequate facilities and quality faculty in place so that students can receive the
most competitive education possible.
Trimble County is the only Kentucky county in the region that experienced a contraction of student
enrollment between 2002 and 2012. According to the 2013 District Improvement Plan, the loss of students
in Trimble is attributable to the completion of a multi-year construction project at the Trimble County
Louisville Gas & Electric Plant for which many workers and families temporarily relocated to the county—
2
Greater Louisville enrollment data and analysis pertain only to the counties within Kentucky.
Page 18 – September 2013
Phase 1: Competitive Assessment
and then subsequently left the county upon project completion—as well as “the lack of employment
opportunities in the community.”
ENROLLMENT GROWTH BY KENTUCKY COUNTY DISTRICT, 2002–2012
District
Share of regional
enrollment
enrollment
2011-2012
Share of regional
Percent change
growth
2002-2007
2002-2012
2002-2012
Bullitt County
12,568
8.9%
8.2%
13.8%
9.1%
Henry County
2,135
1.5%
2.4%
3.2%
0.4%
94,921
67.0%
3.8%
11.2%
57.0%
Meade County
4,966
3.5%
7.2%
11.4%
3.0%
Nelson County
4,542
3.2%
3.6%
0.5%
0.1%
Oldham County
11,766
8.3%
25.2%
31.2%
16.7%
Shelby County
6,638
4.7%
21.9%
37.4%
10.8%
Spencer County
2,724
1.9%
18.3%
26.9%
3.4%
Trimble County
1,388
1.0%
6.7%
-7.5%
-0.7%
141,648
100.0%
6.8%
13.4%
100.0%
Jefferson County
Total
Source: Kentucky Department of Education
Note: Indiana school districts in the Greater Louisville region are not included. See Methodology Appendix.
The greatest weakness identified by online survey participants will come as no surprise: the lack of
education coupled with a poorly-performing central public school system.
SURVEY QUESTION: IN YOUR OPINION, WHAT IS THE GREATER LOUISVILLE REGION'S GREATEST
WEAKNESS OR CHALLENGE TO OVERCOME?
Page 19 – September 2013
Phase 1: Competitive Assessment
Nearly half of survey respondents indicated that they view the region’s options in public K-12
schools as a disadvantage or major disadvantage to economic growth. One of the most consistent
complaints about the public school system is the complicated bussing of students in Jefferson
County Public Schools (JCPS), the largest school system in the region. In fact, most complaints about JCPS
were directly or indirectly related to its student assignment policy that maintains a socioeconomic diversity
ratio in every school based on a number of factors.
One parent outlined issues with the JCPS student assignment plan that many other stakeholders echoed:
“There is no way for me to really decide what school(s) my children would attend. I have to apply to a
cluster, and then rank them, and then possibly, maybe get into my choice. But I really have no control.
With neighborhood schools, I could move to where I want my kids to go. I want my kids in public schools, I
hate having to pay for Catholic schools. I should note that I'm not even Catholic. I would love a great public
school system, but the chances of my children going across the city for elementary school are too great.
That's what I had to do for elementary school and it was awful…This is what happens across the city, and it
is maddening. Parents can't be involved in their kids' schools if they have to go across town for
everything.”
One survey respondent would like the system to “eliminate bussing and spend the money on educating,
not transporting.” Many spoke of the inefficiencies of bussing and the resources wasted on transportation
that could be better spent on other programs that directly impact student performance.
Regarding public education, “We still have a ‘60s agenda for a global economy,” said an interviewee. “The
world has changed.”
Input participants familiar with the parochial and private schools in the region found them “wonderful but
expensive” and linked the wide range of options in private education to the serious challenges and bussing
policies of JCPS. “There is a reason our Catholic/private school system is so robust in this city,
especially considering our relatively small size versus large cities.” “Public schools are a deterrent and
private schools are expensive,” said another. Some were concerned that post-tax money spent on private
tuition could have a larger impact elsewhere in the region.
Survey respondents did give credit to public school systems in the region in spite of the systemic problems
and perceptions of the central system. “Oldham and Shelby County are doing well but Jefferson schools
are inconsistent, some great schools but some seriously under performing schools. I believe JCPS is making
good progress though.” Some saw polar extremes in the JCPS system—“We have some of the best schools
in the nation, and some of the worst in Kentucky. We won’t rise as a district until every school does better
and every student does better.”
Focus group attendees did credit JCPS for “pockets of excellence” and were concerned about the pervasive
poor perception of the public schools and their students. JCPS must “change people’s minds in a scalable
way” and encourage community members to “see [a school] for yourself and talk to a kid.” “There appears
to be a perspective that your child will only do well and ‘get ahead’ if they go to a private school. This
perspective needs to change. We need to invest in and celebrate our public schools. Even if this
Page 20 – September 2013
Phase 1: Competitive Assessment
includes a media campaign which highlights the achievements of our public schools and achievements of
students who have gone through public schools.”
Input participants familiar with very recent changes to JCPS in fact optimistic about current achievements
and the future of the system. “We’re trying to change the conversation from bussing to learning. We have
made lots of improvements we’re not getting credit for.”
There was also a sense that the community would never really raise the bar on public school performance
and student success without serious buy-in from top leaders. “If you look at our community leaders, they
do not send their children to public schools in Jefferson County. They send their children to private schools.
There is no partnership or commitment to improve the public school system coming from the
business community.” “JCPS leadership is extremely receptive to innovative ideas,” and wants support to
be more flexible.
There is a long road ahead to implement the JCPS strategic plan and see the results of systemic changes
“We need people to stick with the plan. It’s not fun to stay the course rather than flit around. It’s not
glamorous, quick work. It’s solid discipline.” There is an urgency to focus on turning around failing schools.
“This community stands ready to roll up their sleeves…we’re poised to be the best urban district in
the country. But it will take time.” “We don’t want to be here 20 years from not having the same
conversation. And we won’t.”
Identified as one of the most challenging issues the region faces, public K–12 education is a major concern
to residents because of its importance on the current ability to retain talent and businesses and for the
longer-term future of the region. One respondent said, “In order to drive regional economy, we must
have a more prepared workforce. As a community, we must place an emphasis on our failing school
system.”
First steps into adulthood
Student outcomes, both in terms of graduation rates 3 and postsecondary choices, are highly varied by
county. In 2012, six of the nine Kentucky counties in the region had a graduation rate (average freshman
graduation rate) above the state average of 78.8 percent, while those with lowest graduation rates were
Trimble (63.0 percent), Jefferson (69.4 percent), and Bullitt (76.5 percent). The largest decrease in
graduation rate is evident in Trimble County and is attributable to its loss of students.
3
The Commonwealth of Kentucky will begin calculating graduation rates with a new cohort formula in 2013. The new formula will be a
more accurate reflection of the students that are finishing high school in four years with their cohort. In the meantime, graduation is
calculated using Averaged Freshman Graduation Rate (AFGR): An estimate of the percentage of an entering freshman class
graduating in four years, dividing the number of high school diplomas awarded in a given year by the enrollment size of that class when
it entered high school. The dropout rate is the percent of students that drop out of school and is collected for grades seven through
twelve.
Page 21 – September 2013
Phase 1: Competitive Assessment
AVERAGE FRESHMAN GRADUATION RATES, 2008–2012
100%
Meade
County
Oldham
County
Shelby
County
Henry
County
2008
Bullitt
County
78.8%
75.0%
80.7%
63.0%
67.7%
60%
69.4%
80.7%
Spencer
County
76.5%
81.2%
65%
Nelson
County
74.6%
70.0%
70%
76.8%
89.6%
85.2%
82.5%
75%
83.9%
80%
82.1%
85%
86.1%
93.2%
90%
89.6%
95%
Jefferson Trimble Kentucky
County County
2012
Source: Kentucky Department of Education
The dropout rate in the Greater Louisville region is declining. Of the Kentucky public school districts in the
region, every one, with the exception of Trimble, experienced a five-year decline in the dropout rate.
Further, the only two counties to have a dropout rate above the Kentucky average (1.6 percent) were
Jefferson and Trimble. Despite a higher rate in Jefferson County (2.2 percent), the gap between the county
rate and commonwealth average has decreased since 2007.
Recently, Kentucky became the first state to increase the official dropout age to 18, a change that
will be phased in over the next five years. The new standard will provide districts additional years to
work with students who exhibit risk factors that could lead to dropping out.
Over 61 percent of survey respondents agreed that dropout rates are a serious problem, but some
were optimistic about Kentucky’s recent move to be the first state to raise the high school dropout
age. “Raising of the dropout age to 18 is a step in the right direction,” said one. “It will be interesting to see
what effect the 18 year old minimum dropout age will have on the system.”
The post-secondary choices of high school graduates are important as the transition to college or
university life is often easiest for those fresh out of high school with relatively low opportunity cost. In the
Greater Louisville region, high school graduates from Oldham County and Jefferson County were the most
likely to be enrolled full-time in college the following year (70.7 and 65.1 percent, respectively). Graduates
in Meade County and Bullitt County were the least likely to be in college full-time the year after graduation
(24.4 and 37.6 percent, respectively), though five of the nine counties had rates lower than the
commonwealth average (55.2 percent). The variability of student outcomes and post-graduation choices
within the region may reflect demographic and socioeconomic differences from county to county.
Page 22 – September 2013
Phase 1: Competitive Assessment
POSTSECONDARY OUTCOMES FOR CLASS OF 2010–2011 BY COUNTY DISTRICT
Work and
Vocational/
part time
technical
In college
college
trianing
Military
Working
Other
Jefferson County
65.1%
6.3%
7.5%
1.9%
11.6%
7.6%
Bullitt County
37.6%
16.6%
4.9%
3.2%
33.7%
3.9%
Henry County
43.8%
5.6%
6.9%
1.4%
34.7%
7.6%
Meade County
24.4%
30.6%
5.2%
4.9%
32.8%
2.0%
Nelson County
47.7%
19.3%
0.3%
1.9%
25.7%
5.1%
Oldham County
70.7%
9.8%
3.3%
1.8%
11.4%
2.8%
Shelby County
57.6%
6.8%
1.4%
3.5%
26.6%
4.2%
Spencer County
42.3%
19.9%
6.1%
3.6%
21.9%
6.1%
Trimble County
56.2%
6.7%
5.6%
1.1%
28.1%
2.2%
Kentucky
55.2%
7.3%
6.3%
2.3%
22.4%
6.4%
Source: Kentucky Department of Education
Idle teens are those youth ages 16 to 19 who are not employed, are not actively seeking employment, and
are not enrolled in school. Greater Louisville went from having among the highest teenage idleness rate in
2000 to the lowest (tied with Nashville) 11 years later, declining by 2.3 percentage points. This indicates
that as graduation rates went up and dropout rates went down in Greater Louisville, rates of teen
engagement in school or work mirrored those trends.
