NEW ALBANY — Last year, Uric Dufrene, a Southern Indiana economist, predicted at the college’s annual economic outlook breakfast, that the region would see “banner year” growth in 2017. At this year’s event, which took place on Tuesday, Dufrene admitted that he was wrong.
The Louisville metropolitan area, including Southern Indiana, did add jobs in the past year: just not as many as Dufrene, IUS’ executive vice chancellor of academic affairs, had hoped. The economist blamed the results on an inadequate available labor force and asked for local leaders to take action.
Tuesday’s economic outlook event brought together Dufrene and fellow Indiana economists, Timothy Slaper, Bill Witte and Catherine Bonser-Neal, to reflect on the past year of economic activity and predict how the economy would perform in 2018.
At the national level, everything looked mostly fine: Unemployment dipped, the country’s gross domestic product, or GDP, increased to its highest level since 2014 and industrial production began to trend upward after years of pushing downward.
Often, Louisville and Southern Indiana follows the country’s trajectory. Not recently, Dufrene said.
“Despite all these favorable national indicators, the most recent quarter for Louisville Metro was the lowest since 2011, and the most recent data available for Southern Indiana actually shows the smallest increase in payrolls since 2012,” he said.
CLARK COUNTY IN THE CROSSHAIRS
In Southern Indiana, only 799 jobs were added in the first quarter of 2017, the most recent data available for the region, Dufrene said. That might seem like a good thing, but in 2016, almost 3,000 were added each quarter.
In the Louisville area, which includes Southern Indiana, data from the most recent quarter, September to July, showed an increase in overall jobs, but a loss in the manufacturing, retail and financial activities sectors. The amount of manufacturing jobs in the area decreased by 400 despite 6 percent growth earlier in the year.
Even professional business services, the fastest growing Louisville business sector in 2016, slowed down to 2.5 percent growth in 2017: a level that barely exceeds overall job growth in the area.
In fact, the only sector showing noticeable appreciation in the metro area was the leisure and hospitality sector, which is adding about 2,200 jobs each year, Dufrene said.
The economist pointed to Clark County as the source of the job growth slowdown, at least in Southern Indiana.
In recent years, Clark County has been the primary source of job gains, especially as the River Ridge Commerce Center continues to add more tenants. But the county lost 165 net jobs in the first quarter of 2017 after increasing by around 400 in the last quarter of 2016.
Perhaps the biggest casualty was the transportation and warehousing sector, which lost 490 jobs. Manufacturing also declined.
The numbers surprised Dufrene, but he thinks he knows the reason why Southern Indiana and Louisville are losing jobs.
“The region’s labor force growth simply may not be sufficient to support the anticipated job growth associated with assets such as the River Ridge Commerce Center,” he said.
The area’s unemployment rate is under 4 percent, a record low. In short, the region is seeing a smaller pool of labor available to fill vacant positions.
This trend is demonstrated in the transportation and warehousing sector. You would think the industry would have no jobs available because it lost almost 500 jobs in 2017, In actuality, there are around 275 job postings for transportation and warehouse jobs, Dufrene said.
ROADBLOCK AHEAD?
The real question now, he said, is whether the region is hitting a solid roadblock with respect to potential job growth. That remains to be seen, but the area is at least facing a hindrance to growth.
Wendy Dant Chesser, the president and CEO of One Southern Indiana, an economic development organization, believes that the recent economic lag might be due to a natural ebb and flow: the area had been adding jobs at a high rate.
“We are lucky to have been above average for so long, but we can’t expect for that to continue forever,” she said.
But she also agrees that the labor force needs beefed up, a cause that 1si is already behind.
Dufrene issued a call to action at the breakfast: there need to be creative strategies to attract residents to the area and keep them there. That way, open jobs can be filled and new companies can continue to locate to Southern Indiana.
That’s already a trend he’s seeing. 1si recently launched its WorkHub program, which is devoted to making sure there are enough workers with the skills needed to fill jobs in Southern Indiana. New groups, such as Southern Indiana Alignment, seek to unite the region to increase educational attainment and ensure sustainable employment and career options. Finally, quality of place initiatives from local governments also help, Dufrene said.
He also advocates for a higher educational attainment in Clark and Floyd counties, meaning more residents earning bachelor’s and even associate’s degrees. Currently, Clark’s is under the state and national average while Floyd’s is just under the country’s. More bachelor degrees mean higher wages for Southern Indiana workers, Dufrene said.
Another potential area of focus was identified by Slaper, one of the Indiana economists on the panel. His colleague, an Indiana University-Purdue University Columbus professor, estimated that there are 18,000 Hoosier employees that should be able to work, but can’t. Their reason? An opioid addiction: a crisis that also affects Southern Indiana.
Dufrene emphasized that the local economy is not lost. It’s still growing as a whole, and Dufrene is “cautiously optimistic” for 2018. That, Dant Chesser, is a phrase she would also use.