2/20/2007 9:08:00 AM OPINION: What is the truth about jobs in Indiana?
Morton J. Marcus, an economist, writer, and speaker formerly with the Kelley School of Business at Indiana University
It seems that I have to write this column every year. Our elected leaders and their appointees are once again telling us how many jobs they have brought to us through their superlative efforts. Have pity on them. They know what they are doing, but they don't know what's going on.
Yet, you and I will go to the polls and judge them based on the number of jobs they bring to the city, county, or the state when we vote in 2007 and 2008.
In a nation where we believe that jobs are so important as a measure of economic well-being, we devote a great deal of resources to finding out how many jobs are being filled and how many people are working. Oops. That's two different things. The number of jobs is probably greater than the number of people working because a person may hold more than one job. The federal government pays the states to collect some data on employment and it collects some data on its own. Some data are collected monthly and other data are collected quarterly. Some data are collected from businesses and some from households. As you might imagine, the result is a batch of differing numbers that do not provide a definitive view of economic performance.
How is Indiana doing? If we look at the number of people who say they are working, 2006 may have been a banner year. Early results suggest that 61,800 (+2%) more people had jobs in '06 than in '05. That is the biggest numeric increase since 1995. Wow. Can you guess who is going to take credit for that? But hold on until the 2006 data are revised before breaking out any champagne.
If, however, we look at the number of jobs reported by employers (rather than the number of persons saying they are employed) we find an increase in 2006 of only 20,800 jobs (0.7%) over 2005. Pending a massive upward revision of the numbers for 2006, that's a bummer. Who's going to get blamed for that?
There are technical reasons for a difference between the number of jobs and the number of persons employed. For example, some people are self-employed or work in firms too small to be included in the monthly survey of jobs. But the difference between a change of nearly 62,000 in one series and nearly 21,000 in another may be hard to explain to an impatient and skeptical public.
There is a fascinating new series available thanks to cooperation between the Indiana Department of Workforce Development and the U.S. Bureaus of Census and Labor Statistics. The Quarterly Workforce Indicators (QWI) tell us, by state and county, how many jobs have been added and lost during each three month period. Jobs are added by new jobs being created and firms hiring people to fill existing jobs. Jobs are lost when workers are dismissed or leave for other reasons.
These are numbers based on actual behavior. They are not the promises (or lies) of press releases issued by governments or firms. But these numbers are far behind the times. Washington, West Virginia, and Iowa are among the states with data on-line for the first quarter of 2006. Illinois, Kentucky, California, North Carolina, and Pennsylvania are among the states that have their data in for the last quarter of 2005. As usual in such matters, Indiana is among the laggards with our latest data coming up to just the third quarter of 2005.
When we look at the Indiana QWI data for the year ending in the third quarter of 2005, it appears that we added just 10,000 jobs from the same period a year earlier. A poor record.
But the data are not easy to understand. They tell us that the state had 153,300 jobs created by new firms or firms expanding employment. The total number of persons leaving jobs because they quit or were let go for some reason was 548,200 and the number of persons hired for existing jobs was 463,500. The difference is 84,700 more than simple churning of employees.
What happened to these 84,700? Did they retire or are they among the unemployed? It's easy to think that they were fully accommodated by the new jobs created (153,300). But the data are dealing with jobs and not numbers of people. Since people may hold more than one job, it's difficult to get a real grasp what's happening. Maybe some part-time workers are being replaced by full-time workers. Or are former full-time workers getting jobs as part-time workers in new and expanding firms?
Until we know how to read this new QWI series, I hope that politicians will not cite these data as proof of their economic virility.