TEENAGE IDLENESS, 2000–2011
12%
10%
9.2%
9.1% 9.2%
10.2%
9.5%
8.2%
8%
6.9%
8.9%
7.8%
6.9%
8.5%
7.3%
6%
4%
2%
0%
Louisville
Austin
Indianapolis
2000
Nashville
2011
Source: U.S. Census Bureau, American Community Survey
Page 23 – September 2013
Richmond
United States
Phase 1: Competitive Assessment
The fundamental challenge of poverty
Educational attainment is the single greatest determinant of lifelong earning potential. Research from the
Georgetown University Center for Education and the Workforce shows that a bachelor’s degree—
regardless of the major or field of study—leads to nearly $1 million more in lifetime earnings than a high
school diploma. Greater Louisville’s gains in educational attainment bear implications for household
income and community wealth.
The effects of household income on intergenerational economic mobility have been well-documented.
Greater Louisville suffers from similar forces of systemic poverty that threaten the economic outcomes of
each new generation. This is evident in child poverty and total poverty rates that surpass the competitor
metros.
The Greater Louisville region has a higher share of children under the age of 18 living in poverty (22.8
percent) than the other comparison metros and the nation. The child poverty level has been on the rise
over the past decade, increasing by eight percentage points since 2001.
Three of the metro areas examined have seen their poverty rates for children and total population decline
since 2010. Total poverty in the Greater Louisville region has increased closely with the national trends
since 2006, but slowed down from 2010 to 2011.
CHILD POVERTY, 2001–2011
24%
22%
20%
18%
16%
14%
12%
10%
2001
2002
Louisville
2003
Austin
2004
2005
Indianapolis
2006
2007
Nashville
2008
Richmond
Source: U.S. Census Bureau, Small Area Income and Poverty Estimates
Page 24 – September 2013
2009
2010
2011
United States
Phase 1: Competitive Assessment
TOTAL POVERTY, 2001–2011
17%
16%
15%
14%
13%
12%
11%
10%
9%
8%
2001
2002
Louisville
2003
2004
Austin
2005
Indianapolis
2006
2007
2008
Nashville
2009
Richmond
2010
2011
United States
Source: U.S. Census Bureau, Small Area Income and Poverty Estimates
Within the Greater Louisville region, child poverty rates are climbing rapidly in Henry (KY), Trimble (KY),
Jefferson (KY), and Washington (IN) counties, and total poverty is growing in Henry, Jefferson, and Meade.
POVERTY BY COUNTY, 2001–2011
Child poverty
Total poverty
Pct. point
2011
change
6.1
7.8%
10.8%
3.0
11.1
12.6%
18.7%
6.1
9.3
11.4%
17.3%
5.9
7.9
9.7%
15.4%
5.7
23.0%
8.8
10.8%
15.5%
4.7
8.0%
2.8
5.1%
6.4%
1.3
12.2%
19.0%
6.8
9.4%
12.7%
3.3
11.1%
13.6%
2.5
8.9%
8.4%
-0.5
Trimble County, KY
12.2%
23.7%
11.5
12.9%
15.1%
2.2
Clark County, IN
11.8%
18.5%
6.7
8.4%
13.0%
4.6
Floyd County, IN
10.5%
18.3%
7.8
7.8%
12.8%
5.0
9.3%
16.7%
7.4
7.5%
12.6%
5.1
14.4%
24.2%
9.8
10.3%
13.0%
2.7
2011
Bullitt County, KY
10.6%
16.7%
Henry County. KY
17.0%
28.1%
Jefferson County, KY
17.3%
26.6%
Meade County, KY
14.1%
22.0%
Nelson County, KY
14.2%
Oldham County, KY
5.2%
Shelby County, KY
Spencer County, KY
Harrison County, IN
Washington County, IN
change
Pct. point
2001
2001
Source: U.S. Census Bureau, Small Area Income and Poverty Estimates
Page 25 – September 2013
Phase 1: Competitive Assessment
Without stable jobs that pay good wages and significant increases in educational attainment so that
workers are qualified for those jobs, the rising child poverty rates will further exacerbate the
socioeconomic gulfs between Greater Louisville’s families of means and those with limited
resources. The poverty rate is just one piece of the puzzle but it speaks to many of the deeply-rooted
issues with which the region has struggled for decades. The higher ratio of child poverty to total poverty in
Greater Louisville as compared to the nation supports the data that children are a relatively large share of
total population growth in the region, and possibly that the region has higher average family sizes. As
children represent a larger share of total population growth relative to the U.S., this places greater
demands on schools; and as more of those children are in poverty, this places greater demands on schools’
services, free and reduced lunch programs, and other wraparound services and programs targeted at risk
factors associated with poverty.
Poverty and socioeconomic status in the region falls along geographic lines. “Louisville is divided as a blue
collar and white collar city…I feel the city is divided socio-economically.”
Some input participants noted that high-poverty areas have some of the best infrastructure, connections,
and access to workforce and are ripe for economic development. There is “a lot of workforce” in some key
areas with “underutilized infrastructure that’s being maintained.” “Concentrated poverty [is] in regions that
would otherwise offer the best location for growth such as transportation, ease of access etc.”
Poverty is tied inextricably to Greater Louisville public school outcomes. As academic performance
indicators worsen, input participants noted that more parents who can afford to enroll their children
in private and parochial schools, further widening the household income gap between students in
public schools and students in private schools.
At the present, some of Greater Louisville’s dynamics related to child well-being are concerning. With
children and youth comprising a disproportionate share of Greater Louisville’s growth when compared to
the average American community, this can be a significant advantage if these children are well-educated, in
stable homes, and have positive experiences in the region that result in them wanting to live and work
there as adults. Unfortunately, many of Greater Louisville’s children live in poverty. Education is a reliable
path out of poverty, and with the region’s dropout rates and teen idleness rates improving, there is good
news on the horizon for the future of Greater Louisville’s youngest residents.
GROWTH IN THE CORE
Job growth not keeping pace with population growth
As evidenced by K–12 enrollment increases, Jefferson County has been the hotbed of regional
population growth. Between 2002 and 2012, growth in Jefferson County accounted for 45 percent of total
regional growth, adding over 50,000 residents (7.3 percent growth over 10 years).
Among the central counties of comparison metros, Davidson County (Nashville) and Marion County
(Indianapolis) each captured just 23 percent of their total regional growth and Travis County (Austin) is
credited for just less than 40 percent. The Richmond metro does not have a comparable central county,
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Phase 1: Competitive Assessment
since the City of Richmond is an independent city. However, Richmond city comprised 7.5 percent of total
regional growth. The population shift away from the central counties is often propelled by more affordable
housing and higher-performing schools, but comes with higher commute costs and less efficient
infrastructure provision as the metro population expands geographically.
The population growth that has occurred in Jefferson County is positive, but the lack of job growth
and elevated vacancy rates in business districts is symptomatic of a slow economic recovery. The
growing population in Jefferson County has not been mirrored by growth in employment opportunities.
Between 2002 and 2012, the Greater Louisville regional job base increased by 15,521 jobs, or 2.5 percent.
According to the U.S. Census Bureau, growth in the region since 2000 was concentrated in Jefferson
County, which added over 50,000 residents and accounted for 43.8 percent of all new regional residents.
Notable growth also occurred in Clark County, IN; Oldham County, KY; and Bullitt County, KY, which all
added over 12,000 residents and collectively accounted for almost a third of the region’s growth.
Jefferson County added just over 3,100 jobs, accounting for 20.3 percent of total regional job growth. Job
gains in Bullitt County, which added 8,400 jobs, were the largest in the region and accounted for 54
percent of total growth. However, population growth in Bullitt County accounted for just 10 percent of
total regional growth, presenting a reverse pattern of population and job growth than in Jefferson County.
The ascendance of e-commerce has driven many of the employment gains Bullitt County, which occurred
primarily in the warehousing and storage sector. Companies such as Best Buy, GSI Commerce, and Zappos
all have large-scale operations in Bullitt County.
The following table shows the region’s counties where growth is employment-oriented (job/population
growth ratio above 1.0) and where growth is predominantly residential (ratio below 1.0).
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Phase 1: Competitive Assessment
COUNTY JOB GROWTH AND POPULATION GROWTH, 2002–2012
% of total regional
% of total regional
Job/population
job growth
population growth
growth ratio
Bullitt, KY
54.1%
10.4%
43.7
Clark, IN
19.1%
12.0%
7.0
Floyd, IN
County
10.2%
3.3%
6.9
Meade, KY
2.5%
0.3%
2.2
Oldham, KY
12.0%
10.4%
1.6
Nelson, KY
6.2%
4.8%
1.3
Trimble, KY
0.1%
0.2%
-0.1
Spencer, KY
2.3%
3.6%
-1.3
Henry, KY
-1.6%
0.2%
-1.8
Washington, IN
-5.9%
0.2%
-6.1
Shelby, KY
Harrison, IN
Jefferson, KY
-3.5%
7.6%
-11.1
-15.8%
3.2%
-19.0
20.3%
43.8%
-23.4
Source: EMSI; U.S. Census Bureau, Population Estimates
Note: Percentages are shares of total regional growth
The comparison metros offer a variety of storylines regarding job creation in the central county. In Austin,
over 50 percent of net metro jobs were located in Travis County between 2002 and 2012. The Nashville
region added 96,800 jobs, and 16 percent of those located in Davidson County. Williamson County, located
just to the south of Davidson and the home county of Franklin, TN, captured 40 percent regional net new
jobs. In the Indianapolis region, Hamilton County, which is north of Marion, captured 60 percent of all
regional jobs while Marion County lost 14,500 jobs.
The decentralization of jobs is a trend that has occurred in nearly every major metro in the U.S. The
Brookings Institution found that between 2000 and 2010, 91 of the largest metros in the nation
experienced a decline in jobs located within three miles of the central business district (CBD). In Greater
Louisville, the proportion of jobs within three miles of the Louisville central business district is 28.9 percent,
six percentage points higher than the national average. A slim majority of jobs (51.5 percent) were between
three and 10 miles from the Louisville central business district. In the average of the 100 metro areas
examined by Brookings, the largest cohort of jobs (43.1 percent) was found between 10 and 35 miles from
a CBD.
These growth ratios have implications for the region’s land use and tax base dynamics from county to
county, as well as commuting patterns from net resident-gaining counties to net job-gaining counties.
While Greater Louisville has seen the decentralization of jobs throughout the region as previous
commercial and industrial areas in-town hollow out, this trend is still not as pronounced as in other
U.S. metros. The region’s policy decisions revolving around transportation, workforce development, and
land use will continue to be impacted by the geography of jobs and population, especially as it relates to
connecting people with work opportunities.
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Phase 1: Competitive Assessment
Input participants did note the movement of jobs from the central city to suburban office parks,
corporate campuses, and warehouse districts along the interstate.
“These are the highest Class A vacancies we’ve ever had,” said a real estate developer of the downtown
market. “The movement away from downtown isn’t good,” said one focus group participant. “People are
moving back, but not businesses and infrastructure.” Meanwhile, input reflected that transit options are
poor and do not effectively move people from residential neighborhoods to areas with high
concentrations of employment.
