KENTUCKY STATE UNIVERSITY: INSIGHTS ON INCLUSIVE INNOVATION

INNOVATION IN KENTUCKY | CHALLENGES ON THE HORIZON

CAPITAL: Rising interest rates, inflation, and geopolitical uncertainty has cast a pall on the U.S. economy. Innovation-focused investments thrived at the height of the COVID-19 pandemic and boomed in 2021, but their continued resilience is uncertain for 2022 and 2023, as the world meets new challenges. The first three months of 2022 marked a record high for VC dealmaking among late-stage startups, but that frantic pace has slowed.

In Kentucky, venture capital companies brought in $27.7 million during the first quarter of 2022, according to the latest Venture Monitor report from PitchBook and the National Venture Capital Association.

• —ECONOMY: The cost of living has outpaced the median wage in Kentucky because of the surge in inflation. According to the Kentucky Center for Economic Policy, the east-south central states — which include Kentucky — year-over-year inflation was 8.0% in July, which was slightly down from June, but still close to the highest it has been for decades. Growth has also become less inclusive. Income inequality has been rising in the world's major economies including in the United States.

WORKFORCE: The United States faces a growing shortage of STEM professionals especially when it comes to African Americans and other minorities. A 2021 analysis by the Pew Research Center indicates that Black workers make up only 9 percent of the nation's STEM workforce. Slower population growth and aging of the current population also imply that the nation will need productivity increases to do more work in the future. Innovative technologies favoring capital and higher-level skills have contributed to a decline in labor's share of income and increased wage inequality.

In Kentucky, job quality and opportunities lag for a broad cross section of workers, including women, Black Kentuckyians, those in the public sector, and rural residents according to the Kentucky Center for Economic Policy. According to Brookings Research in 2019, more than 28% of jobs in the Louisville KY region were at high-risk for automation and artificial intelligence (AI). The picture is worse for Black workers who face a 44% risk of current-task automation.

As Kentucky cannot attract enough out-of-state talent to fuel the local innovation economy, it is critical to devote more resources to cultivating inclusive ecosystems to help generate a diverse “homegrown” talent pipeline. Cultivating an inclusive innovation ecosystem is essential for the future growth and competitiveness of Kentucky’s economy and overall wellbeing of its citizens.