Economy and Employment and Retirement and Government & Economic Development and Labor and Workplace Issues

IU: Growth of Indiana’s labor force slowing rapidly

November 13, 2012

The growth of the state’s labor force is expected to slow significantly during the next three decades, predicts the Indiana Business Research Center.

The center at Indiana University’s Kelley School of Business on Tuesday released the results of a study it produced for the Indiana Department of Workforce Development.

IU’s research center attributes the slowdown to an increasing number of baby boomers entering retirement and a cresting of the decades-long rise in female labor force participation.

For Hoosier employers, the pullback could present several challenges, said Matt Kinghorn, the business research center’s state demographer.

“Firms in growing fields like health care, business operations and information technology will certainly have to compete for labor,” he sad in a prepared statement. “But even mature industries that will likely grow slowly or even decline in the next couple of decades, including many manufacturers, could still have trouble maintaining an adequate work force because they are more dependent on older workers.”

The slowdown started to emerge  between 2000 and 2010, when Indiana’s labor force grew by roughly 132,000—its smallest 10-year gain since the U.S. Census Bureau began collecting data on labor force size in 1940, the research center said.

It expects the state’s labor force to slow even more, to less than 120,000, in the current decade and essentially flatten between 2020 and 2030 before it begins growing again, albeit slowly.

The projections are quite a contrast to what occurred during the last half of the 20th century, when the baby-boomer generation and a large number of women entered the work force, helping Indiana’s labor force grow an average of 310,000 per decade, the research center said.

The shift is not unique to Indiana but instead reflects a national trend. According to the Bureau of Labor Statistics, labor force growth around the country slowed to an average annual rate of 0.8 percent last decade compared with 1.6 percent annually between 1950 and 2000.

The Bureau of Labor Statistics expects the rate to slide even further, to 0.6 percent this decade and to 0.4 percent between 2020 and 2030.

In Indiana, seven of the state’s 16 metropolitan areas are expected to match or exceed Indiana’s 0.4-percent average annual growth rate this decade, including the Indianapolis-Carmel area. Its labor force is projected to grow by 1 percent per year this decade, tops in the state.

Other metro areas with relatively high annual projected growth rates through 2020 include Lafayette and the Indiana portion of the Louisville metro area (both 0.6 percent) and Elkhart-Goshen (0.5 percent).

At the other end of the spectrum, Kokomo is expected to suffer the greatest rate of decline (0.6 percent), followed by Anderson (0.4 percent) and Muncie (0.3 percent).
 

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