Recession and Layoffs and Legislature and State Budget and Unemployment and Statehouse Dispatch and Opinion and Economy and Employment and Government

Latest jobs numbers may change state's priorities

February 2, 2009

First, it was the federal stimulus package that threatened to sidetrack the focus of lawmakers and the governor this session, Now, it's the sledgehammer of economic reality.

Indiana's gubernatorially vaunted status as an island of growth and prosperity in an economically challenged Midwest came crashing down with the realization that not only are we not an island—we're passengers in the same stranded boat as our suffering neighbors.

Gov. Mitch Daniels had pointed out several times in recent months that we were faring better than surrounding states, and even Democrats couldn't disagree about the bottom line, although they quibbled with whether being better relative to those at the bottom was a sufficient touchstone.

But everything may have changed with the release of the latest set of unemployment figures, which came even before 700 more jobs were lost at the Navistar engine plant and foundry in Indianapolis.

Indiana's seasonally adjusted December unemployment rate was 8.2 percent, up from 4.5 percent in December 2007 and from 7.1 percent in November. This was the state's highest rate in more than two decades, dating back to February 1985.

The national seasonally adjusted unemployment rate was 7.2 percent. Indiana and South Carolina led the nation in month-over-month rate increases, with both states reporting unemployment rate increases of 1.1 percentage points vs. November.

Only seven states posted higher December rates than Indiana, and the only other two that did not border an ocean were Nevada and Michigan.

From 2007 to 2008, U.S. Bureau of Labor Statistics data crunched by The Wall Street Journal show Indiana's year-over-year change in the jobless rate jumped 3.7 percent, a rate exceeded by only Rhode Island, North Carolina and Nevada.

More than 261,000 Hoosiers are now unemployed. The state is feeling the strain of the influx of Medicaid and welfare recipients, and ensuring that they receive unemployment insurance benefits in a timely manner.

Unlike previous Hoosier recessions, which principally affected urban areas represented by Democrats, the pain is much more widespread this time around. Economic diversification efforts over the past 25 years moved major manufacturing facilities throughout the state into smaller and more rural communities.

Many such facilities housed automotive industry suppliers, sited close to manufacturers in Kentucky or Ohio, or to Japanese vehicle manufacturers in Indiana, with huge factories in Lafayette, Princeton and Greensburg.

So, now the impact is being felt in communities that would have been immune because of the lack of such investment only 15 years ago. Many of these districts are represented by Republican lawmakers, adding to the pressure on Daniels, and ensuring that complaints don't come exclusively from Democrats seeking a partisan advantage.

In north-central Indiana, for example, Elkhart County has been hit the hardest of any county in the state because the recreational vehicle and manufactured housing industries have been hammered.

The three Republican House members from that area told their colleagues that "everything we do in the House chambers from here on out needs to be about bringing more jobs to Indiana and saving every tax dollar we can," said Rep. Jackie Walorski, of Jimtown, who voiced their concerns.

Hoosiers have focused on what Washington, D.C., is doing and, whether or not they like the substance of what is emanating from the White House and Capitol Hill, they do see one thing: action.

If they do not see their lawmakers and governor try to do what they can at the state level, they may begin to get restless, and with little else of substance to focus on, that ought to concern lawmakers.

The original belief among both parties appears to have been that completing work on the budget on time was the top priority this session, and everything else could take a back seat (although passage of a resolution allowing Hoosiers to vote on making property tax caps part of the Indiana Constitution was also at the head of the Republican "to-do" list).

But there may now be a new imperative as a result of the latest job numbers. Jobs themselves may become "Job One" for our elected officials.

A separate state stimulus package—as suggested by Democrats and derided by Republicans when it appeared the federal stimulus program would go much further—may now attract some Republican interest, particularly if it is framed so as to create good jobs quickly in the hardest-hit areas.

As we suggested to you here last week, the budget might still end up waiting on the federal stimulus program, albeit not for quite the reasons we thought just a few days ago.

Expect lawmakers to turn their attention during February to leaving the island that turned from paradise to a mirage.
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Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached at edf@ingrouponline.com.

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