Pharos-Tribune

November 5, 2013

MORTON: Indiana leading the way back


Pharos-Tribune

---- — We have been hear-ing a great deal about how manufac-turing is leading the nation back from the recession and Indiana is out ahead of the nation in that recovery. Do the numbers verify the story? By-and-large, yes.

First let’s look at the nation. In August 2007, the U.S. had 137.5 million jobs with wages and salaries. That number excludes all proprietors (farm and non-farm) as well as other farm workers. (Note: these are jobs, not employed persons since one person may hold more than one job.)

We dropped 7.8 million jobs (5.7 percent) by August 2010. Since that low, the nation has gained back 6.3 million jobs. That leaves us with an August 2013 jobs deficit of 1.5 million (1.1 percent below the August 2007 level).

The story for Indiana is somewhat brighter. There were 3.0 million Hoosier jobs in August 2007. That number fell by 180,000 (6.0 percent) by August 2010; then 158,000 were recovered by this past August. Hence the Hoosier non-farm jobs deficit was 22,000 or 0.7 percent of the ‘07 level.

There would be no job deficit at the national level if manufacturing had not been so hard-hit by the recession and if manufacturing had led the recovery of jobs.

At the U.S. level, we lost 2.3 million manufacturing jobs, recovered only 400,000, and, in August ‘10, had a deficit of 1.9 million manufacturing jobs. In Indiana, our manufacturing job deficit was 58,000, nearly three times our total jobs deficit.

In August 2013, U.S. manufacturing jobs were 13.4 percent below their ‘07 levels; Indiana’s were 10.6 percent below their level of six years ago, before the recession. Where does this Hoosier strength come from?

In August 2007, transportation equipment (largely automotive vehicle parts and production) represented 1.2 percent of jobs nationally, but 4.4 percent in the Hoosier state. This sector took a much harder hit in the recession than did manufacturing in general. Nationally 22 percent and in Indiana 27 percent of these jobs were lost by August 2010. The recovery was kinder to Indiana than nationally, but by August 2013 both the U.S. and the state were still about 12.7 percent behind their respective peaks.

This leaves us nationally and in the state with seven workers where we had eight producing transportation equipment in 2007. By-and-large, these were good paying jobs, often union jobs with strong benefit packages.

Where does the U.S. economy need help? If you believe we should recover to where we were, then manufacturing deserves our attention. Our manufacturing job deficits, nationally and in Indiana, exceed our total non-farm job deficits. The recovery is most successful in the non-manufacturing sectors.

Yet, one must ask: “Why should the old [2007] proportions of jobs persist?” Six years of much trauma have gone by. Is it reasonable to expect jobs in manufacturing and transportation equipment to resume their former places of importance? If not, is Indiana going in the wrong direction while the nation is going in a new direction?

Morton J. Marcus is an economist, writer and speaker formerly with the Kelley School of Business at Indiana University. He can be reached at mortonjmarcus@yahoo.com.