A COMPREHENSIVE REVIEW OF ECONOMIC TRENDS IN NORTHEAST INDIANA
PREPARED BY THE COMMUNITY RESEARCH INSTITUTE AT
INDIANA UNIVERSITY PURDUE UNIVERSITY FORT WAYNE
John R. Stafford, Director
Valerie A. Richardson, Research Associate
September, 2008
ACKNOWLEDGEMENTS
The Community Research Institute appreciates the financial support that the Olive B. Cole Foundation and the Northeast Indiana Foundation have provided in support of this project.
The Institute also deeply appreciates the contributions that have been provided by Lynne McKenna Frazier, Dr. Thomas Guthrie, and Lincoln Schrock during the research and preparation of the study. All three have been long-time observers of economic activity in northeast Indiana. Each brought a different perspective to the project and those insights have been most helpful.
The authors are responsible for the final content of this report. The observations, comments and recommendations reflect the views of the authors and not necessarily those of the sponsoring organizations or contributing observers.
TABLE OF CONTENTS
SECTION 1. INTRODUCTION 1
Defining Northeast Indiana from a Geographic Perspective 2
Commuting Patterns across the Region: 3
SECTION 2. EMPLOYMENT 5
Overall Employment Trends for Northeast Indiana 5
NEI Employment by County 6
An Overview of the Northeast Indiana Counties 8
An Analysis of Northeast Indiana Employment Sectors with Emphasis on Manufacturing 22
Major Employers in Northeast Indiana - Yesterday and Today 37
Other Employment Observations 40
Labor Force and Participation Rates 44
Unemployment in Northeast Indiana 46
Employment Projections 47
Gross Domestic Product 50
SECTION 3. INCOME AND EARNINGS 52
NEI Wages by County: 52
Average Wages By Industry 55
Earnings and Net Earnings 55
Other Components of Earnings 57
Proprietorship Income, More on Wages and Salaries, and Supplements 57
Some Observations on County Earnings and Non-Farm Proprietorship Income 60
Total Personal Income 62
Dividends, Interest, and Rent 63
Transfer Payments 64
Per Capita Personal Income 65
Per Capita Personal Income by County 66
SECTION 4. EDUCATION 68
Introduction-Education in a Manufacturing Environment 68
NEI, Indiana, and U.S. Education Attainment 69
Education Levels By County 73
By Race and Ethnicity by County 79
Recent High School Graduation Rates 81
SECTION 5. NEI POPULATION 84
Population Summaries and Data 84
Population by Age Group 88
Race and Ethnic Groups 93
Components of Population Change 95
Population Projections 97
SECTION 6. OBSERVATIONS …………………………………………………………..101
The Pace of Job Creation in Northeast Now Trails Both the State and the Nation...... 101
The Relative Decline in Job Quality in the Region Has Continued Over the Past Decade..…102
Manufacturing Remains a Critical Part of the Northeast Indiana Economy…………………104
When Looking Beyond the Dominant Role of Manufacturing in Northeast Indiana
We Find Many Important Economic Differences Among Our Counties………………… 106
The Composition of the Region's Labor Force is Changing Due to Both In and Out
Migration………………………………………………………………………………………..109
Two Perspectives on Monitoring Regional Economic Performance…………………………...110
Northeast Indiana Has Made Important Strides in Thinking and Acting Regionally……….111
SECTION 7. RECOMMENDATIONS …………………………………………………..113
Workforce Development is Job One…………………………………………..………113
Successful Economic Development Requires Sustained and Broad-Based Support…….…..114
We Must Rekindle an Intense Civic Competitive Spirit…………………………………….....114
Northeast Indiana Must More Aggressively Act to Build Statewide and
Midwest Connections...... 115
Northeast Indiana Needs a Bold, High-Level Economic Development Strategy
That Has Wide-Spread Ownership…………………………………………………………...115
Northeast Indiana Must Proactively Utilize Its Regional Infrastructure Assets...... 115
APPENDIX A. Definition of Federal Statistical Areas and the Relationships in NEI 115
APPENDIX B. NEI Commuting Patterns 2006 116
APPENDIX C. COUNTY BUSINESS PATTERNS: Number and Size of Businesses by County 117
APPENDIX D. Post High School Educational Resources in Northeast Indiana 120
APPENDIX E. 121
GRADUATION RATES FOR NEI HIGH SCHOOLS BY COUNTY, BY SCHOOL CORPORATION FOR 2005/06 and 2006/07 121
iii
SECTION 1. INTRODUCTION
There are many factors which influence an area’s economy—education, tax structure (or the tax structure or educational attainment or opportunities of a competing region), private investment, infrastructure, global opportunities and challenges, leadership, core competencies, and so on. It may be occasionally helpful to step back and view what has happened to get us where we are today. There is the saying “Those who fail to learn the lessons from history are doomed to repeat them”. An examination of the past may answer questions and help initiate discussion and/or plans for the future of northeast Indiana.
