Should the next president of the U.S. be concerned about uneven job growth in the nation? Or should he just let the market determine which states prosper and which struggle?
There is no explicit job policy in this country to bring employment to slow growing areas. Neither Senator Obama nor Senator McCain has ventured to discuss the issue. Job growth is left to the states with each competing against the others in an expensive battle of subsidies.
From 2002 to 2007, the number of jobs in the U.S. grew by 5.6 percent, but in Indiana, the increase was just 3.0 percent. The Hoosier state realized only 1.2 percent of the U.S. job growth during those five years, going from 2.23 percent of all jobs in 2002 to 2.17 percent of the nation's jobs in 2007.
What is true at the national level also is true in Indiana. From 2002 to 2007, jobs in the Columbus metropolitan area grew by 10 percent, while declining by 10 percent in the Anderson metro area. Of the 14 metro areas centered in Indiana, seven added jobs while the other seven lost.
The Indianapolis metro area alone (Boone, Hamilton, Hancock, Hendricks, Johnson, Marion, Morgan and Shelby counties) enjoyed two-thirds of the job growth in the state (58,900 of the 87,200 increase in Hoosier jobs). The other six winners (Bloomington, Columbus, Elkhart-Goshen, Fort Wayne, Gary and Lafayette) together added 32,600 jobs.
At the same time, in addition to the Anderson metro area, the Evansville, Kokomo, Michigan City-LaPorte, Muncie, South Bend, and Terre Haute metro areas together lost 17,700 jobs.
These aggregate numbers do not tell the full story. Public sector jobs in Indiana increased by 3.5 percent compared to 3.2 percent nationally. Of the 14,700 public sector jobs added in the state, 59 percent were in the Indianapolis metro area. At the same time, public sector jobs declined in the Gary, Michigan City-LaPorte and Terre Haute metro areas.
The picture is much different for private sector jobs: in Indiana, job growth was just 2.9 percent compared with 6.1 percent nationally.
Naturally, there are those who will have a knee-jerk reaction, blaming the problem on the manufacturing sector. They would do well to look at the facts. Nationally, manufacturing jobs were down by 9.0 percent, while in Indiana, the decrease was 6.5 percent.
Indiana's great deficiency was in nonmanufacturing private sector jobs.
Clearly, the subsidies that the state provides to firms could be adjusted for the circumstances of the area. This is a tricky business. Firms have their preferences and it might be costly to get an enterprise to establish itself in a part of the state that is not consistent with its best interests.
But once the state starts inducing companies to locate in Indiana, it's just a short step to creating differential subsidies based on local need.
Opinions expressed solely are those of the writer. Morton Marcus is an economist, author and speaker formerly at the Kelley School of Business, Indiana University. He can be reached at mortonjmarcus@yahoo.com.
