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Column: Indiana manufacturing leading nation’s way back?

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We have been hearing a great deal about how manufacturing is leading the nation back from the recession and Indiana is out ahead of the nation in that recovery. Do the numbers verify the story? By-and-large, yes.

First let’s look at the nation.

In August 2007, the U.S. had 137.5 million jobs with wages and salaries. That number excludes all proprietors (farm and nonfarm) as well as other farm workers. (Note: These are jobs, not employed people, since one person may hold more than one job.)

We dropped 7.8 million jobs (5.7 percent) by August 2010. Since that low, the nation has gained back 6.3 million jobs. That leaves us with an August 2013 jobs deficit of 1.5 million (1.1 percent below the August ’07 level).

The story for Indiana is somewhat brighter. There were 3 million Hoosier jobs in August ’07. That number fell by 180,000 (6 percent) by August ’10; then 158,000 were recovered by this past August. Hence the Hoosier nonfarm jobs deficit was 22,000, or 0.7 percent, of the ’07 level.

There would be no job deficit at the national level if manufacturing had not been so hard-hit by the recession and if manufacturing had led the recovery of jobs.

At the U.S. level, we lost 2.3 million manufacturing jobs, recovered 400,000 and, in August ’10, had a deficit of 1.9 million manufacturing jobs. In Indiana, our manufacturing job deficit was 58,000, nearly three times our total jobs deficit.

In August ’13, U.S. manufacturing jobs were 13.4 percent below their ’07 levels; Indiana’s were 10.6 percent below their level of six years ago, before the recession. Where does this Hoosier strength come from?

In August ’07, transportation equipment (largely automotive vehicle parts and production) represented 1.2 percent of jobs nationally, but 4.4 percent in the Hoosier state. This sector took a much harder hit in the recession than did manufacturing in general. Nationally 22 percent and in Indiana 27 percent of these jobs were lost by August ’10. The recovery was kinder to Indiana than nationally, but by August 2013 both the U.S. and the state were still about 12.7 percent behind their respective peaks.

This leaves us nationally and in the state with seven workers where we had eight producing transportation equipment in 2007. By-and-large, these were good-paying jobs, often union jobs with strong benefit packages.

Where does the U.S. economy need help? If you believe we should recover to where we were, then manufacturing deserves our attention. Our manufacturing job deficits, nationally and in Indiana, exceed our total nonfarm job deficits. The recovery is most successful in the nonmanufacturing sectors.

Yet, one must ask: Why should the old (2007) proportions of jobs persist? Six years of much trauma have gone by. Is it reasonable to expect jobs in manufacturing and transportation equipment to resume their former places of importance? If not, is Indiana going in the wrong direction while the nation is going in a new direction?

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to letters@dailyjournal.net.

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