One of the challenges noted by survey takers was, “Suburban sprawl which is taking employees, executives,
and young professionals to the suburbs as opposed to creating a vibrant, energetic, close knit community
of downtown commerce.”
Others felt that more should be done to connect business and residential areas across the region that lie
outside of the central business district. One survey respondent felt there is too much “emphasis on
downtown rather than linkages to nearby suburban areas.”
Still others appreciated the range of choices that suburban, downtown fringe, and downtown areas offer
businesses and residents. There is an “attitude of residents that the city and the suburbs are not all
part of the whole picture” but the “whole range of downtown, close-to-downtown, and suburban
options are pretty great.”
RECESSION AND RECOVERY
Persistent recession periods
Since 2000, the nation has fallen into recession twice. The effects of these periods were especially
pronounced in Greater Louisville as the duration of job loss and time to recovery were lengthier than
competitor regions.
The core economic sectors in the Greater Louisville region, including logistics, distribution, and
manufacturing, are highly cyclical and dependent on national and global consumer and customer
confidence. The impact of the logistics-dependent economic composition is most notable through the
Great Recession, the effects of which started later and endured much longer in Greater Louisville than the
nation. Dependence on physical flows of goods lessens the economy’s ability to insulate against
downturns and emphasizes the need for additional diversification.
In the post-World War II era, there have been 11 distinct business cycles, with the most recent Great
Recession enduring the longest (18 months). During the 2001 recession, which lasted eight months, the
Greater Louisville region lost 13,000 jobs, equal to two percent of the jobs base. In this period, Indianapolis’
economy constricted -0.5 percent (4,300 jobs lost) and Richmond shrunk by -0.97 percent (8,700 jobs lost).
At the same time, the Austin region shed over 19,000 jobs (about three percent of total employment), the
most among the comparison metros.
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Phase 1: Competitive Assessment
After the end of the recession in November 2001, Nashville, Austin, and the United States regained
employment levels equal to those of 2000 within 35 months. In the Greater Louisville region, employment
levels equal to those in 2000 were attained after 51 months, less than one year prior to the beginning of
the Great Recession. This is a significantly long period of recovery that potentially weakened and
destabilized the regional economy so that it was unprepared to weather the most recent recession,
which officially began in December 2007 and lasted until June 2009.
In this recession, the national economy shed 7.5 million jobs in just 18 months (-5.4 percent). Greater
Louisville regional employment during the same period contracted by 32,200 jobs, or 5.15 percent, ahead
of Nashville and Indianapolis which declined at higher rates.
NONFARM EMPLOYMENT INDEX, 2000–2013
130
125
120
115
110
105
100
95
Recession
Louisville
Austin
Nashville
Richmond
United States
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jul-00
Jan-01
90
Indianapolis
Source: U.S. Bureau of Labor Statistics, Current Employment Survey
Note: July 2000 = 100
Employment contraction in the Greater Louisville region began in earnest in the middle part of 2008 and
was milder than employment losses in other metros and the nation. During this period, regional
employment levels declined below the 2000 benchmark. Because of their job growth momentum in the
other comparison metros following the 2001 recession, none of these regions experienced contraction to
their 2000 levels during or following the Great Recession.
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Phase 1: Competitive Assessment
Overall, Greater Louisville shows less resilience and ability to rebound quickly than other metros,
partially due to the sectors that are the core of the regional economy. Most notably logistics,
distribution, and transportation are dependent on upticks in spending and increased production and thus
can lag other signs of recovery, such as new orders. The regional dependence on logistics and distribution
will be explored in more detail in the following section.
Survey respondents were generally positive about the direction of the regional economy following the
most recent recession. Almost 64 percent rated the overall economy as better, and 52.1 percent felt job
opportunities have improved. Still, 48.3 percent perceived unemployment as being the same.
“Louisville’s pace of growth is being surpassed” by its competitors, remarked a focus group participant.
“Louisville never booms, never busts. Growth is marginal.” Another said, “We’re making strides but
they’re not the lead we need to make an impact. We’ve had reasonable growth that’s positive, but
in terms of what we want to be, we’re huffing and puffing.”
“There is danger in complacency. The ‘lack of bad’ or ‘lack of falling off the cliff’ shouldn’t be the
benchmark on which we build a strategy. We still have to catch up.”
Unemployment and labor force participation
The continued tepid employment growth in the Greater Louisville region is also evident in workforce
measures. The unemployment rate in the region (8.2 percent in July 2013) continues to be elevated above
the national rate (7.7 percent) and the other comparison metros.
While all metros saw an increase in the unemployment rate during and after the end of the recession
period, the Greater Louisville region’s peak was highest of all metros (in December 2010 at 12.3 percent).
Austin has the lowest unemployment rate at 5.6 percent followed by Richmond (6.2 percent) and Nashville
(6.8 percent).
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Phase 1: Competitive Assessment
UNEMPLOYMENT RATE, 2007–2013
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
Great Recession
Louisville
Austin
Nashville
Richmond
United States
Indianapolis
Source: U.S. Bureau of Labor Force Statistics, Local Area Unemployment Statistics
Note: Unemployment rate is not seasonally adjusted.
In addition to unemployment, the confidence exhibited by workers in the Greater Louisville region as well
as other metros has been waning since 2000. This can be seen in the labor force participation rate (LFPR),
which measures the employed and the unemployed (actively looking for work) as a share of the working
age population (ages 18 to 69). LFPR is a more complete indicator of adults participating in the labor
market than the unemployment rate because it uncovers the group of people not working and not looking
for work who are not accounted for employment and unemployment figures.
Since 2000, the LFPR has fallen in all comparison regions and the nation, with the largest decline occurring
in Austin. However, the tight labor market in Austin still displays the highest rate of worker engagement
(77.9 percent). In the Greater Louisville region, labor force participation (72.5 percent) is the lowest among
the metro comparisons, but still higher than the national rate (63.4 percent).
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Phase 1: Competitive Assessment
LABOR FORCE PARTICIPATION RATE, 2000–2012
100%
95%
90%
85%
77.9%
80%
75%
76.8%
76.5%
76.4%
72.5%
70%
63.4%
65%
60%
55%
50%
Louisville
Austin
Indianapolis
Nashville
2000
2012
2007
Richmond
United States
Source: U.S. Census Bureau, Population Estimates; U.S. Bureau of Labor Force Statistics, Local Area Unemployment Statistics
Taken together, consumer confidence, employment, unemployment, and labor force participation
trends reveal that while Greater Louisville has endured many months and years of slow growth and
lags its competitors, the trajectory of jobs in the region is on the upswing and workers are feeling
more positive overall.
There was concern among stakeholder input participants over persistent high unemployment as the
regional economy rebounds. “When we look at job growth, we suffer from a structural mismatch. Why is
unemployment high but jobs are growing? We have to focus on where the true mismatches are.”
GREATER LOUISVILLE AS A DISTRIBUTION HUB
Location, location, location (and infrastructure)
The region draws much of its economic competitiveness in the logistics sector from its geographic assets
and strategic location for trade. Most notably, according to The Atlantic and National Journal’s The Next
Economy project, the Greater Louisville region is centrally located and is within a two-hour flight of 75
percent of American cities (and within 24 hours by ground of two-thirds of American cities).
When asked about the greatest strength of Greater Louisville, the following words were frequently used by
survey respondents to describe its distinctive tangible and intangible assets. Clearly, its location—which has
been critical to its historic and current economic growth—is recognized as its best advantage.
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Phase 1: Competitive Assessment
SURVEY QUESTION: IN YOUR OPINION, WHAT IS THE GREATER LOUISVILLE REGION'S GREATEST
STRENGTH?
The location makes Greater Louisville a natural point for shippers, distributors, and warehouse activities.
The presence of UPS and the investments that have gone into Worldport, the largest fully automated
package handling facility in the world, have incentivized other companies to relocate to or expand in
Greater Louisville.
River: The Ohio River flows through the middle of the Greater Louisville region, providing a connection to
the Mississippi River and ultimately the Gulf of Mexico. The Louisville, KY port area extends for 15 miles and
includes almost 70 public and private facilities.
In 2011, according to the U.S. Army Corps of Engineers, the tonnage moving through Louisville (5.4 million
tons) was ranked 72nd out of 149 U.S. water ports. The other comparison metros that were also ranked
include Nashville (108th) and Richmond (140th).
Between 2002 and 2011, cargo tons have decreased for the Louisville port area by about four percent
annually. The decline was most pronounced over the past five years, driven by decreases in shipments of
petroleum products and sand and gravel (the largest shipments by tons to the region).
The impacts of the Panama Canal widening, set to be completed in 2014, on the Greater Louisville corridor
of the Ohio River have not been fully examined. A 2011 report by the Kentucky Transportation Center says
that much of the added Next Panamax containerized volume will bypass Kentucky because of the lack of
public investment in intermodal infrastructure and aging lock and dam infrastructure, although an
expansion to the McAlpine Locks and Dam completed in 2009 has expanded navigability through that
passage. River commerce may also be impacted with Mississippi River dredging efforts and as increasing
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Phase 1: Competitive Assessment
federal regulations to reduce emissions affect coal—a major bulk commodity traveling the channel and
using the Port of Louisville’s terminals.
Rail: The Greater Louisville region’s location has been enhanced by investment in rail transportation
infrastructure. The presence of three Class I railroads as well as regional-serving rail lines provide an
alternate route for shipping in and out of Greater Louisville.
Improvements to the rail infrastructure are coming from both the public and private sectors. In 2012, CSX
began operations at its new $15 million intermodal facility near the Louisville airport and has submitted
plans to partner with the Louisville & Indiana Railroad to upgrade the line between the two namesake
geographies and increase traffic.
The Commonwealth of Kentucky received $11.5 million in 2012 to upgrade two freight bridges between
Louisville and Paducah, which are part of the Strategic Rail Corridor Network and Defense Connector Lines
serving Fort Knox.
Interstates: In addition to moving freight by rail, the region’s distribution capacity is enhanced as it sits at
the confluence of three interstates: I-65, I-64, and I-71.
A primary element of transportation cost is the effect of congestion. Additional freight costs associated
with congestion are lower in the Greater Louisville region than many of the comparison metros. According
to the Texas A&M Transportation Institute’s annual Urban Mobility Report, Greater Louisville’s truck
congestion cost $145 million in 2011 and has risen by 14 percent since 2007. Richmond was the only
comparison metro that had a lower overall cost ($62 million) but it has increased by almost 30 percent
since 2007. Costs associated with congestion were highest in Indianapolis ($241 million).
As part of a larger distribution network the value of commodities flowing through Greater Louisville is high,
in turn increasing the cost of any delay. However, one of the main drivers of freight congestion is the I-65
at I-64/I-71 interchange, which was ranked the third worst freight bottleneck in the nation by the Federal
Highway Administration. As a remedy, Kentucky and Indiana are working together on the $2.6 billion Ohio
River Bridges Project, which is intended to increase the ease with which traffic and freight can move across
the river and throughout the region.
Respondents rated commuting time and traffic flow most favorable of regional infrastructure and
development characteristics presented in the survey. Over half of respondents rated the region’s commute
as excellent or better than average.