That was the raison d’etre for the first “Performance of the Northeast Indiana Economy Over the Past 30 Years, the Major Forces Shaping That Performance, and Some Thoughts on Appropriate Economic Policy To Enhance Future Performance” report released by Thomas Guthrie and Valerie Richardson of the Community Research Institute at IPFW in 2000. How have economic conditions changed since then? Have we initiated any “appropriate economic policy”? In addition to those questions, we have the added bonus that two additional counties have been added to the NEI[1] group of counties. What effect does that have on any recommendations for our future?
At the time the first report was prepared, northeast Indiana (NEI) was in a relatively positive position-we were recovering from the devastating recession of 1981 which included the closing of a dominant employer, International Harvester, with over 10,000 local jobs, manufacturing employment was thriving and unemployment was low. Since that time manufacturing employment has nose-dived; we are adjusting to the fact that any future success in manufacturing will require a more educated workforce and a more technologically advanced workplace; we are contemplating the loss of an older, more highly-skilled manufacturing workforce as they near retirement; and we are still searching for something to take the place of the lost, highly-paid manufacturing jobs.
NEI’s personal income growth has continued to worsen in relation to the United States. This is most likely due to the adjustment (or lack of) in the changes taking place in the manufacturing sector and the dominance of that sector as the generator of income in our region. Almost 15,000 manufacturing jobs in NEI have been lost since 2001. The manufacturing sector has had a higher average wage than the area’s average wage, and therefore the magnitude of the loss of manufacturing jobs is significant. NEI has added some health and social service jobs which pay, on average, about 80 percent of the lost manufacturing wage. The only other noticeable increase in employment has been in temporary employment services and these jobs have a pay scale about half of the average manufacturing wage.
Along with the challenges presented by the dramatic changes weakening of the manufacturing sector, economic growth in northeast Indiana also is increasingly inhibited by our relatively low levels of educational attainment. The area appears to be providing programs which address the educational needs of the local economic opportunities: Ivy Tech has been in the news for adding programs which address certain labor shortages; IPFW has also added programs such as masters in engineering, applied computer science, and nursing in addition to the new Pension Plan Management center; many other colleges and universities in the area such as St. Francis, Huntington, Indiana Wesleyan have added or expanded their nursing programs; Taylor University has a Center for Research and Innovation and other programs which encourage entrepreneurship and research; the list goes on. Yet, the data indicates that our workforce is just not keeping pace with national gains in educational attainment while the knowledge-based economy is demanding greater and greater skill levels in virtually every sector.
Not all news is bad news. There has been some evidence that NEI is beginning to think and act like a region. The Northeast Indiana Regional Partnership is a new economic development consortium that is active not only in developing leads and marketing the area, but is organizing regional activities such as a comprehensive identification of sites available for development, as well as offering opportunities for professional development to local economic development officials such as the weeklong Economic Development course offered through Ball State’s Center for Economic and Community Development. The Northeast Indiana Innovation Center has been up and running since 2005, with a number of successful start-ups and programs under its belt. There is regional coordination in considering infrastructure improvements, or at least the beginnings for this are in place. Some of the recommendations from the original report have been considered, discussed, or even acted upon. It is time to review those recommendations and to incorporate new ones.
