Introduction

The blog started with a post on “Moneyball for Government” on March 9, 2015, and has essentially stayed true to the original premise: when using public dollars, pick an indicator to influence, measure your progress, and see if the benefit outweighs the cost. The authors were a bipartisan group of Republicans and Democrats looking to improve government effectiveness.

This idea of accountability for public tax dollars isn’t new, with its origins beginning in education in the 1960s and expanding into healthcare through the Affordable Care Act (value based purchasing and readmissions penalties). Accountability in education is a given, while it remains controversial in healthcare. Accountability should be expanded into other domains like local government and economic development.

Since March 9, 2015, this post represents the 47th installment in the series. I thought I’d review the different findings over the time period and demonstrate why Hendersonians should be concerned about the current state of affairs and also point out some positive things.

Bad News

  • From 1969 to 2013, Daviess County and Henderson County enjoyed relative parity in per capita income. However, beginning in 2005 and accelerating after the recession in 2008, Daviess County recovered quicker than Henderson County. Since 2013, Daviess County residents made on average $4,338 dollars more than Henderson’s residents or 12.4% more in relative terms.

  • Henderson is surrounded by communities whose citizens earn more money than Henderson’s. Warrick County (Newburgh) residents earn 28.7% more. Smaller, more rural Webster County residents earn 5.7% more than Henderson residents. Mining jobs may explain the difference and with the recent decline in mining, Henderson’s standing might have improved.

  • Henderson’s per capita income ranking has been falling for decades. In 1978, Henderson was ranked 2nd in per capita income. In 2015, Henderson was ranked 31st.

  • Methodist Hospital, the community’s second largest employer behind the school system, lost better than 50% of its inpatient admissions between 2000 and 2014 and its payor ratio has steadily trended toward medicaid with one source estimating 70% of its revenues now coming from medicaid. Recent layoffs and an “affiliation” agreement with Deaconess Hospital suggest finances continue to deteriorate.

  • Low birth weight hobbles Henderson and Union health. As of 2013, Henderson and Union Counties posted some of the worst low birth weight data when adjusted for poverty in Kentucky and possibly the developed world. Ten percent of Henderson and Union’s newborns were under 5 pounds 8 ounces according to County Health Rankings.

  • New home building is sluggish. Building permits issued for single family homes in Henderson are at the same level as in 1985.

  • Coal industry continues its nearly century long slide. Portrayed as the economic savior in rural Kentucky in the 2016 elections, coal continues not be competitive with energy substitutes like natural gas. No coal has been mined in Henderson since 2013. According to the 2016 Kentucky Annual Report by the CBER, coal jobs are at their lowest level since 1927.

  • While a bumper crop in soy beans and corn is expected, farm income is predicted to decline for the fourth year in a row. According to the WSJ, “the USDA expects farmers to make half as much money this year as they did in 2013.” Farm prices peaked in Henderson in 2014 and have been trending down.

  • From 2000 to 2017, Henderson’s poverty increased by 42.9% when measured by the U.S. Census Small Area Income and Poverty Estimates, but it has improved since 2015.

  • When measured by average weekly wage from just before the 2008 recession to 2015, Henderson’s wage growth was 18%, placing 8th out of 11 area counties.

  • When measured by job growth from just before the 2008 recession to 2015, Henderson’s job growth was -3.5% placing it 9th out of 11 area counties.

  • Players Club golf course closed.

Good News

  • Henderson County Schools are performing above the predicted level when measured by ACT score and adjusted for both poverty and the presence of an independent school system. Their ACT score was 19.8 despite a poverty level of 23.8%.

  • Migration data from the IRS do not show a big disparity in incomes between those individuals moving to Henderson and those moving from Henderson. My working theory was that high earners were moving to either Warrick or Daviess. Again, this was not substantiated. Time constraints prevented a fuller analysis and people rarely want to read about non-discoveries. Still, it is significant.

  • Henderson is ranked relatively high when compared to other Kentucky counties on the county level “Innovation Index.” This distinction is something to be celebrated. For more information, see the CBER 2016 report.

Kentucky County Innovation Index

Areas of Concern

Economic problems eventually show up on the financials of lenders. With the dramatic changes in Henderson economic activity, local banks are likely to see the next wave of fallout. I’ve been monitoring closely the FDIC performance ratios at the local banks. Nothing to report so far, but those banks with the most exposure to the Henderson economy are likely to be under pressure.

Conclusion

Most Henderson leaders have remained quiet; one, Magistrate George Warren, acknowledged the challenge (see his letter to the editor); and yet others have chosen style over substance, showmanship instead of accuracy and bluster before candor. One wonders how much longer the public will tolerate messaging that diverges from their every day experience.

While some people have done well in Henderson, it is more accurate to say that economic conditions have deteriorated over the past decade or more. Persistently misrepresenting the current state of Henderson undermines pubic policy initiatives and disregards the economic concerns of many Henderson citizens.

It’s time to get serious about public policy responses and reexamine stale economic development strategies. Henderson needs to get its “swagger back” and a number public policy ideas will follow in the “Hendo Swagger Back” series. (Make sure to differentiate those that criticize from those that offer actual, concrete and constructive ideas).