However, several survey comments showed that there are mixed reactions concerning the Ohio River
Bridges Project. While some are looking forward to its completion, others feel it will negatively impact
traffic and commute times. The project is considered worthwhile by many, and while it will have a
positive impact on the entire region, southern Indiana will experience the greatest boom from the
bridges.
Real estate: Distribution and logistics is a space-intensive sector as inventories of goods need to be stored
between shipments. Nationally, construction of warehouse and distribution facilities, according to Cushman
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Phase 1: Competitive Assessment
& Wakefield, stalled during the recession and as economic activity is picking up, there is a shortage of
high-quality space.
In the Greater Louisville region, vacancy rates currently stand at 4.9 percent, well below the 8.7 percent
national average. Ground zero for the region’s distribution and warehousing operations, Bullitt County’s
vacancy rate of 3.8 percent is the lowest within the region. Construction of new space is ongoing, but much
of the new supply will not be ready for occupancy until 2014. Prospects looking for warehouse facilities in
excess of 200,000 square feet will find only a few properties, and there are none exceeding 300,000 square
feet.
Air: Air cargo is a signature piece of the Greater Louisville region’s logistics cluster. As previously
mentioned, the presence of the UPS Worldport facility is often a determining factor when businesses seek
to expand or relocate to the area. The UPS Airlines hub in Louisville averages upwards of 250 inbound and
outbound flights per day and serves more than 200 countries around the world. Companies such as
Zappos, Geek Squad, J&J Pharmaceuticals, Amgen, and GSI Commerce have come to Greater Louisville, in
part, to leverage the UPS distribution network.
AIR FREIGHT AND MAIL VOLUME, 2012–2013
Freight/ Mail (M lbs.)
M lbs.
Airport
Louisville
Louisville International-Standiford Field
Austin
Austin-Bergstrom International
Indianapolis
Indianapolis International
Nashville
Richmond
% change
Rank
4,522
-0.4%
2
160
0.2%
48
1,918
2.2%
4
Nashville International
80
-6.3%
76
Richmond International
117
6.7%
61
Source: U.S. Bureau of Transportation Statistics, Research and Innovation Technology Administration
Note: Rankings are out of 827 U.S. airports. Weight is in millions of pounds.
“For years it seemed important to get a commercial [passenger air] hub in Louisville,” recalled a focus
group participant. “Even though people questioned it at the time, UPS was a better pursuit.”
Commercial passenger air service is a key component for many white-collar employers. The ability for
same-day travel and to quickly and efficiently fly into and out of different major markets can be a deciding
relocation factor. While the Greater Louisville region boasts one of the most competitive air and freight
mail capacities in the world, the passenger service falls short compared to its peer regions. The airports in
Austin, Indianapolis, and Nashville—serving larger metros than Greater Louisville—enplaned more
passengers than Louisville International. Richmond International Airport, with the fewest departures and
highest fares, is within two hours from Washington Dulles International Airport.
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Phase 1: Competitive Assessment
PASSENGER AIR, 2013
Carriers and
Passenger departures
Domestic airfare
destinations
Departures
12-month
# of
Top
Average
12-month
Airport
(ths.)
change
Rank carriers
destination
fare
change
Louisville International-Standiford Field
1,659
2.4%
66
24
Atlanta
$401
-0.9%
Austin-Bergstrom International
4,660
3.5%
36
24
Dallas
$386
2.2%
Indianapolis International
3,493
-2.3%
48
23
Atlanta
$388
-0.6%
Nashville International
4,854
3.2%
33
25
Atlanta
$370
-0.5%
Richmond International
1,571
0.9%
69
24
Atlanta
$412
-0.4%
Source: U.S. Bureau of Transportation Statistics, Research and Innovation Technology Administration
Note: Rankings are out of 827 U.S. airports. Departure and carrier/destination data is from May 2013. Airfare data is from Q1 2013.
Perhaps more important than departures are destinations. Atlanta was the top single destination from
Louisville, as almost 30 percent of flights went through Hartsfield-Jackson International. Having fewer nonstop flight options may be prohibitive for larger company relocations and expansions.
Airline service received the lowest rating of regional infrastructure and development characteristics
presented in the survey with about a third of respondents indicating the airline service is worse than
average or poor.
“Airline service is better than the community size and dynamics would suggest but worse than is wanted to
draw headquarters facilities,” a survey respondent said, echoing other similar sentiments regarding the role
of passenger air service in corporate location decisions. “Air travel is affordable but it’s an Achilles heel
from an attraction standpoint,” said a real estate developer.
One respondent referenced a study that said “Louisville will never be a headquarter city because our
airport is does not provide direct service internationally. Without additional headquarters it will be tough to
grow our infrastructure.” Another said, “Most everyone who comes to Derby understands that Louisville
fails to live up to its claim of being a top 20 city because most of the nation cannot get here without
visiting someone else’s airport first.”
Logistics employment
The investment in infrastructure and the natural location attributes drive continued employment growth in
the region. The transportation and warehousing sector employs over 40,000 workers in the Greater
Louisville region and has grown 9.4 percent over the past decade, adding 3,524 jobs.
The concentration of workers in this sector in Greater Louisville is about twice the national average, and
specific niches are even more highly concentrated. Transportation and warehousing makes up 6.3 percent
of total jobs in the Greater Louisville region, while at the national level the sector comprises 3.2 percent of
jobs. Digging even deeper, employment in couriers and express delivery services is seven times the
national average and inland water freight transportation employment is more than 11 times the national
average.
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Phase 1: Competitive Assessment
Employment growth in the sector is vital to the well-being of the region, but many of the core
occupations make less than the regional average wage. According to Economic Modeling Specialists
International (EMSI) data, laborers and freight, stock, and material movers are the largest single occupation
group in the sector (20 percent of total employment) but make less than $12 per hour. As identified in
GLI’s 2013 Logistics Annual Review, there is an opportunity to target higher-paying positions within
the sector that focus on adding value to the commodity. Opportunities in re-commerce and biologistics are prime examples.
“We were a manufacturing mecca historically,” said one focus group participant. When that sector began
declining, “UPS picked up the slack.”
Stakeholder input participants cited the presence of UPS Worldport as a major asset and a defining
characteristic of Greater Louisville. A focus group participant said of the logistics sector in the region, “It’s
fractured but it drives the economy.” One stakeholder considered that “we haven’t even scratched the
surface” of the full potential impact from the logistics sector. “We haven’t embraced the startup
side,” suggested another.
POTENTIAL FOR ECONOMIC DIVERSIFICATION
Economic structure
To build a diversified economy, the region must overcome some key competitive disadvantages
related to its overall education attainment, workforce sustainability, and air connectivity. Taken
together, these weaknesses impact the region’s ability to broadly compete for professional and
technical jobs as well as highly educated workers. 4
In a recent review of the regional economy, the St. Louis Federal Reserve chronicles the transition of
Greater Louisville as historically dependent on heavy manufacturing and river trade to an economy that is
more balanced with service-based companies. The region is home to the major corporate offices of
Humana, Yum! Brands, Papa John’s, Brown-Forman, Kindred, and UPS Airlines and is synonymous with
some of the most iconic pieces of Americana including the Kentucky Derby, bourbon, and Louisville
Slugger.
As previously discussed, the logistics and distribution sector is one of the main pillars of the regional
economy. UPS is the region’s largest employer and employs over 20,000 employees. The transportation
and warehousing sector, which encompasses logistics, employs over 40,000 people and regional growth
over the past 10 years has outpaced national gains. Major relocations and expansions, including Café Press,
Nasty Gal, Gilt Groupe, and GSI marked 2012 as an excellent year. However, according to the Logistics
Annual Review, finding seasonal workers for the holiday season proved tough for many logistics
operations, especially as companies are competing for workers within the same finite labor pool.
4
It should be noted that GLI’s target sectors will be analyzed in detail in the subsequent Target Sector Analysis. This section is
intended to present a higher-level overview.
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Phase 1: Competitive Assessment
Employees in the healthcare and insurance sectors account for almost 20 percent of the total regional
employment. Humana has over 11,000 employees; Norton Healthcare, KentuckyOne Health, Kindred
Healthcare, Floyd Memorial Hospital, Signature Healthcare, and Baptist Health support more than 27,000
additional jobs. Growth in the health and social assistance sector (23 percent) has matched the national
sector growth (24 percent) over the past 10 years. Finance and insurance employment grew by 17 percent
between 2002 and 2012, far outpacing the stagnant national sector.
The thrust of economic development activities related to healthcare and insurance has primarily come from
the niche sector of aging care and lifelong wellness. Major assets such as Innovate LTC (an aging care
business accelerator), Nucleus (University of Louisville’s innovation and life science organization), the
Health Enterprises Network (sector-specific economic development support organization), and the
University of Louisville’s geriatric medicine specialty all support growth and innovation within the cluster.
Scaling activity and connecting with organizations beyond Jefferson County will be vital to
increasing the aging care sector’s regional impacts.
Nationally, manufacturing has enjoyed a renewed spotlight as the sector has reversed downward trending
employment into positive gains over the past three years. Manufacturing operations represent a large
share of the Greater Louisville regional economy as almost 70,000 people work in the sector (11 percent of
total employment). Between 2002 and 2012, the sector shed 14,000 jobs and contracted by 16 percent, a
mark not quite as negative as experienced by the national sector (lost 22 percent). Since 2010,
manufacturing employment has grown, increasing by 12 percent. General Electric, which employs 8,000 in
the region, innovates and researches home appliances in its Appliance Park facility in Louisville. Ford Motor
Company’s Louisville Assembly Plant and Kentucky Truck Assembly employ a combined 9,600 workers. GE
and Ford operations also have a serious impact on employment, investment, and revenues in their
suppliers in the region.
Food and beverage activities play a large role in the economy as well. Well known for as the undisputed
bourbon capital of the world, the Greater Louisville region is the headquarters of one of the largest
American-owned wine and spirits businesses, Brown-Forman, which owns brand such as Jack Daniels,
Woodford Reserve, Southern Comfort, and Korbel. Heaven Hill Distilleries, Beam Global, and suppliers, such
as Vendome, which makes distilling equipment, are also located in the region. The headquarters of Papa
John’s, Texas Roadhouse, and Yum! Brands anchor the presence of large food-based companies.
Strategic investment and development of certain economic clusters have played a crucial role in attracting
and expanding businesses in the Greater Louisville region. Sectors beyond logistics do have a strong
presence in the region, but not nearly the level of impact on the economy.
