Morton J. Marcus, an economist, author, and speaker, formerly with the Indiana University Kelley School of Business
An impressive press release last month may have escaped your attention during the intra-holiday period. On December 28th the Indiana Economic Development Corp. (IEDC) announced that 158 companies "committed in 2007 to create 22,627 new jobs in Indiana ... by 2012".
A skeptic would say, "Small potatoes when compared to the nearly three million jobs Indiana currently has." But such a view would be beyond skeptical; it would be downright cynical.
Let's put 22,600 jobs in perspective. That number exceeds the number of jobs added in Indiana in 2007 when job growth (December-to-December) was 5,800. It also exceeds job growth in 2006 which was 13,400. The reader proficient in arithmetic will immediately recognize that 22,600 new jobs are more than the number of jobs gained by Indiana in 2006 and 2007 combined.
IEDC adds that, since January 2005 (incidentally when Governor Daniels took office), "nearly 500 companies have committed to create more than 60,000 jobs in Indiana." That number is more than twice Indiana's average gain in jobs (27,800) between 1990 and 2007.
No one expects all those new jobs to be added in a single year. But the aggregate number is impressive. The Hoosier state has gained more than 60,000 jobs only four times in the seventeen years from 1990 to 2007.
The announcement by IEDC is particularly promising because they seek high paying jobs in growing sectors of the economy with firms that are well-established.
Coming as it does at the end of 2007, the IEDC report is most welcome because Indiana's gain of 5,800 jobs in the past twelve months gave us a job growth rate of just 0.2%, the fourth worst record among the fifty states. Only Minnesota, Ohio, and Michigan posted lower job growth records.
Over the past seventeen years, Indiana has averaged a 1.0% job growth rate. This earned our state the 39th place among all states, behind leaders Nevada, Arizona and Utah. The nation saw an average job growth rate of 1.4%.
Perception of growth depends on not only the rate of growth, but also on the volatility of those growth rates. If we had a boom or bust economy, that would be high volatility, leaving businesses and their workers with a great sense of uncertainty. Michigan, New York, and Connecticut led the nation in such volatility, while Montana, Idaho, and Wyoming enjoyed more tranquil years. Indiana ranked 12th in volatility between Maine and New Jersey.
On the positive side, in 15 of the past 17 years we had job growth and only two years where the state lost jobs. But those two down years were right in a row, 2000 and 2001, when we lost 104,400 jobs from our peak of 3,003,400 in December of 1999. To date, Indiana's December employment has not regained that high level; in 2007, our number of jobs was still 17,000 below that peak.
Thus, it is with considerable hope that we greet the most agreeable news provided by IEDC of its expectations. But, as cautious Hoosiers will ask: Will those expectations be met? What does it mean that "nearly 500 companies have committed to create more than 60,000 jobs in Indiana"? What constitutes a commitment?
The time frame for IEDC extends to 2012, when a second Daniels' term will expire. Are there any assurances that those 60,000 jobs will materialize? What happens if they do not? One of the firms on the list, Getrag Corporate Group (1,400 automotive jobs promised for Tipton County), suspended construction recently. Of course it is just a temporary glitch, something like a market correction, but What if.....?