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Budget cuts threaten local economic data analysis

November 17, 2008
Four years ago in this space, I urged then- Gov.-elect Mitch Daniels to focus on improved information for decision-making. His administration has done that, although there is still much work ahead.

The danger today is not from inadequate attention by Indiana's government to the data requirements of the state, its localities and businesses. No, the danger comes from serious budget cuts by the federal government. We need our governor, our senators, our representatives and our local officials to raise the alarm so the new Congress and the Obama administration will reverse the errors of the past year.

The U.S. budget proposed by the Bush administration and passed by Congress cut into the funding for statistical programs of many federal agencies. What gets cut? National data is never at risk. Big business and their lobbyists would not allow it. Even states are fairly secure.

The cuts will be down where we live, down at the metropolitan areas, the county and the city levels. The cuts will hurt local businesses and economic development officials, since they will not have the data that helps them see how their market differs from the state and the nation.

We are not sure what will disappear. But metropolitan gross domestic product, the most comprehensive measure of economic output, is a likely candidate.

This GDP figure (from the Bureau of Economic Analysis) is the best measure of how well our economies are performing. It goes beyond income and employment to the heart of business health and productivity.

Maybe we wouldn't be happy to learn that, for the last five years for which we have data (2001-2006), Muncie ranked last in economic growth among the 363 U.S. metro areas. Or that Anderson was just 16 places from the bottom while Michigan City-LaPorte was in the bottom 25. Nor would we delight in the knowledge that Indianapolis, that shining star of Indiana, ranked a dim 225th among the nation's metro areas.

We might lose vital local data from the U.S. Bureau of Labor Statistics. For example, where else would we learn that Franklin County in southeastern Indiana led the state in percentage growth of business establishments? At the same time (first quarter 2007 to the same period this year), Knox County (Vincennes) was the leader in percentage growth of total employee compensation.

Everyone is focused on manufacturing in Indiana without realizing that the geographic variations are enormous. While Allen County (Fort Wayne) was losing $32.4 million in manufacturing workers' wages, Bartholomew County (Columbus) saw a growth of $31.7 million. While there was a statewide decline of 0.7 percent in manufacturing wages between the first quarters of 2007 and 2008, a dozen counties saw growth of 8 percent or more. The biggest loser was Madison County (Anderson), where manufacturing wages fell more than 53 percent.

For all its problems, manufacturing still accounts for 31 percent of all wages in Indiana. In 25 of our 92 counties, manufacturing yields at least half of all wages. This detail is possible only if we have local-level data from federal agencies.

Finally, think about the Census of 2010. It is almost upon us, just 14 months away. Will we lose local data on education and housing, on employment, income and occupations because the Bureau of the Census does not have the resources to conduct a proper survey of Americans?

If you write but one letter to Santa this year, make it a plea for producing good local-area data for our localities. Don't forget to send a copy of your letter to Sens. Richard Lugar and Evan Bayh, your congressman, and this newspaper.
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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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