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Phase 1: Competitive Assessment
EMPLOYMENT BY SECTOR, 2002–2012
Louisville 2012
NAICS
Code Description
Change 2002-2012
% of
Location
Louisville
Empl.
total
quotient
net
Louisville
%
U.S. %
2,502
0.4%
0.31
(1,783)
(42%)
(2%)
657
0.1%
0.19
(174)
(21%)
57%
11
Ag, Forestry, Fishing and Hunting
21
Mining, Quarrying, and Oil/Gas Extraction
22
Utilities
1,773
0.3%
0.74
218
14%
(7%)
23
Construction
31,461
4.9%
0.94
(7,209)
(19%)
(11%)
31
Manufacturing
71,378
11.0%
1.35
(14,094)
(16%)
(22%)
42
Wholesale Trade
26,917
4.2%
1.06
(27)
0%
0%
44
Retail Trade
64,188
9.9%
0.95
(4,760)
(7%)
(2%)
48
Transportation and Warehousing
40,958
6.3%
1.97
3,524
9%
5%
51
Information
9,818
1.5%
0.80
(2,156)
(18%)
(20%)
52
Finance and Insurance
36,312
5.6%
1.37
5,261
17%
0%
53
Real Estate and Rental and Leasing
9,019
1.4%
0.84
(1,067)
(11%)
(3%)
54
Professional, Scientific, and Technical Svcs
30,957
4.8%
0.77
2,660
9%
17%
55
Mgmt of Companies and Enterprises
7,400
1.1%
0.85
1,440
24%
18%
56
Administrative and Support and Waste Mgmt
42,913
6.6%
1.10
6,297
17%
6%
61
Educational Services
62
Health Care and Social Assistance
71
9,955
1.5%
0.61
(1,181)
(11%)
28%
78,381
12.1%
1.01
14,818
23%
24%
Arts, Entertainment, and Recreation
9,881
1.5%
0.95
(770)
(7%)
11%
72
Accommodation and Food Services
54,212
8.4%
1.04
8,551
19%
15%
81
Other Services (except Public Administration)
32,571
5.0%
0.98
(1,149)
(3%)
7%
90
Government (all public sector)
86,301
13.3%
0.82
7,291
9%
2%
99
Unclassified Industry
102
0.0%
0.13
(167)
(62%)
(14%)
15,521
2%
3%
Total
647,654
Source: EMSI
The growth and development of the Greater Louisville economy is at the forefront of local business
concerns. According to internal polling of GLI’s top investors, a majority identified economic growth and
sustainability as an essential priority.
“We desperately need corporate, high-paying jobs,” said a focus group attendee. Many stakeholders spoke
of the need for the region to diversify, build a stronger base of white collar jobs, and attract corporate
headquarters. “The growth of a city and its complexion is tied to its industry. And the backbone of our
economy is UPS.”
While more in-depth analysis of occupational wages will be provided in the next phase of the Advantage
Louisville planning process, the Target Sector Analysis, a snapshot of regional sector wages provides an
overview of average employee earnings. The average annual wage in the Greater Louisville region is
$42,561, which is about 10 percent lower than the national average. The highest paying sectors are
primarily white collar activities and include management of companies ($109,052), utilities ($83,323),
finance and insurance ($69,415), and professional, scientific, and technical services ($58,681). These sectors
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Phase 1: Competitive Assessment
have also seen growth over the past decade. Employment losses are evident in lower paying sectors,
especially those that serve the regional market, such as retail and arts, entertainment, and recreation.
EMPLOYMENT GROWTH AND WAGES, 2002–2012
Mgmt of Companies
and Enterprises
$100,000
Utilities
$80,000
Prof., Scientific, and
Tech. Svcs.
Manufacturing
Fin. and Ins.
Wholesale
Transp. and
Warehousing
$60,000
Mining, and Oil/Gas
Information
Construction
$40,000
Real Estate
Government
Health Care and
Social Assist.
Educ. Svcs. (Private)
Admin., Waste
Mgmt
Retail Trade
$20,000
Agriculture
Arts, Ent., and Rec.
Other Svcs.
$0
(50%)
(40%)
(30%)
(20%)
(10%)
0%
Accommodation and
Food Svcs.
10%
20%
30%
Source: EMSI
Note: Average annual wage (2013) is plotted on vertical axis and employment growth/contraction (2002–2012) is plotted on horizontal axis.
Employment in public universities or educational institutions is classified under the ‘Government’ sector.
Survey respondents cited low wages as one of Greater Louisville’s biggest obstacles to overcome, both in
terms of retaining talent and in building a more prosperous region. More than half of respondents rated
wages and benefits as unchanged in the region since the last recession.
Greater Louisville has still seen few of its higher-paying sectors grow in concentration in the regional
economy. The location quotient of finance and insurance increased from 1.12 to 1.37 between 2002 and
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Phase 1: Competitive Assessment
2012—in other words, the sector is now 1.37 times more highly-concentrated in the Greater Louisville
region than at the national level. Management of companies and information saw small growth in location
quotients but still remain less dominant in the regional economy than the U.S. average.
Job growth factors
The current economic environment has made it very difficult for economic development entities to move
the needle in terms of job growth and development. Economic development organizations must face this
fact and look to bolster their playbooks beyond the traditional attraction and recruitment strategies. The
common understanding is that job growth can be attributed to companies moving in and out of a
community, companies opening or closing, and companies expanding or contracting.
Between 2000 and 2010, companies moving in and out of Greater Louisville accounted for a net loss of
jobs around 2,600. Greater Louisville is the only geography of the five examined with a net loss of jobs
from net business relocations (establishment move ins minus move outs). What job growth occurred came
entirely from existing business expansions. This demonstrates that when firms and their jobs leave the
region, newly-located firms are not bringing new jobs at a rate that replaces those lost. In the same
time period, the bulk of net job creation can be attributed to regional companies expanding their
operations.
JOB GROWTH FACTORS, 2000–2010
Net job change from
Net job change from
Net job change from
establishments
establishments
establishments
opening
expanding
moving in
(30,603)
31,558
(2,633)
53,820
110,823
12,634
Indianapolis
(52,909)
61,866
4,411
Nashville
(38,258)
55,704
20,819
20,462
26,696
5,557
(5,967,019)
(6,662,829)
Louisville
Austin
Richmond
United States
93,292
Source: Edward Lowe Foundation, YourEconomy.org
Repeatedly, stakeholder input participants cited serious competitive disadvantages in the complexities of
the Kentucky tax structure and advantages in Indiana’s tax policy. “We tax the businesses we want at a
higher rate!” said a focus group attendee of the taxes paid by the bourbon industry.
“There are structural challenges in the Kentucky tax base,” and the state capital of Frankfort is remote from
many of the most dynamic business sectors that drive Greater Louisville, the Commonwealth’s largest
economy. “When we compete with other cities for headquarters, their tax benefits make us look
amateurish.”
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Phase 1: Competitive Assessment
GREATER LOUISVILLE’S EMERGING ENTREPRENEURIAL AND
INNOVATIVE ACTIVITY
The expanding ecosystem
Innovation is a complex process that depends as much on the entrepreneurial ecosystem as individual
creative power. The environments that are often associated with high levels of innovation tend to boast a
critical mass of mobile and talented people with access to capital and an engaged business community,
anchored by research-intensive education institutions. Measuring individual pieces of the ecosystem offers
an output-oriented view, but the on-the-ground perspective of entrepreneurs and their support systems
truly sheds light onto the challenges and opportunities available to the region. Greater Louisville’s negative
net jobs as a result of business openings between 2000 and 2010 illustrate a need in the region for
additional emphasis on new business creation as a job growth driver.
Since 2000, GLI’s EnterpriseCorp has periodically published the State of Entrepreneurship for the Greater
Louisville Region report. The most recent update occurred in 2010 and concluded that Greater Louisville is
“vigorously supporting new ideas and new businesses.”
The region is gaining ground, and national recognition supports the growing entrepreneurial culture. In
2012, the Kauffman Foundation found that the Greater Louisville region ranked among the top 20 largest
metros with the largest per capita numbers of high-growth firms (as measured by inclusion on the Inc. 500
list). Nashville, Austin, and Indianapolis also made the list. The Kauffman Foundation labeled Greater
Louisville as one of six “surprise metros” and found that high growth companies were primarily
occurring in the business services and IT sectors. In 2013, the entrepreneur media website Under 30
CEO ranked Louisville as the third among the Top 30 Best Cities for Young Entrepreneurs. Austin and San
Francisco were ranked first and second.
The Greater Louisville region is continually making enhancements and adding capacity to its
entrepreneurial culture and density. EnterpriseCorp’s annual Signature Event focuses on the
accomplishments and vision of regional entrepreneurs. The IdeaFestival brings hundreds of innovators and
global thinkers to the region every year. Administered by EnterpriseCorp, the homegrown Vogt Awards
support and provide mentors to manufacturing startups innovating in hardware, textiles, and food
products.
Over the past year, there has been tremendous momentum in the Greater Louisville region to invest in
high-potential firms through intense, focused support. Business accelerators and incubators are finding
traction in the region. In the course of the past year the region has launched an early-stage accelerator and
co-working space (Velocity Indiana) in addition to accelerators focusing on five different niches:
manufacturing (Vogt Awards), aging care (Innovate LTC), healthcare (XLerateHealth), and agriculture and
clean tech (Village Capital and VentureWell). The Distilled Spirits Epicenter and Moonshine University
provide support to fledgling distilled spirits entrepreneurs.
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Phase 1: Competitive Assessment
Incubator space in Purdue Research Park in New Albany and University of Louisville’s Nucleus Innovation
Parks—including the iHub co-working space—in Downtown Louisville’s Haymarket district are universityfunded facilities for regional entrepreneurs to use.
Further, as highlighted in the Wall Street Journal in January 2013, the University of Louisville revamped its
MBA program and placed an emphasis on entrepreneurship. The Princeton Review and Entrepreneur.com
ranked the University of Louisville’s graduate program in entrepreneurship 20th of the top 25 programs,
and Eduniversal ranked the program ninth in the U.S. and 32nd in the world.
EnterpriseCorp’s State of Entrepreneurship report also chronicles some challenges, many of which are
addressed in the following analysis. Not unlike other mid-sized metros, the availability of capital is one of
the primary challenges that face entrepreneurs. Nevertheless, while Greater Louisville is not a venture
capital (VC) hub, momentum from private equity and angel networks are evident.
Another concern for the entrepreneurial community is the participation of large employers. The role of
innovation in many of the sectors that comprise the core of the regional economy is not as prominent as
other sectors. Finding ways to encourage “intrapreneurial” activities in the larger companies is a priority
identified by EnterpriseCorp.
“We’re missing corporate engagement. They could be partners in the new firms or the first customers to
startups. They have a wealth of expertise,” said a stakeholder. However, “There is a stunning lack of support
for the entrepreneurial community from big companies. The corporate leadership has no clue what’s going
on.” One example was Humana’s lack of presence in XLerateHealth, a business accelerator program for
healthcare-related startups. “This is a corporate town. We have to engage the leadership to speak the
language of entrepreneurship.”
Finally, there is a need to raise the national awareness of the entrepreneurial environment and broadcast
success stories. One of the takeaways from the State of Entrepreneurship report was an overwhelming
feeling that local media could help drive stories about smaller companies in addition to reports about the
large employers in the region.
