While growing, state lags behind on employment

This column is not about the Religious Freedom Restoration Act.

I wrote that column and threw it away. The arrogance of those in the General Assembly who crafted and voted for the original bill and the non-fix, both signed by an irresponsible and unresponsive governor, is too depressing for me.

Not all the March data on employment released last week were available at this writing. Instead, let me share this piece of good economic news from February. Each of our 50 states had more jobs in February this year than in the same month last year. Nationally, the number of jobs grew by 3.3 million, a 2.4 percent growth rate. For Indiana, we had an increase of 59,100 jobs, a 2 percent increase.

Although this rate of growth was good enough to rank 19th in the U.S., Indiana still lagged behind the rest of the nation. Only 15 states exceeded the national average, which was boosted because three of the biggest states (California, Texas and Florida) each grew by at least by 3.2 percent. Utah led the nation with a 4.2 percent growth in jobs, while West Virginia and Montana trailed with each at 0.3 percent growth.

Within Indiana, the number of people with jobs increased by 62,800, or a 2.1 percent increase from February 2014 to the same month in 2015. At the same time, the number of unemployed people fell by 20,900, or 9.6 percent.

Does this seem like a miracle to you? Indiana added 59,100 jobs, but 62,800 more persons were employed. This difference arises because the number of jobs comes from a survey of firms while the number employed comes from a survey of households. The household survey includes people who are self-employed and family members working in small businesses, classes of employment not covered by the survey of firms.

Those numbers sound fine, until we look at the details. Only 55 of Indiana’s 92 counties saw more people employed in February 2015 than a year earlier. Five counties (Hamilton, Elkhart, Lake, Tippecanoe and St. Joseph) accounted for 58 percent of this growth.

Perhaps the best news is that 91 of the 92 counties showed decreases in the number unemployed. The exception was Lake County, where the number unemployed rose by 30 people (0.1 percent), which was probably not statistically significant.

If our lawmakers stop pursuing divisive issues and focus on the economy, they might ask: What constitutes a healthy employment situation?

Foremost, we want to see a minimum number of people unemployed. However, what if those formerly unemployed have left the labor force? In the past year, 43 Indiana counties saw declines in the labor force; that is, fewer people were either employed or looking for work.

Many say these are discouraged workers, a bad economic sign, but that is jumping to conclusions. People leave the labor force for many reasons. Some retire. Some go back to school. Some stay home to care for family members. Contrary to popular belief, those may not be discouraged workers but people enabled by optimism.

More detailed data from the Department of Workforce Development and the Bureau of Labor Statistics will help state and local policymakers know what they are talking about.

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to dr-editorial@greenfieldreporter.com.