IBJOpinion

MARCUS: State's long-term job deficit tops 800,000

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Morton Marcus

Recently, I saw a newspaper story detailing the number and percentage of jobs lost over the past year for Indiana’s metropolitan areas. This year-over-year story is appropriate, but it tends to hide the truth behind the numbers.

The recession is just part of Indiana’s economic story. Even if we recover our losses of the last year (146,000 jobs or 5.8 percent, July 2008 to July 2009), that would be only a portion of the 192,000 jobs lost since our last peak of 2.52 million jobs in 2000.

However, it is not just how far we are below our previous peak that we need to consider. We need to think of all the jobs Hoosiers have not had in the past nine years. This job deficit, plus the income and output deficits that go with job losses, is the true measure of our economic performance.

Each of the past nine years has seen fewer Hoosier jobs than in 2000. Forget about growth; forget about keeping pace with the nation; just concentrate on holding even with our own best year. But we have not sustained that level of jobs. Hence, each year there has been a job deficit (the number of jobs below our peak). Through 2009, the sum of those deficits will total 821,000 in lost job years.

Will we regain our 2000 peak number of jobs? Assume that all goes well in 2010; Indiana stops losing and starts gaining jobs. Assume that all those jobs promised by companies taking tax breaks from the state and local governments come through as planned by 2011, 2012, etc. That would not wipe out the aggregate deficit of jobs we have accumulated in nine years.

Job conditions throughout the state vary greatly. For example, the Columbus area saw its peak number of jobs last year at 40,100, exceeding its previous 1999 peak and fully recovering from the subsequent decline. The Bloomington and Indianapolis metro areas each peaked in 2007.

In contrast, the most recent peak for the Anderson metro area was at 43,700 in 1990. Every year since then has been lower; this year’s number of jobs should come in about 33,500. The aggregate job years lost equals 76,900 for Anderson.

Muncie’s metro area shows a 14-year job deficit at 73,900, or 11 percent off its sustained peak job numbers. By contrast, Terre Haute also had a 14-year deficit, but is just 5 percent off its sustained peak numbers. Kokomo, with 10 years since its last peak in 1999, has a 72,900-job deficit, or a state-leading 15 percent below its sustained peak numbers. Yet the Gary metro area also has a 10-year deficit, but is a mere 2 percent off its sustained peak levels. The Evansville metro area is in even better shape, despite eight years below its peak; its deficit is only 1.9 percent.

What are the policy implications of these numbers? Certainly, we want to see communities pull out of the recession. Some places, Elkhart-Goshen for example, have seen tough times because of the current downturn and could benefit from short-term assistance.

Other places have long-term needs that require attention. Should our state have plans that address geographic differences? Do we help those in need (Anderson and Muncie)? Or do we invest where the marketplace has found its greatest returns (the Indianapolis area)? Some will say we can do both, but I suggest that is true only in theory and rarely in practice.•

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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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