Across Kentucky, families are feeling the squeeze as the cost of living keeps rising, while wages have barely moved.
I spoke with Jason Bailey, the founder and executive director of the Kentucky Center for Economic Policy, a progressive think tank, about what’s driving essential costs up across Kentucky, and what we should be watching as we head into the holiday season.
This conversation has been edited for length and clarity.
Ayisha Jaffer: We know life is getting more expensive across the board, but what are the main factors driving that increase in essential cost and inflation here in Kentucky?
Jason Bailey: There are several things going on. We saw a rapid increase in prices during the COVID-19 pandemic, and that had in part to do with shortages in the supply chain for a variety of goods. It had to do with changes in the way people bought things. They bought fewer services, and more goods.
We see more industries where there are monopolies operating and able to control prices, and that sent prices up pretty substantially. Inflation tends to send prices up. They typically don't come back down with a few exceptions. So we've had higher prices as a result.
Inflation growth has slowed, but those increases are still affecting people. And we're still seeing increases in the price of housing, in the price of groceries, in the price of homeowners insurance. There are just a number of factors that have to do with the markets for those particular goods and services including ways in which climate change is impacting costs. There are a lot of things going on.
AJ: It seems to be a really hard time right now for everybody.
JB: Absolutely. The other side of the equation is income. It’s definitely been the case that wages have not kept up, and that just adds to the pinch.
AJ: Kentucky’s minimum wage has been stuck at $7.25 an hour since 2009. Your team at the Kentucky Center for Economic Policy found that if it had kept up with inflation, Kentuckians would be earning about $14.70 an hour today — more than double the current rate. How did we get here, and why has the minimum wage stayed frozen for so long?
JB: This is the longest time in history in which the minimum wage has not gone up. It's essentially been decisions, both in Washington at the congressional level as well as in the legislature, not to increase that minimum. It's still $7.25 an hour.
We've also not increased the minimum wage for tipped workers since 1991. it's still stuck at $2.13 an hour. A reliance on tips is very volatile, and many tipped workers don't make enough to get by. So that's one of the huge problems we have is that this minimum bar that is in place just hasn't been updated to reflect these rising costs.
AJ: What does that gap between wages and the real cost of living look like for Kentuckians, and how does that ripple through the broader economy?
JB: In Kentucky, you've got about 20% of workers who make less than $15 an hour. So when people don't have money to spend, then there's less that's being circulated locally.
Where has that money gone? It's really gone to the people at the top. Those folks already tend to be very well off, and they don't spend much of their income. It sort of continues to pile up so it doesn't circulate in the economy and create jobs.
AJ: For listeners who want to stay informed, what resources or organizations would you recommend for understanding or navigating these economic changes?
JB: At the Kentucky Center for Economic Policy, we will have more out around the affordability issue and the kind of policy solutions that are needed. There's important work to be done in the 2026 General Assembly.
Other than that, we need to be supporting those local efforts that are immediate help to people, whether that's food banks, homeless shelters, programs that help people with utility assistance. There are lots of things that at a local level can be done.
Those solutions are critical, but ultimately they're not enough if we don't also have government action.
