MARCUS: Diversity reigns among state's economies

November 14, 2009

Not every county in Indiana is like every other county. This is important to understand (particularly if you are a state legislator) because we cannot assume one remedy is appropriate for all ills statewide. Likewise, your county is not unique, probably not even distinct from other Indiana counties. This is important to understand (especially for members of the General Assembly) because it is unlikely the problems your county faces deserve unique legislative attention.

Where is what done in Indiana? First, let’s look at farming. Statewide, farming accounts directly for 0.8 percent of the state’s earnings by individuals (figures are for 2007). The top five farming counties are all in the northwestern quadrant of the state. Another 15 counties derive more than 5 percent of their earnings from farming. In 49 of Indiana’s 92 counties, farming amounts to less than 2 percent of earnings.

Second, consider manufacturing, Indiana’s most important sector, with one-quarter of the state’s earnings. Howard County is most dependent on manufacturing at 59 percent, followed by five more clustered around 55 percent. Another 25 counties derive a third to half their earnings from manufacturing. Only six counties (including Hamilton) receive less than 10 percent of their earnings from manufacturing.

Next to manufacturing, private health care is the second-largest sector in our economy. (Health care provided by government institutions are not included here.) Statewide, private health care accounts for 9.7 percent of Hoosier earnings, but we have data for only 55 of the 92 counties. Disclosure issues limit our analysis for this and many other sectors, but we won’t go into the oddities of efforts to protect the privacy of individual firms.

According to the available data, Delaware County is most dependent on health care, with 19 percent of its earnings originating in that sector. Low shares (under 5 percent) of earnings are found in 14 counties. Does this indicate inadequate access to health care? Let’s hope no one in a position of authority says “yes” to that question without some intense thought and investigation.

Cutting the data a different way, we find that real estate services are the most concentrated: Marion and Hamilton counties alone account for 50 percent of earnings originating in that sector. Those two counties also provide 48 percent of earnings from professional and technical services.

By contrast, farming is the least-concentrated activity, followed closely by utilities, local government, manufacturing and retail trade. When you think about it, only manufacturing is a surprise. Every place has utilities, local government and retail trade. But that manufacturing should be among the least-concentrated activities suggests Indiana is truly a state where manufacturing is pervasive, vital to the economies of most counties.

Among the counties, Martin, with the Crane facility, has the most concentrated economic activity (75 percent of earnings originating on federal payrolls). Heavy manufacturing counties are heavily concentrated as well.

Beyond that we dare not go because of missing data stemming back to those infamous disclosure problems. For example, only 65 percent of earnings in Monroe County are reported by sector by the U.S. Bureau of Economic Analysis. What’s missing? State and local governments. Why are these missing? Only BEA can say. We can guess there is concern about the size of Indiana University in the state sector. But IU is a public agency. Why are public data suppressed?

These disclosure issues are found in state as well as federal data. For example, why can’t we have accurate sales tax revenue by county when such data are available in other states?

You’ll excuse me now. I have to take anti-depressants every time I deal with the incomprehensible disclosure rules of our statistical agencies.•

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Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.


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