Entrepreneurial employment
Important measures that reflect one end of the entrepreneurial spectrum are those related to the selfemployed. In the United States, per EMSI, 6.7 percent of workers are considered self-employed, a figure
which is virtually unmoved from 2002. In the Greater Louisville region, self-employed workers represent 4.9
percent of all workers, a decrease from 2002 (5.6 percent). Self-employment rates in Nashville (7.4 percent)
and Austin (6.7 percent) are the highest of the comparison metros.
Employment levels in companies that are young and small also give an approximation as to the willingness
of employees to work for a fledgling startup rather than an established business. As indicated in the
following charts, firms in the Greater Louisville region that are younger than 10 years old and those that
have fewer than 50 employees tend to employ smaller shares of the regional workforce than in other
communities. Austin has the largest share of employees working in young companies (26 percent) and the
largest share of employees working in small companies (27.5 percent) among the comparison geographies.
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Phase 1: Competitive Assessment
The culture of celebrating innovative and entrepreneurial ventures is well-established in Austin and
supports acceptance of entrepreneurial risk.
SHARE OF EMPLOYMENT IN COMPANIES WITH FEWER THAN 50 EMPLOYEES, 2002–2012
Source: U.S. Census Bureau, Quarterly Workforce Indicators (QWI)
SHARE OF EMPLOYMENT IN COMPANIES YOUNGER THAN 10 YEARS OLD, 2002–2012
Source: U.S. Census Bureau, Quarterly Workforce Indicators (QWI)
Entrepreneurial talent in the region must “increase and develop.” “We need more professional talent that’s
entrepreneurial,” said a stakeholder. The University of Louisville’s Entrepreneurship MBA at the Forcht
Center for Entrepreneurship and the J.B. Speed School of Engineering were cited as important players in
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Phase 1: Competitive Assessment
developing local talent, but still “there isn’t enough alignment with the entrepreneur community and
[the] University.” Many students from the Speed School want “big name companies” on their resumes like
GE or Ford.
What is missing from Greater Louisville’s entrepreneurial ecosystem is “density—the sheer number and
quantity” needed to build a critical mass of sustainable innovation and support. Increased density would
provide more institutional knowledge for new entrepreneurs. “We always feel like we have to reinvent the
wheel. We need some stability and consistency” in startup groups and networks.
Patents
Patent activity has long been associated with geographic centers of innovation as it indicates the creation
of new products and technologies. According to data from the U.S. Patent and Trademark Office, patenting
activity in the Greater Louisville region lags behind other comparison metros in terms of patents per 10,000
employees (3.1) and falls toward the bottom in regard to annual growth (.05 percent between 2001 and
2011). Between 2001 and 2011, Austin-based inventors and companies filed the greatest number of
patents (21,236) and had the highest rate of patents per 10,000 employees in 2011 (39.9). The prolific
patent activity in Austin is driven by companies such as IBM, Advanced Micro Devices, Dell, and Freescale
Semiconductor, which have all filed at least 1,200 patents each since 2000.
Universities and university-connected organizations are among the top patenting organizations in most of
the comparison metros. In Nashville, Richmond, and the Greater Louisville region, such organizations are
among the top five patenting organizations. The University of Louisville Research Foundation filed 45
patents between 2001 and 2011, fewer than Vanderbilt University in Nashville (204), Virginia
Commonwealth University in Richmond (63), and University of Texas in Austin (217).
PATENT TRENDS, 2001–2011
2011
2001-2011
Per 10K
Patents
Louisville
employees Annual % change
156
3.1
Trend
Total
0.5%
1,454
2,460
39.9
3.6%
21,236
Indianapolis
497
6.9
-0.3%
4,869
Nashville
212
3.4
2.6%
1,667
224
4.8
3.4%
1,890
108,614
10.0
2.2%
966,964
Austin
Richmond
United States
Source: U.S. Patent and Trademark Office; U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages
The patenting activity that is ongoing in the Greater Louisville region reflects the region’s large
companies and its core economic activities driving product and technology upgrades. It is positive
that this particular metric of innovation is driven by the region’s corporate employers, which are not
only employing research talent locally but are seeking competitive advancements in the products
they manufacture in the region. But it also underscores the fact that while patent activity reflects
innovative activity, it does not necessarily reflect entrepreneurial activity. The top patented
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Phase 1: Competitive Assessment
technology class since 2000 has been in the refrigeration space, which is likely connected to GE Appliance
Park. The third most patented technology category is in electric heating, also tied to GE.
R&D and technology commercialization
Research and development (R&D) is crucial, as it is where innovation and funding intersect. Universities are
central institutions when it comes to R&D, and University of Louisville is the primary recipient of federallyfunded academic research dollars in the region. In fiscal year 2010, the University of Louisville spent $189
million in R&D expenditures, ranking 104th of 150 top research universities. However, since 2006, R&D
expenditures have increased by 33 percent at the University of Louisville, indicating that the
university is working to fulfill its legislative mission to be “a premier, nationally-recognized
metropolitan research university.”
UNIVERSITY R&D EXPENDITURES, LARGEST RESEARCH UNIVERSITIES, FY 2010
Total
Rank by
expenditures
% of U.S. total
expenditures
Louisville
University of Louisville
$189,090,000
0.3%
104
Austin
University of Texas at Austin
$589,502,000
1.0%
29
Indianapolis
Indiana University-Purdue University Indianapolis
$296,194,000
0.5%
71
Nashville
Vanderbilt University
$504,959,000
0.8%
35
Richmond
Virginia Commonwealth University
$197,709,000
0.3%
98
Source: National Science Foundation/National Center for Science and Engineering Statistics, Higher Education Research and Development Survey
Note: Ranking is out of 150 top research universities.
Recent National Science Foundation research shows that industry-sponsored university R&D funding is on
the rise while federal dollars are increasingly unstable due to threats from sequestration and other funding
cuts. In fiscal year 2013, 70 percent of U of L’s research funding was secured from federal sources, 17
percent from the state, and the remaining share was almost evenly split between corporate and private
non-profit sources. In the face of an uncertain federal funding environment, the University will need to look
to other sources—specifically industry—to grow its influence among other research universities.
“University of Louisville specifically needs corporate-sponsored research. That’s where we fall woefully
short,” remarked a focus group participant. “Right now the R&D is underwhelming.”
“The top action that the Greater Louisville Region could do to is support the University's (U of L) efforts,
particularly in research. The researchers at U of L have a very high potential of drawing in major
company interests and therefore more research parks, offices, and labs. I don't think Louisville will ever
become a tech hub (too far from California for that) BUT, Louisville can become a leader in healthcare.
Everything else would trickle down from a research explosion: demand for hospitality and restaurant
businesses would boom around the Nucleus/Shelby campus (revitalizing downtown), research-related
conventions could be created/recruited to base in Louisville which is better positioned for ease of access to
the entire nation, and Louisville would receive notoriety for being innovative which would draw more
employers and thinkers to get a piece of the action.”
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Phase 1: Competitive Assessment
Business research and development is another dimension of innovation as it is an indicator of the funding
local businesses are willing to commit to new ideas and new products. In the latest accounting of states
and R&D expenditures, Kentucky private businesses spent $889 million in 2010 on research and
development, with 92 percent being funded with the company’s own funds (as opposed to other
businesses or federal dollars). Companies in Indiana spent significantly more as they expended almost $5
billion in 2010. Research and development expenditures were the lowest in Kentucky and the second
highest in Indiana. The dichotomy between Kentucky and Indiana is also seen as Kentucky was ranked
43rd and Indiana was ranked 21st in terms of overall R&D expenditures (all funding sources) as a
percent of state gross domestic product.
Capital
As previously mentioned, capital is one of the most acute needs of entrepreneurs. The State of
Entrepreneurship report found that with regard to capital in the region, “the picture is not bad—not bad at
all.” The presence of angel investor networks, venture capital firms, and private equity firms is encouraging,
especially as the presence of such groups has increased since 2005. However, capital is still an acute
need for regional entrepreneurs as other metros have a more developed and established capital
framework.
Startup companies need capital in very early stages to grow and scale their operations. Among the earliest
sources of capital in the lifecycle of a business are funds from angel investors, high net-worth individuals
who put money into young companies. Angel investment has been a focus of GLI’s EnterpriseCorp as they
began and continue to support the Enterprise Angels, a group of more than 40 angel investors. The
Enterprise Angels vet two selected deals each month and members of the groups are expected to invest
$50,000 in companies presented to the group in the first two years of their membership. The Louisville
Angel Investor Network is another local angel group that is comprised of 21 members and seeks to make
investments in startups across a wide range of industries located within two hours of Louisville. The efforts
to increase the capacity and number of local angel investors is crucial to the overall ecosystem, but tax
credits available to angel investors in states like Ohio and Indiana that are not available in Kentucky may
diminish the willingness of would-be angels to invest in the Kentucky side of the region.
The democratization of early-stage investment is beginning to take shape. Crowdfunding, which already
allows individuals to support initiatives, programs, and new products through online investments or
donations, is being expanded to include equity investments. (Under current regulations only accredited
investors can receive equity via crowdfunding.) The Jumpstart Our Business Startups (JOBS) Act, passed by
Congress in April 2012, called for the U.S. Securities and Exchange Commission (SEC) to issue regulations
regarding equity crowdfunding, which will eventually result a new marketplace for investors of all means to
support early stage companies through equity investments. Recent rules released by the SEC have added
latitude to the channels through which companies can seek equity crowdfunding and as Forbes reported in
July 2013, widening equity crowdfunding to non-accredited investors is the next likely move by the SEC.
Greater Louisville is at the forefront of taking advantage of the easing on equity crowdfunding rules, and
the implications it has on the regional entrepreneurial environment are immense. The Commonwealth
Crowdfunding Committee and OPM Services, both based in Louisville, are working to connect companies
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with crowdfund investors. Such activity has already brought Greater Louisville national attention for being
among the first metros to stake out excellence in crowdfunding. These progressions and initiatives are
important to Greater Louisville as they will open up an entire new class of investors, both regionally and
nationally, that companies can tap for capital.
Availability of capital was rated lowest by survey respondents assessing a range of components of business
and entrepreneurial support and assistance in the region. Forty-seven percent ranked it as poor or below
average. “The risk adverse tendency of the city and the lack of money to bet on more projects and people”
was identified by one community member as Greater Louisville’s greatest weakness. To address this
problem the region needs “angels, [venture capital], and more capital for entrepreneurs for the area.”
Specifically, “We need more tech-savvy angel investors,” said a focus group participant.
For growing firms, venture capital is the natural corollary to earlier stage funding. However, venture capital
and other private sources of funding tend to flow more slowly into Kentucky and the Greater Louisville
region than competitor states and metros. According to the National Venture Capital Association, in 2012
companies in the Commonwealth of Kentucky attracted $23.1 million in venture capital, equal to just less
than one-tenth of one percent of total VC in the country. Further, none of the capital that was invested in
Kentucky originated in the Commonwealth. Rather, the largest investments of the $15 million that was
invested by Kentucky VC groups went to companies in Ohio and Maryland.
In contrast, VC investments totaled $327 million in Virginia (40 percent from in-state firms), $87 million in
Tennessee (27 percent from in-state), $930 million in Texas (16 percent in-state), and $84 million in Indiana
(20 percent in-state).
