How’s business?
“Wonderful,” is the answer you’ll probably get from those who know only that the stock market continues to rise.
How is business in Indiana or in your sector of the economy? That answer is often hard to find.
The news media often report only the upbeat press releases from companies seeking to impress investors or politicians. The politicians only want good news to have voters believing they caused successes and had nothing to do with failures.
“How’s business” today rarely reflects the long-term trends influencing our lives and our communities. Business changes. Not like the weather, but more like the climate: slowly. Mighty firms and bustling communities fade while new enterprises sprout and forgotten towns regain popularity.
In 2007, before the Great Recession, Indiana had about 152,900 establishments, places where people worked — factories and shops, garages and hospitals, schools and nursing homes, public and private. Ten years later, that number was down by 4,500 (-2.9%). Meanwhile, the nation gained 153,000 establishments (+2.0 percent).
During that decade, Indiana lost 2,700 construction business sites (-16.8%) and 2,100 retail establishments (-9.0%). Nationwide, both of those sectors also lost establishments, but by smaller percentages than Indiana.
Places of business, you might say, are not as important as jobs.
According to the same sources, (County Business Patterns, U.S. Bureau of the Census), the number of paid employees increased by 4.9 percent in Indiana and 7.1 percent nationally.
However, Hoosier employees matched their national brothers and sisters in the percent increase of average weekly earnings. The increase, not adjusted for inflation, in Indiana was 25.6%. Nationally, it was 25.8%
Although this is a good talking point, the dollar increase for Hoosiers was $175 per week compared to $210 across the nation. That difference is the result of Hoosier weekly earnings, for all sectors of the economy, being 16% below the corresponding national figure in 2007.
Now comes the question, “Why, then, are Indiana’s weekly earnings 5.4% higher than the nation’s in 2017?” How did we go from 16% below the nation to 5% higher in 10 years?”
The answer is manufacturing.
Yes, manufacturing continues to dominate many of our economic statistics. Not because it is the highest-paying sector (it ranks eighth-highest of 20 sectors in both Indiana and the United States), but because our 32,000 (-6 percent) decline in manufacturing jobs during that decade did not approach the 1.6 million (-12 percent) of lost manufacturing jobs nationally.
In 2007, manufacturing was 26% of the total payroll in our state, but only 11% for the nation. Those figures declined to 23 and 10% respectively in 2017.
Hence, our state’s economy gained ground on the nation because of our strength in a severely declining industry. As they say, “Ain’t God good to Indiana?”
Morton Marcus is an economist. You can contact him at [email protected]. You also can follow his and those of John Guy on “Who Gets What?” wherever podcasts are available. Send comments to [email protected].
