EYE ON THE PIE: What is the truth about jobs in Indiana?

February 26, 2007

It seems I have to write this column every year. Our elected leaders and their appointees are once again telling us how many jobs they have brought to us through their superlative efforts. Have pity on them. They know what they are doing, but they don't know what's going on.

Yet, you and I will go to the polls and judge them based on the number of jobs they bring to the city, county or the state when we vote in 2007 and 2008.

In this nation, we believe jobs are so important as a measure of economic wellbeing that we devote a great deal of resources to finding out how many jobs are being filled and how many people are working. Oops. That's two different things. The number of jobs is probably greater than the number of people working because a person might hold more than one job.

The federal government pays the states to collect some data on employment and it collects some data on its own. Some data are collected monthly and other data are collected quarterly. Some data are collected from businesses and some from households. The result is a batch of differing numbers that do not provide a definitive view of economic performance.

How is Indiana doing? If we look at the number of people who say they are working, 2006 may have been a banner year. Early results suggest that 61,800 (up 2 percent) more people had jobs in 2006 than in 2005. That is the biggest numeric increase since 1995. But hold on until the 2006 data are revised before breaking out any champagne.

If, however, we look at the number of jobs reported by employers (rather than the number of people saying they are employed), we find an increase in 2006 of only 20,800 jobs (0.7 percent) over 2005. Pending a massive upward revision of the numbers for 2006, that's a bummer.

There are technical reasons for a difference between the number of jobs and the number of persons employed. For example, some people are self-employed or work in firms too small to be included in the monthly survey of jobs.

There is fascinating new information available, thanks to cooperation between the Indiana Department of Workforce Development and the U.S. Bureaus of Census and Labor Statistics. The Quarterly Workforce Indicators (QWI) tell us, by state and county, how many jobs have been added and lost during each three-month period. Jobs are added by new jobs being created and firms hiring people to fill existing jobs. Jobs are lost when workers are dismissed or leave for other reasons.

But these numbers are far behind the times. A number of states, including Illinois and Kentucky, have made data available online for all of 2005 or even the first quarter of 2006. Indiana is among the laggards, with our latest data coming up to just the third quarter of 2005.

When we look at the Indiana QWI data for the year ending in the third quarter of 2005, it appears we added just 10,000 jobs from the same period a year earlier. A poor record.

But the data are not easy to understand. They tell us the state had 153,300 jobs created by new firms or firms expanding employment. The total number of people leaving jobs because they quit or were let go for some reason was 548,200 and the number of people hired for existing jobs was 463,500. The difference is 84,700.

What happened to these 84,700? Did they retire or are they among the unemployed? It's easy to think they were fully accommodated by the jobs created (153,300). But the data are dealing with jobs and not numbers of people. Since people may hold more than one job, it's difficult to get a real grasp of what's happening.

Until we know how to read this new QWI info, I hope politicians will not cite these data as proof of their economic virility.

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. To comment on this column, send e-mail to mortonjmarcus@yahoo.com.
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