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ECONOMIC ANALYSIS: New metropolitan areas redefine economic data

February 14, 2005

This month marks the first important use of the recently redefined Metropolitan Statistical Areas for Indiana.

When we receive our first glimpse of state employment information for the new year, the Department of Workforce Development will include three new MSAs in its tables: Anderson, Columbus and Michigan City. And most of the existing metro areas, including Indianapolis, will see significant changes in their geographic composition.

In general terms, these changes are easy to explain. We are a mobile population and, as we move, economic activity moves with us. Large urban areas grow at the fringe, pushing that activity over county borders. And some smaller urban areas have grown large enough to be considered metro areas in their own right.

It is a myth that the Midwest in general, and Indiana in particular, rank as the slowest-growing part of the country. Midwest population growth in 2004, at 0.5 percent, remains significantly higher than the moribund Northeast, and Indiana's 0.6-percent population gain is only slightly off the national average.

On the other hand, the specifics of the changes to MSAs are a little harder to follow. Drawing borders on maps has always been a judgment call. In this case, it is the judgment of the Bureau of Economic Analysis in Washington, based in part on information from the 2000 Census, that made the difference.

So counties like Adams, DeKalb and Huntington will have to get used to being non-MSA counties again, instead of their previous status as part of Fort Wayne.

It goes the other way, too. Jasper and Newton counties are now in Gary-Hammond MSA, while Greene and Owen counties are now part of the Bloomington MSA.

And Madison County will start its second stint as the stand-alone Anderson MSA, after spending the 1990s as part of Indianapolis.

This is more than just putting pins on maps. MSAs have more complete, more timely economic information available. As a new metro area, Columbus will have up-to-date access to industry employment, hours and earnings data for employers within Bartholomew County that didn't exist a month ago. It's a designation many areas want and more than a few lobby BEA directly to try to attain the status.

It also means something for those of us who closely track the data. The Indianapolis MSA, for example, has turned in a very weak employment performance in the last 12 months. Its December job total of 892,700 workers remains 0.1 percent down from the job total one year earlier and the employment decline suffered in the first half of last year was the most severe in the state.

But the next batch of employment data we receive on Indianapolis will likely show a different pattern for two important reasons. First, the new data will incorporate major revisions through a process known as re-benchmarking.

There is some evidence that process could produce a modest upward revision to the job estimates. But the new data will also drop Madison County from the job total. Since Anderson's performance, along with much of east central Indiana, has been subpar, its loss will be Indianapolis' job gain.

That's a sleight of hand that would make an accountant proud. But the message from the MSA redefinition goes beyond a few statistical tables. It reminds us that the forces of growth continue to push and redefine the borders of our regional economies. And that presents a challenge for the governments and institutions that serve them.



Barkey is an economist and director of economic and policy studies 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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