Is Indiana job loss as bad as they say?

• Author: Barkey, Patrick M.
• Position: Indiana Indicators

When you give an economist a microphone you always seem to get two answers to every question. We don't just disagree with other economists, and we seem to disagree with ourselves.

On the other hand--whoops--that uncertainty sometimes just reflects the constant change in the economic environment that we try to understand. The facts about the economy have a way of changing under our feet.

A prominent case in point is the recent performance of the Indiana economy. In years past, the best way of communicating to the general public how well the state's economy was doing was to cite the unemployment rate. When we described the recessions of the early 1980s, we talked about the unemployment rates that went as high in some Indiana counties as 20 percent. We all understood that was very bad, and that when jobless rates fell during the subsequent recovery, that was good.

But unemployment rates just don't track the economy that simply anymore, at least in Indiana. Throughout this entire recession, unemployment rates have been lower in our state than the national average--by at least a full percentage point. Are we really better off than everyone else? Not at all. But what kind of data can we provide to support that?

Employment growth seems like a natural choice. But when you look behind the numbers, you find that job growth can be computed many different ways, yielding potentially different results.

The Indiana Fiscal Policy Institute, in support of the OBannon administration's "Energize Indiana" initiative has put forth one method, and it's a perfectly reasonable one. Its central finding is that over the period January 2000 through October 2002, the Indiana economy suffered a larger percentage job loss than any other state in the country. Payrolls shrank by 109,100 jobs during that 34month period, a 3.6 percent decline.

But now the "other hand.' The simple story of Indiana's recession told by these job-loss rankings is incomplete. That's because most of those painful employment declines occurred before the summer of 2002. For the last five months, the state economy has hung onto its payrolls, and has even managed a bit of growth.

Let's compute job growth a slightly different way--by comparing the job totals in any given month to the monthly payroll exactly one year earlier. As recently as January 2000, the Indiana economy was faring pretty well on that score. Growth for that month was a heady 2.8 percent, 16th best in the country. Then the recession...