Muncie.

• Author: Hicks, Michael J.
• Position: Muncie, Indiana

Muncie's economy was rocked hard by the 2001 recession and the subsequent employment losses that swept the upper Midwest. Happily, it appears as if the employment declines and attendant out-migration have slowed considerably. As a result we predict that 2008 will be a bottoming-out year for employment in Muncie. Here's what to expect.

First, as the rapid job losses plateau out, population declines--which have plagued the region over the past decade and a half--will dampen. Delaware County should see a population in 2010 just modestly above its 1990 Census of roughly 119,000. This estimate is consistent with some academic forecasters (1) who predict modest population growth for the area, and it is a significant turnaround from the 5,000 person drop in population between 1990 and 2000. A slowdown in economic outmigration, along with an increase in natural growth will aid in the region's population growth. Interestingly, net international migration is a small but growing contributor to the Muncie area population.

Employment loss in Delaware County has slowed to a trickle (see Figure 1). This trend largely mimics those counties adjoining Delaware County. The most recent data on net employment changes (job gains minus losses) suggest that 2006 to 2007 job losses hovered near zero for the second year in a row. The nearly static net employment changes mask a considerable turnover rate in employment. In the past four quarters, roughly one in ten jobs in the county went vacant and were later filled. This turbulence is a little less than the state or national average, but certainly reflects the state of employment dynamics in today's economy.

[FIGURE 1 OMITTED]

The health care and social services sector is one part of the economy that has changed dramatically. Growth has been almost sufficient enough to absorb modest job losses across the remaining sectors. The heaviest job losses have occurred in manufacturing and accommodations and food services. The impending closure of the Borg-Warner plant in Muncie (due by early 2009) will cost the area roughly 750 more manufacturing jobs. This is likely to be among the last of a long string of major plant closures in the region.

The sectoral shift away from more capital-intensive activities, such as manufacturing, to more labor-intensive industries, such as health care, is reflected in earnings data. Across the board, earnings for existing employees have declined modestly (by...