The Terre Haute regional labor force grew by about 2,400 (a 3.2 percent increase) between August 2015 and August 2016. Since the area's population has been in decline since 2010, we suspect this growth in the labor force mostly represents people who have finally decided to re-enter the job market, a shift that mirrors national and state trends. As employment experienced similar growth, the seasonally adjusted unemployment rate fell slightly over this period from 5.9 percent to 5.6 percent (see Figure 1).
The Terre Haute region is not alone in experiencing population loss. Among 17 small metropolitan areas in Ohio, Indiana and Illinois, (1) only six experienced population growth between 2010 and 2015, and most of those were home to either a tier 1 research university or a state government. Among the remaining group--those that are not home to a state government or a tier 1 research university, Terre Haute's labor force still lags that of comparable metropolitan areas (see Figure 2).
Large research universities are great engines of economic growth. Lacking that, Terre Haute must look to other potential sources of growth. We think a natural starting point is to examine those sectors that traditionally have driven economic and job growth in the region, which are (in no particular order) retail, health care, higher education, prisons and manufacturing. In each case, we feel the prospects for significant contributions toward helping the region out of its present stagnation are fairly limited.
While the new Meijer store on the east side of town is a bright spot for the retail sector and the Highway 46 corridor, it may be merely cannibalizing retail grocery sales from other east-side outlets rather than drawing in significant new business. The economic literature on the impact of new Wal-Marts is instructive. As is the case with this Meijer, local substitution effects tend to dominate when new retail outlets are constructed, but there are significantly positive effects as well. Since Wal-Mart came to the IN-46/I-70 interchange in 2005, one strip mall and several retail shops (located in the out lots between Wal-Mart and IN-46) have been constructed. Meijer's opening across IN-46 has added momentum to this effect.
New eateries around town, especially on the south-side Highway 41 corridor are also bright spots, but may represent little more than a shuffling of previous restaurant spending. In any event, employment in the local retail and...