As seen in Greater Louisville’s in-migration trends from nearby metros, “We don’t have a big cadre of
people with national relationships,” said one entrepreneur. “Relationships are regional.” This characteristic
of Greater Louisville’s entrepreneurs puts more pressure on local and regional sources of capital.
One stakeholder actively involved with local startups observed, “The money is there but it doesn’t have
any confidence. We need to better educate [the corporate leadership].”
Many stakeholders involved in the startup and innovation communities of Greater Louisville referenced
Kentucky’s tax structure as a major impediment to growing local capital. “There are significant structural
problems in the tax base” of Kentucky, said an entrepreneur. “We lose baby boomers, millionaires, and
enormous talent who could be investing in the community.” Tennessee and Indiana were cited as good
examples of states that could better retain potential investors through favorable income, corporate, and
estate taxes.
Another survey response regarding the region’s greatest challenge for economy is “stagnation and
the culture aversion to taking the risks necessary to ensure competitive growth.” One respondent
offered this perspective: “I would follow some other cities (for example with CincyTech) in developing a
public/private venture capital arm that take a new business from incubation to IPO to prosperous business.
I would take it one step further and provide up to five years of technical and business strategy support.
These two initiatives would be greatly assisted if this region’s leaders would support the establishment of
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top tier masters and doctorate programs at the University of Louisville. These programs should be chaired
by the preeminent masters in fields such as engineering, business, medicine, law, and art.”
“A BIG CITY WITH A SMALL TOWN FEEL”
Community character
Residents of Greater Louisville feel a strong attachment to the community and its scalable size—it can feel
like a close-knit, well-connected community while benefiting from big city assets. However, this small-town
feel does not necessarily translate to a strong regional identify with a unified vision.
Greater Louisville enjoys a wide range of high-quality amenities relative to its moderate size as a metro
area. With sports facilities like the KFC Yum! Center and Louisville Slugger Field, a diverse and centrallylocated group of museums, and performing arts which include opera, theater, ballet, children’s theater,
symphony, and the renowned Humana Festival of New American Plays, the region enjoys accessible and
well-supported arts, culture, and sports institutions.
Annual celebrations like the Kentucky Derby and its related events, IdeaFestival, and Forecastle Festival for
music, art, and environmental activism (ranked by Rolling Stone as one of the “Top 33 Coolest Festivals”)
bring major attention and thousands of visitors to the region.
Combined with a revitalized Downtown Louisville, Louisville Waterfront Park, emerging commercial
corridors in NuLu and Bardstown Road, successful and nationally-recognized restaurants, and a burgeoning
distillery district adjacent to the West Main Museum Row, the region’s central city offers some distinctive
and well-developed options for culture and socializing.
The breadth and quality of amenities is remarkable for a metro its size, according to many community
members. “Coming to school in Louisville has made me love the city,” said a survey participant. “It's smaller
and more southern than other cities, which gives it a hospitable vibe, but big enough and diverse enough
to be cultured and offer a lot of different, great things.”
Many stakeholders recognize a shift happening in Greater Louisville’s national standing. “Our community
is growing in national recognition,” said one survey respondent. “I believe the area’s reputation is
growing for all of its small businesses. We seem to be known for great local restaurants, and other local
businesses.”
While the region’s growing “foodie” culture and the success of the Urban Bourbon Trail have been a boon
for restaurants, the proliferation of new and old dining establishments is not evenly distributed across the
region, with some areas of Jefferson County deeply underserved by access to food, according to
stakeholder input. In addition, access to retail amenities is lower than average in the region. Stakeholders
providing input identified shopping options as not as strong as other quality of life amenities like
restaurants, culture, and sports.
Other stakeholders called the options of Greater Louisville something special. “We are a large city with
deep arts, social services, but small town identity.” “We need to own the bourbon culture even more!”
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Stakeholders commonly used the terms “big little town” and “big city with a small town feel” to describe
the region in a positive and negative sense. The identity is positive in its connecting and hospitable nature
but “problematic” often times from an external perspective. It may imply “people who don’t want change.”
It was understood that what current residents value about the region may not translate to new residents
from other places. “Outside people see and may feel differently about things we value like small town.”
Much of the “big small town charm” that comes from a dynamic, changing community was
attributed to friendliness, diversity of residents, and competitive quality of life options. “Louisville
has the potential to be a great place” if the region can continue to build on those characteristics.
As previously mentioned, perceptions of Kentucky hurt the image of Greater Louisville. In addition, the
region bridges the South and the Midwest, perceptions of which can help or hurt it. The “Midwestern work
ethic and Southern hospitality” or Southern charm were often mentioned as a positive hybrid identity. But
for minority talent considering the region, “You don’t know what you’re moving to—is it a southern or
Midwestern city?”
A stakeholder stated, “We should just be brave and bold about whatever we want to be.”
When survey participants were asked why they do not feel attached to the Greater Louisville region, one
commented, “Too much emphasis on where one went to high school, particularly if you didn't grow up
here. I've always found that very strange for this large a metro area.” Another remarked, “There appears to
be too much emphasis on being ‘home grown’ compared to other cities such as Nashville.” The strong
community connection of native residents can sometimes create a barrier and feel “insular” to new
residents trying to establish a network.
Many input responses highlighted the regional emphasis on high school affiliation and how it either
connects or excludes. Some believed that Greater Louisville feels like a “big little town” where “lifers” accept
outsiders. “If you want to be engaged, it’s about your passion and interest. It’s easy to connect with leaders
in the city.”
Regional identity
For the purpose of this Competitive Assessment, the Greater Louisville region is the 13-county, two-state
metropolitan statistical area defined by the U.S. Office of Management and Budget. Within Greater
Louisville, a regional definition is harder to establish. In order to understand and work for the same set
of economic development goals, Greater Louisville must determine what makes it a region and work
to convene those communities around its vision. The “small town” feel and neighborhood pride of
Greater Louisville sometimes restricts its ability to think big and regionally.
There are some regional efforts convening multiple counties from Kentucky and/or Indiana around
common issues in workforce and economic development. Wired 65 is a 26-county two-state region created
through a WIRED (Workforce Innovation in Regional Economic Development) grant from U.S. Department
of Labor. The region includes Louisville and Elizabethtown. Kentuckiana Works, the workforce investment
board for Greater Louisville, serves seven counties. Kentucky Indiana Exchange (KIX) is a regional leadership
coalition of 26 counties across two metro areas focused on talent, innovation, place. One Knox is the
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central coordination agency initiated by the 2005 Base Realignment and Closure (BRAC) Commission to
help the region prepare for and manage growth associated with Fort Knox. The Bluegrass Economic
Advancement Movement (BEAM) is a joint effort by Louisville and Lexington to push the advanced
manufacturing sector in the state. The Louisville-Southern Indiana Ohio River Bridges Project is a
partnership of the Kentucky Transportation Cabinet and the Indiana Department of Transportation.
As seen with these varied regional efforts, leaders in Greater Louisville do find common ground within the
region or in partnership with neighboring metro areas and counties around targeted efforts or issues.
However, these initiatives have not necessarily translated into a full embrace of regionalism and a two-state
Greater Louisville identity at the community level, and the geographic scope and scale varies from issue to
issue.
When asked about regional cooperation in Greater Louisville, one elected official said, “We don’t have it.
[Louisville] doesn’t team up with Bullitt County or Southern Indiana to do anything.”
“Regional mobility is key now. There has to be leadership that says Louisville needs the region and vice
versa” as commuting patterns lengthen. “I’m not sure Louisville understands the importance of smaller
communities. But we can be a team.”
Many responses to the online survey question, “If you could make one recommendation for strengthening
the effectiveness of your community’s leadership (within the public or private sector), what would it be?”
related to regional cooperation. “If you want to talk about Greater Louisville Region, then think like that.
Why delay the bridges for 10 years?…Why can't you think as one entity rather than two?”
Despite commuting and commerce patterns, the Kentucky and Indiana segments of the region do not feel
connected to many stakeholders. “The Ohio River has been the Great Wall of China. We’re not a metro area
that acts like one.” “We have to get over the mentality of two sides of the river.”
One Kentucky resident remarked that “the dynamic with Indiana is that it’s easy to ‘ra-ra’ regionalism, but
on the ground it’s different. We fight tooth and nail.” When the Ohio River Bridges Project is completed,
many stakeholders anticipate major growth in southern Indiana that will impact all of Greater
Louisville. Current rifts could deepen as prosperity grows on the Indiana side of the bridges if twostate regional collaboration is not forged now.
“We haven’t had any real effort to bring us together on how to sell ourselves as a real region.” Although
“we’ve made strides” in some efforts around workforce initiated by KIX.
A regional approach to public policy—including collective advocacy in Frankfort, forging Kentucky
and Indiana collaboration, and building support for the local option sales tax amendment—was
mentioned as the most potentially valuable outcome of any regional cooperation. “Do we do enough
as a region to influence Frankfort?” asked a focus group participant. The Greater Louisville region has
“disproportionately low influence in our capital.” “We have to enhance our relationship with state
government. We are tied to state rigidness and not as nimble as other places because of it. We have to
figure it out.”
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Some also saw convening around Fort Knox and leveraging its Human Resources Command as a vital
pipeline of talent into Greater Louisville as a task that could best be taken on as a region. “Fort Knox gives
us an opportunity as a region to differentiate ourselves, and we don’t leverage that capacity.”
“We are not very good at marketing ourselves as a region,” said an economic development professional.
“The challenge is bigger than we realize, and it goes deep. It’s fixable, but we can’t ignore it.”
Some focus group participants noticed that new or returning residents in Greater Louisville often have
more positive perceptions of the region than long-time citizens. “When I look at us compared to other
cities, our problems do not look that big. There is nothing in Louisville that can’t be overcome.”
There was consensus among stakeholders around what the persistent challenges of the region are,
and a sense that these issues can be tackled intentionally with the right leadership and
collaboration. “We have to be honest and aware about the problems in our community to
entrepreneurially address them,” observed a focus group participant. “The things we do out of our own
inventiveness are so much better than when we copy someone else. We do so much better with ideas that
organically come from our community.”
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CONCLUSION
Greater Louisville has many strong assets and attributes that bode well for its ability to attract and grow
talented workers, engaged students, entrepreneurs, businesses, and quality of life options. Most
stakeholders recognize these advantages and take great pride in the region’s cultivation and support of its
distinctive characteristics.
However, the problems with diversifying the economy, jobs with non-competitive wages, attracting skilled
workers, systemic and segregated poverty, and low educational levels cannot be accepted as part of the
region’s identity. Leaders and stakeholders must work to strategically reverse the trends that threaten
prosperity and well-being, and raise expectations for the region’s accomplishments. There is already
momentum in these areas as child well-being, adult educational attainment, and diversified sectors are
moving in a positive direction.
