By Morton J. Marcus, an economist who has traveled and studied Indiana for more than three decades
Quite appropriately Governor Daniels did not make any claims about “a revitalized Indiana economy” in his recent State of the State speech. He stuck to the theme that we are on track to turning the economy around rather than proclaiming any victory.
This restraint was well-warranted. Indiana ranked 45th among the 50 states in its rate of employment growth for the past year (November to November figures). The nation added jobs at a 1.5% rate. Our 0.3% increase beat out only Ohio and Michigan as well as Mississippi and Louisiana. The first two of these have been victims of the auto industry’s distress, while the latter two were victims of hurricanes.
Indiana managed an increase of only 10,000 jobs. The private sector grew by 15,100 jobs (0.6%) while government employment declined by 5,100 (-1.2%). During the year, state government jobs fell by 2,500 (-2.1%) and local governments decreased their employment by 3,000 workers (-1.1%). Half of those local jobs were in schools.
But then, who cares if government employment is cut? We hear, time and again, that government is not productive, it does not create wealth. It is a lie, but we hear it repeatedly from those who learned their economics listening to Paul Harvey and Rush Limbaugh. We are expected to believe that police, fire, education, health care, snow removal, and the many other services of government are without value. Thus, if we decrease government employment we must be doing something right. The idea that a growing private sector requires a growing public sector seems to be an untenable, even un-American concept.
Where were the jobs gained and lost? Health care and social assistance accounted for 6,600 (44%) of the 15,100 private sector jobs added in the year. The social assistance number alone was 2,300 jobs added. Were any of these the result of shifting jobs from government to the private sector? I don’t know. Leisure and hospitality services added 4,600 jobs including 2,200 in limited-service eating places. Can you say “fast-foods”?
On the down side, we lost 2,900 jobs in motor vehicle parts manufacturing and another 1,300 in transportation equipment manufacturing. Primary metals, fabricated metals, and plastic products each lost 1,000 jobs. Retail trade lost 600 jobs while insurance carriers lost 400 jobs and telecommunications declined by 300 jobs.
Of the 10,000 jobs Indiana gained, two-thirds were in non-metropolitan areas* while the other third were in the 14 metro areas of the state. The biggest winner was Evansville with a gain of 2,300 jobs (1.3%). Can you say Toyota? The biggest loser was Kokomo, down 1,200 jobs (-2.4%).
Normally, Hoosiers think that the Indianapolis metro area is doing far better than the state as a whole. That was not true in the past year. The ten-county Indianapolis metro area added only 1,400 jobs (the same as the three-county Fort Wayne area) which was about half the rate of growth statewide. Columbus, Lafayette, South Bend and Gary were also growing metro areas, while Elkhart-Goshen, Bloomington, Terre Haute, Anderson, Muncie, Michigan City-LaPorte were job-losing areas.
It certainly is good to know that we are on the right track to adding more jobs in Indiana. Our recent performance should make it relatively easy to do better in the future.
* Indiana counties in the Louisville and Cincinnati areas are treated as non-metropolitan because of data limitations.