Indiana jobs: recession, recovery.

AuthorKinghorn, Matt R.

Indiana reached an important milestone in July 2014. Nearly seven years from the start of the Great Recession, the state finally has more private sector jobs than it did in June 2007--the employment peak of the previous business cycle (see Figure 1). Similarly, the U.S. eclipsed its pre-recession peak in March 2014. Nationally, the private sector job count is now at an all-time high, but Indiana is still below its high watermark set in the spring of 2000.

While Indiana has now recovered all the private sector jobs it lost during the recession, the structure of the state's economy has shifted over the last six years. Not surprisingly, industries like health care, hospitality and food service are on the rise, while goods-producing industries like manufacturing and construction are down.

This article takes stock of employment changes by industry since 2007 and places those changes within the context of the Midwest and nation. Then, we consider how these shifts impact the wages of Hoosier workers. Finally, we'll take a deeper dive into the employment data to identify the detailed industries where the state is building a competitive advantage and those where it is falling behind.

Employment Change Overview

As Figure 2 highlights, employers in the health care and social assistance industries were far and away the drivers of private job growth in the state between 2007 and 2013. Over this period, Indiana's hospitals accounted for one-quarter of new jobs in this sector, while home health care providers added more than 7,600 jobs and employment at doctor's offices increased by nearly 5,000. In terms of growth rate, this sector has expanded at a 2.1 percent annual rate since 2007, which is slightly slower than the U.S. average but outpaces the rest of the Midwest (see Figure 3). (1)

The administrative and waste management services sector ran a distant second place with 10,500 new jobs over the past six years.

This surge is difficult to interpret, however, since the temporary employment services subsector--which places workers in a variety of industries--accounted for much of this growth (i.e., nearly 14,300 new jobs in this industry between 2007 and 2013). Occupation data at the national level provides some clues as to the type of industries that may be utilizing these services in Indiana. In 2013, production, transportation and material moving occupations and administrative support occupations each accounted for an identical 21 percent of all jobs in the employment services industry at the national level. The next closest occupation grouping was business and financial operations with 4 percent of the jobs in this industry.

The growth in Indiana's administrative and waste management services sector translates to a 1 percent annual increase between 2007 and 2013--a mark that far outpaces the Midwest region (0.4 percent annual growth) and the U.S. (-0.2 percent). The only other sectors where Indiana is growing more rapidly than both of these benchmarks are agriculture and transportation and warehousing.

Looking to the other end of the spectrum, Indiana's manufacturing sector has been the largest source of job loss over the past six years with a decline of nearly 60,000 jobs. Not surprisingly, the auto industry has had the largest losses within this sector, with employment at parts manufacturers down by nearly 10,500 jobs over this period and vehicle body and trailer makers losing nearly 6,400 jobs. Unfortunately, the Midwest and the U.S. have experienced even sharper declines in manufacturing employment than Indiana (see Figure 4).

The same can be said for construction employment. Indiana has lost 28,000 jobs in this sector between 2007 and 2013, which works out to a 3.4 percent annual slide. However, the U.S. (-4.3 percent per year) and the Midwest (-3.9 percent) have lost construction jobs at an even faster clip.

It is important to note that comparisons between 2007 and 2013 alone can make the situation in many sectors look worse than it really is. For most sectors with fewer jobs now than before the recession, all the damage was done by 2010, and each has been on the rebound since. Manufacturing employment in Indiana, for instance, fell by more than 125,000 over a 24-month period beginning in June 2007--a 23 percent decline (see Figure 5). This sector has been climbing back steadily ever since, adding more than 86,000 jobs between June 2009 and July 2014.

The construction sector had a similar drop through the recession, and while its rebound has not been as strong as manufacturing's, the sector has reclaimed 38 percent of the jobs lost between June 2007 and February 2010.

Outside of government employment, the information sector and the real estate, rental, and leasing sector have had the weakest rebounds in recent years. Information has added back 17 percent of the 5,400 jobs it lost in the recession, and real estate, rental, and leasing has recovered 21 percent of its losses.

The Impact of Industry Shifts on Wages

One of the key consequences of this shifting employment landscape is that it is placing downward pressure on wages for Hoosier workers. The average wage for struggling...

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