EYE ON THE PIE: Vitality of local economies examined

Euturn Wright, the noted economic development specialist, was in Indianapolis for the Super Bowl extravaganza. I talked with him as we stood waiting to climb the stairs for the zip line. This exhilarating 800–foot ride down a cable from a height of 95 feet was one of the highlights of the successful downtown party enjoyed by thousands of Hoosiers and visitors as a lead–up to the game itself.

"Impressive," he said.

"The tower we must climb?" I asked.

"Yes, and the whole show," he replied. "This should be a boost to morale in this downtrodden state."

"Downtrodden?" I questioned in disbelief as we shuffled along in line with our fellow daredevils.

"Precisely," he said with accustomed authority. "Over the decade 2000 to 2010, Indiana lost 9.7 percent of its jobs compared to the national decline of 3.5 percent."

"Wait a second," I objected. "You're comparing the down year 2010 with 2000, a year near the peak of the tech boom."

"Nothing is wrong with that," Euturn responded. "It's like this ride before us. Imagine two cables. One goes down more rapidly than the other. Which one would you prefer to ride? For me, the better ride is the one that is slower and takes me farther. I get a better, longer view and less stress on the way down. Economics is not about seeking thrills."

We moved along with the throng. "But downtrodden?" I asked.

"Certainly," he said. "Only 17 of Indiana's 92 counties added jobs in the decade. When we look at the average wage per job, the story is similar. In sum, 25 of the counties did manage to see wages grow faster than the national average of 31.4 percent. But that means 67 counties fell below that figure.

He continued, "Indiana added only 3.4 percent to the number of its establishments while the national growth rate was 13.8 percent. Establishments may be more fast food restaurants or chiropodists' offices. They may be a key measure of vitality in the local economy.

"Only seven Indiana counties grew faster than the national rate during the decade. Five were the fast growing suburban counties surrounding Indianapolis. Another was Evansville's suburb, Warrick County. Completing the list was LaGrange County; I admit to not knowing what commercial activity is advancing there."

The tower was now looming over us. Euturn was still talking while I began quaking.

"While jobs are an important measure of economic growth, average wage figures are equally necessary to evaluate what is happening in a community. However, we must not neglect the change in the number of businesses for here, perhaps, is the key to added diversity of commercial opportunity in a county or state. Those opportunities for citizens to earn more as workers and to have greater choices as shoppers are what we seek when we speak of economic development.

"The counties with the greatest loss in establishments (Miami, Cass, Fayette, and Madison) were among the hardest hit in jobs and average wages. It follows that if the job market is weak, wages will not rise rapidly and fewer entrepreneurs or chains stores will be interested in opening shops. Therefore, the change in establishments over time may be an excellent summary statistics for what is happening in a community."

I wasn't listening. I was looking up at that tower, wondering about the ability of my heart to take the stress of climbing stairs for 800 feet and then facing certain death when the cable snapped. I stepped aside to let Euturn climb the first five steps. He turned to me. I waved farewell.

Opinions are solely the writer's. Morton Marcus is an independent economist, speaker, and writer formerly with IU's Kelley School of Business.