How to Reduce Labor Costs without Sacrificing Quality

3 Oct 2018

Payroll is often a company's’ largest expense. Finding ways to reduce payroll then becomes important for companies looking to grow or to increase profitability. The question becomes how to do so while remaining fully staffed and not sacrificing quality. East Kentucky provides the answer.

Wages are an average of 20 percent less in East Kentucky than in the rest of the country.

Companies can reduce their payroll cost by locating in East Kentucky where the average hourly wage is $17.53 – 20 percent lower than the national average of $21.73. For a company with 100 full time employees at the average wage, this could be a monthly savings of over $67,000 or more than $800,000 per year.

Why are wages lower?

There are a variety of factors contributing to lower wages in East Kentucky, including:

#1 This is a right to work state

Employers can negotiate wages and benefits directly with employees, rather than having to go through a union. This allows companies to be upfront with employees about the wages they can afford to pay. Those looking for a long-term position and sustainable job are willing to work with companies to reach a mutually beneficial agreement.

#2 Supply and demand

There are over 12,000 highly skilled workers looking for jobs in Kentucky. With many of them coming out of the mining industry, they have experience, problem-solving skills, and know how to work hard. Still, there are more available employees than jobs. This puts employers in a strong negotiating position.

#3 Cost of living is lower here

Even though employees are paid 20 percent less than the national average, they enjoy a high quality of living at those rates. This is because Kentucky has a lower cost of living than most of the country. Things like housing cost less here, making it possible to do more with less. This is a good thing because it means that employees are satisfied working for Kentucky’s average wage, and employers still save money.

Employers are satisfied too

Some may worry that paying workers less may mean a sacrifice in quality and efficiency. This is not the case in East Kentucky. In a recent survey, 80 percent of businesses reported being either satisfied or very satisfied with their workforce.

In fact, Chris Tomlinson, CEO of Silverliner, a Pikeville company, said of his employees, ““A company is only as good as its’ people and their passion. Our people have passion and are proud of what they can do and produce. We will have 100 percent accuracy because our people will make it perfect. That’s what it’s all about - the people behind the product.”

Can you save money by locating in East Kentucky?

We invite you to consider East Kentucky for your new location and to further explore how much money you could save by doing so. For more information or for assistance, contact Chuck Sexton, CEO of One East Kentucky by emailing