ECONOMIC ANALYSIS: The new economic reality: It's all about the work force

January 16, 2006

Since these words usually find their way out onto the Internet, I thought I'd work in the following phrase to get the hit counters for the new year off to a good start: Evolution vs. intelligent design. Ah, that should do it. I can hear the sounds of computer mouse clicks already.

And, believe it or not, there's an economic angle to that debate. Not literally, of course. Economics is pretty important, but I will concede that the creation of the universe came first. But in the creation of economies and, especially, in the policies we formulate to help them grow in the future, the issue is before us every day.

Are there levers and knobs we can pull and twist to move the economy where we want it to go? We certainly act as if there are. Politicians claim credit for success, and try to deflect blame for economic setbacks. People refer to Alan Greenspan, the departing Federal Reserve chairman, as the second-mostpowerful man in the country. And locally we spend millions of dollars trying to formulate and implement strategies to stimulate growth.

Those strategies are changing as the economy evolves. Before the turn of the previous century, the Ball brothers were recruited to Muncie from Buffalo, N.Y., by the promise of cheap land, good access to transportation, and an available labor force. And in the century of manufacturing dominance that followed, that simple strategy paid off handsomely for communities all over the state.

That era has come to a close. While many communities around the state still pursue a growth strategy that emphasizes shell buildings, abatements and infrastructure improvements to attract production facilities-and a few have enjoyed impressive success-the labor demands of the production side of the economy have shrunk to the point where the industrial sector simply can't anchor the economic base the way it once did.

Attracting and growing different kinds of businesses, where people sit in front of computers and telephones instead of assembly lines, is alien to many portions of Indiana. But strategies to compete in the new game are out there, so perhaps we should get more familiar with them.

Most of those strategies shine a bright light on the labor force. Just what is it that your local work force is good at? The fact that your community has a low cost of living, low taxes, or even low wages is less relevant to businesses whose competitive edge depends on the talent they can recruit and retain. After all, the emerging battle between Google and Microsoft for digital dominance isn't going to be decided by which company has the lowest production costs.

One of the new buzzwords in development these days is alignment. There is a compelling logic to it. If we start educating and training workers today for the kinds of jobs we hope to attract-aligning work-force and economic development, if you will-we maximize our chances for success.

But in Indiana, like many other Midwest states, it is more easily said than done. One does not simply change the resumes of a 3-million-strong labor force with the stroke of a pen. And there's more to shaping and building the talents of people than there is to moving earth and steel. But communicating the message that a different kind of job skills and talents will be needed in the future is a place to start, and now is the time to get started.

Barkey is an economist and director of economic and policy study 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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