Through research and input, this report uncovered and examined ten stories about Greater Louisville that
must be thoughtfully and tactically leveraged:
Moderate population growth but minimal diversification: Greater Louisville’s sluggish population
growth—relative to its comparison metros—calls attention to the demands on the home-grown population
to stay in the region in order to sustain the growth trajectory. The region is also experiencing minimal
diversification when compared to the populations of peer metros. This puts additional pressure on Greater
Louisville leaders to understand how emerging demographics—including a strong influx of international
residents and a more diverse youth population—will impact the region and can be leveraged for long-term
opportunities in talent and economic development.
Building a sustainable workforce: Greater Louisville’s age and migration trends raise concerns about the
long-term viability of its population and workforce. The attraction of new workers and residents will be key,
along with the retention of recent college graduates. Stakeholders perceived developing and recruiting an
educated workforce as well as keeping young, educated people in the region to be among Greater
Louisville’s greatest challenges.
A less educated workforce, but gaining ground: Positive change in educational outcomes is measurable,
but the momentum needs to accelerate if the Greater Louisville region is to compete at the level it
envisions. Currently, adult educational attainment in the region is not competitive with its peer metros. In
order to attract and grow more skilled jobs in every business sector, Greater Louisville will have to import
talent and increase its postsecondary degree output. While the youngest group of workers in the region
(ages 25 to 34) has higher rates of bachelor’s degree attainment than previous generations, the rate of
young workers without a high school diploma is also higher. This illustrates a mounting opportunity gap
among the region’s workforce.
Child well-being and the future of Greater Louisville: With growing concern over educational
attainment, the region’s current youth offer the best hope for dramatically improving trends that have
historically hindered Greater Louisville’s economic growth. While poor perceptions of the largest public
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school system in the region and relatively high child poverty rates underscore the systematic issues that
must be overcome to ensure Greater Louisville achieves its desired future, recent improvements in high
school dropout rates and teenage idleness show that progress is being made.
Growth in the core: Jefferson County has been the hotbed of regional population growth in terms of sheer
numbers, driving 43.8 percent of the region’s population growth since 2002. Jefferson County Public
Schools have seen enrollment increases as a result. Meanwhile, job growth has not been as centralized in
the urban core, with Bullitt County accounting for more than half of the jobs created in the region.
Recession and recovery: The foundation of the regional economy is built on logistics, distribution, and
manufacturing. However, these sectors are highly cyclical and characterized by lagging recoveries. There is
an acute need for additional diversification in sectors impacted by different cycles and external factors in
order to develop a more resilient economy that will outperform in future downturns. Still, stakeholders feel
generally positive about improvements in the regional economy since the last recession and Greater
Louisville as a “bright spot” in the context of its larger region straddling the Midwest and the South.
Greater Louisville as a distribution hub: The importance of logistics on the regional economy cannot be
overstated, and its long-term potential is still being explored. Competitive geographic and infrastructure
factors create a strong set of assets to keep goods moving in and out of the region. Greater Louisville still
needs to target higher-paying logistics and distribution jobs. Many core logistics occupations pay lower
than the regional average wage.
Potential for economic diversification: While still strengthening and supporting the massive logistics
presence in the region, the diversification of the Greater Louisville economy is a focus for many economic
development stakeholders. The region is carving out niches in aging care, food and distilled spirits,
healthcare, advanced manufacturing, and corporate services. Maturation and innovation within these
sectors is key, as is expanding their potential into the entire region.
Greater Louisville’s emerging entrepreneurial and innovative activity: Greater Louisville has been
recognized as a “surprise metro” by the Kauffman Foundation for its entrepreneurial activity. In the past
year alone, the ecosystem for startup and second stage firm support has grown tremendously with the
addition of five business accelerators. While established metrics of innovation, including patents and R&D
expenditures, show dominance by the region’s large companies, there is still not much interaction between
corporate businesses and the local emerging entrepreneur community in terms of mentoring, investment,
or services. Meanwhile, the University of Louisville is increasing its R&D output significantly in order to
grow its national presence as a research powerhouse.
“A big city with a small town feel”: A common thread in stakeholders’ identity of Greater Louisville is its
“big small town charm” exhibited in the range of options it offers in a friendly, mid-sized metro. If the
region can continue to make the most of the best parts of its small town hospitality, there is great potential
for Greater Louisville’s growing attractiveness. The region as a whole, however, suffers from fracturing and
lack of a regional approach to major issues that impact the growth and success of its communities.
Louisville must determine what makes it a region and work to convene those communities around its
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vision. Despite some of the big challenges and vulnerabilities of Greater Louisville, many stakeholders were
optimistic that the region can take ownership of its future and address these issue head-on.
In a region with a large home-grown population, community pride is a major advantage but fear of change
can hamper efforts to be bold and transformational. At this point in Greater Louisville’s development, the
status quo is not an option for retaining the region’s best qualities. It is important to remember that holistic
economic development is not about growing for the sake of competition but is about increasing quality of
life, prosperity, and opportunities for every single citizen in the Greater Louisville community and
capitalizing on the region’s distinctive characteristics. This Competitive Assessment is the first step in a new
regional effort to carry out the big, bold ideas that Greater Louisville stakeholders have for their region.
Next steps
The next phase of the Advantage Louisville process is the Target Sector Analysis and Marketing Review.
Market Street will examine the regional economy and workforce to highlight the business sectors and
niches that hold the most potential for long-term, dynamic, and sustainable growth for Greater Louisville.
This phase will also include a review of GLI’s marketing efforts and materials to assess how they clearly and
effectively communicate the Greater Louisville story.
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METHODOLOGY APPENDIX
Regional Definitions
The regions that are analyzed in the preceding report are based on December 2009 Metropolitan Statistical
Area (MSA) definitions of the Office of Management and Budget (OMB). Counties contained within each
MSA are as follows:
 Louisville/Jefferson County, KY-IN (referred to as Greater Louisville region): Clark County, IN;
Floyd County; IN, Harrison County; IN, Washington Count, IN; Bullitt County, KY; Henry County, KY;
Jefferson County, KY; Meade County, KY; Nelson County, KY; Oldham County, KY; Shelby County, KY;
Spencer County, KY; Trimble County, KY
 Austin, Texas: Bastrop County, TX; Caldwell County, TX; Hays County, TX; Travis County, TX;
Williamson County, TX
 Indianapolis, Indiana: Boone County, IN; Brown County, IN; Hamilton County, IN; Hancock County,
IN; Hendricks County, IN; Johnson County, IN; Marion County, IN; Morgan County, IN; Putnam
County, IN; Shelby County, IN
 Nashville, Tennessee: Cannon County, TN; Cheatham County, TN; Davidson County, TN; Dickson
County, TN; Hickman County, TN; Macon County, TN; Robertson County, TN; Rutherford County, TN;
Smith County, TN; Sumner County, TN; Trousdale County, TN; Williamson County, TN; Wilson
County, TN
 Richmond, Virginia: Amelia County, VA; Caroline County, VA; Charles City County, VA; Chesterfield
County, VA; Cumberland County, VA; Dinwiddie County, VA; Goochland County, VA; Hanover
County, VA; Henrico County, VA; King and Queen County, VA; King William County, VA; Louisa
County, VA; New Kent County, VA; Powhatan County, VA; Prince George County, VA; Sussex County,
VA; Colonial Heights city, VA; ; Hopewell city, VA; Petersburg city, VA; Richmond city, VA
In February 2013 the OMB published a new set of MSA definitions reflecting changes based on 2010
standards as well as data from the 2010 Decennial Census. This affected the Louisville MSA as well as
Indianapolis, Nashville, and Richmond. The 2013 definition of Louisville/Jefferson County, KY-IN adds Scott
County, Indiana and deletes Meade and Nelson counties in Kentucky. The Indianapolis-Carmel, IN MSA was
changed to Indianapolis-Carmel-Anderson, IN and adds Madison County, Indiana and deletes Shelby
County, Indiana. The new definition of Nashville-Davidson-Murfreesboro-Franklin, TN MSA adds Maury
County, Tennessee and deletes Wilson County, Tennessee. The Richmond, VA MSA no longer includes the
Virginia counties of Cumberland, King and Queen, and Louisa.
Because at the time of this report most public sources have not updated their data to reflect the new
February 2013 OMB definitions, Market Street used the December 2009 definitions of Louisville MSA and its
comparison communities. In addition, the 2009 definitions were chosen for this analysis as GLI currently
uses the 2009 metro area definition for its research and analysis.
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Quantitative Data
The quantitative portion of this review utilizes data from the U.S. Census Bureau, the U.S. Bureau of Labor
Statistics, state databases, and other publicly available data sources.
U.S. Census Bureau: Data from the U.S. Census Bureau came primarily from products such as the
Decennial Census, the Population Estimates Program, the American Community Survey, Small Area Income
and Poverty Estimates (SAIPE), and Quarterly Workforce Indicators (QWI. Data revealing social and
economic characteristics are primarily sourced from the Decennial Census and the American Community
Survey. QWI data were used for exploring entrepreneurial activities in Greater Louisville and its comparison
geographies.
U.S. Bureau of Labor Statistics (BLS): The BLS provides data on employment, unemployment, labor force,
and wages. The Quarterly Census of Employment and Wages (QCEW) is conducted by the BLS and provides
detailed employment data by sector. However, the BLS is careful to suppress employment in sectors where
the number of establishments is less than or equal to three, or when a single employer represents more
than 80 percent of total sector employment. The BLS will not publish data if it does not meet a state’s
disclosure policy, which leads to suppression issues. When suppression prevents effective analysis, data
from EMSI is used.
Economic Modeling Specialists International, Inc. (EMSI): EMSI provides a variety of data points
covering concepts such as business sector employment composition, wages, establishments, occupational
composition, workforce demographics, exports, inter-industry expenditures, job openings, and degree
completions. EMSI is an industry-leading provider of proprietary data and aggregated data from public
sources such as the U.S. Census Bureau, the U.S. Bureau of Labor Statistics, the U.S. Bureau of Economic
Analysis, the National Center for Education Statistics, CareerBuilder, and many others. EMSI was acquired
by CareerBuilder in 2012.
Location Quotients: Location quotients are used to measure the relative concentration of local
employment in a given business sector or occupation. When applied to business sector employment, they
measure the ratio of a business sector’s share of total regional employment to that business sector’s share
of total national employment.
LQ =
(Regional Employment in Sector / Total Regional Employment)
__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
(National Employment in Sector / Total National Employment)
A business sector with an LQ equal to 1.0 possesses exactly the same share of total regional employment
as that business sector’s share of national employment. When a regional business sector possesses a
location quotient greater than 1.0, this signals that the business sector is more concentrated in the region
than it is nationwide. Conversely, a location quotient less than 1.0 indicates that the business sector is less
concentrated in the region than it is nationwide. The higher the location quotient, the more concentrated
the level of regional employment as compared to its national equivalent. For example, a location quotient
of 1.25 would indicate that a business sector’s share of total regional employment is 25 percent higher than
the same business sector’s share of national employment. An LQ of 2.0 would indicate that a business
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sector’s share of regional employment is twice as large as the national share, while an LQ of 0.5 would
indicate that the business sector’s share of local employment is half the national equivalent.
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