ECONOMIC ANALYSIS: Revised job-growth figures provide hope for economy

March 28, 2005

It wasn't many months ago that Indiana's leaders faced an unpleasant question: Would the jobs being destroyed by the recession, technological change and global competition ever come back?

Today, we know the answer is an emphatic yes. In fact, Indiana's employment growth over the last 12 months has been stronger than all but 15 other states.

If that news had come out six months ago, in the harsh glare of the political campaign, you wouldn't be reading about it here for the first time. It would already be splashed across your computer and television screens. But after a long campaign where every morsel of news on job growth was eagerly devoured in the media, news of the substantial upward revisions to job growth in Indiana and most of its major cities has largely flown under the radar.

That's unfortunate, because the impressions most of us formed about the health of the Indiana economy-based on the preliminary data available at that time-are now proving to be inaccurate. Indiana did suffer significant job loss as a result of the 2001 recession, of course. But our growth coming out of the recession has been surprisingly strong.

The same cannot be said about our neighbors. In any direction you travel from Indiana, the job situation remains bleak. Michigan remained mired in job loss in 2004, while Illinois, Ohio and Kentucky each had job growth of less than 1 percent and rank among the slowest-growing states in the nation.

But sitting in the middle is Indiana, where payrolls numbered 2.9 million workers in February, according to the Department of Workforce Development, 2.6 percent higher than the same month last year. That's 73,000 net new jobs created statewide over the last 12 months.

Pacing the growth statewide was the Elkhart metropolitan statistical area, which is up 8,000 jobs over last year, a 6.6-percent gain. The Columbus, Indianapolis and New Albany MSAs also saw job growth stronger than the state average.

The reasons why are not hard to understand. We are a production-oriented state and, right now, the production side of the economy is booming. Industrial output nationwide is on an 18-month winning streak and manufacturing output is up more than 9 percent from mid-2003. Businesses are still buying equipment and ramping up expansion plans, and that's sweet music to many an Indiana businessperson's ears.

But the change in the economic climate outside our windows shouldn't lessen our sense of urgency in dealing with our state's economic challenges. The truth be told, the Indiana economy has always been reasonably good at creating jobs. Our low unemployment rates testify to that.

The issue for Hoosiers has been the nature of those jobs and, specifically, how much they pay. Our state's decline, which accelerated in the mid-1990s, has been a relative one, opening a gap between paychecks here and elsewhere that has grown to be significant. Recovery from a painful recession, however welcome, does not attack that issue.

Besides, Indiana's impressive rebound in employment growth last year is only a recent phenomenon. In 2001, the recession year, we lost more jobs on a percentage basis than all but one other state. That's one reason why, even after this encouraging growth spurt, we remain behind all but seven other states in closing the gap between current and prerecession payrolls.

But you can't complain about job growth, and the state economy certainly has given us plenty of reason to cheer these last 12 months.



Barkey is an economist and director of economic and policy studies at the College of Business, Ball State University. His column appears weekly. He can be reached by e-mail at pbarkey@ibj.com.
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