For these reasons and more, it is time to update the 2000 report. As in the 2000 report, this report presents plenty of data about employment, education, income, and population. There are analyses of what may have contributed to the facts that we are observing today. The final section will offer some scenarios for the future.
Defining Northeast Indiana from a Geographic Perspective
Northeast Indiana is defined as the eleven county area comprised of Adams, Allen, DeKalb, Grant, Huntington, LaGrange, Noble, Steuben, Wabash, Wells, and Whitley counties. A decade ago, NEI was defined as a nine county area. There have been various state initiatives which require the definition of a region. At the basic level, this usually begins with the current Metropolitan Statistical Area (MSA), and in NEI, Fort Wayne in Allen County has been the major city. The Fort Wayne MSA and related areas in NEI are described in Appendix A. The recent addition of Wabash and Grant counties was a result of the state’s Strategic Skills Initiative.
The Economic Growth Region concept came about as part of the Indiana Department of Workforce Development’s 2005 Strategic Skills Initiative (SSI). This was a $23 million dollar investment designed to align the state’s economic and workforce development efforts and address anticipated workforce shortages. The Indiana Business Research Center (IBRC) of the Kelley School of Business at Indiana University was asked to review commuting patterns, demographics, and other quantifiable factors in order to group counties by region. These regions would then be empowered by the SSI grant to conduct research and identify occupational shortages, their root causes, and methods to address these shortages in their respective regions. From the research conducted by IBRC and reviewed by the Indiana Workforce Service Area, Economic Growth Region 3 is now NEI. The Indiana Department of Workforce Development has now built upon these definitions begun by the SSI project and is using 11 regions as the areas for which workforce statistics are created and maintained as part of the Federal Workforce Investment Act.
Since much of the concept of “region” is based on economic or social ties, commuting patterns for the 11 NEI counties for 2006 is given in Appendix B.
The maps below identify the 11 counties of northeast Indiana (also known as Economic Growth Region 3):
Map 1. The 11 Counties of NEI / MAP 2. NEI in IndianaCommuting Patterns across the Region:
What makes NEI a cohesive, defined area? Part of the answer lies in the commuting patterns. In 2006, 69,589 NEI residents left their home county to work elsewhere. Almost 70 percent commuted to another NEI county. The table on the next page gives detailed commuting patterns for 2006. A significant link can be seen in the counties commuting patterns, with some of the exceptions noted below.
When considering all commuting patterns, Grant County appears to have the weakest link with the other 10 NEI counties. Only 31.5 percent of its residents who commuted went to work in another NEI county. Only 26 percent of the persons commuting into Grant County were from another NEI county. Although CRI has not investigated the commuting patterns of all of Indiana’s 92 counties, it does appear that Grant County does not follow a typical commuting pattern. That is, the top three counties sending workers into Grant County are not the same three counties which receive Grant County residents to work. (Madison/Wabash/Blackford send in the most workers; Grant County residents go to Howard/Huntington/Madison and Delaware).
Wabash County also has weaker links than most NEI counties, but Allen, Grant and Huntington Counties do have strong commuting ties to Wabash County.
LaGrange County residents overwhelmingly commute to Elkhart County, at least before the recreational vehicle slowdown in mid-2008; therefore, the commute from LaGrange to other NEI counties appears weak. (Elkhart County received 3,842 of LaGrange’s 6,514 commuters in 2006, and NEI counties, specifically Noble, Allen, and Steuben, received 1,885 of the 3,483 LaGrange residents who commuted.)
Adams County had more commuters coming into Adams from non-NEI counties, notably from Jay County, and out-of-state also ranked in the top 4 of places which draw workers into Adams County.
SECTION 2. EMPLOYMENT
Overall Employment Trends for Northeast Indiana
Total wage and salary employment[2] for the 11-county NEI region totaled 371,441 in 2006. This is a 47.8 percent increase since 1972.
Chart E-1.
Source: BEA Wage and Salary (CA25)
Chart E-2 compares the growth since 1979 of NEI to that of Indiana and the United States. Although NEI (and Indiana) were performing relatively better than the U.S. prior to 1979, that year represents the high watermark in terms of employment growth compared with the nation. NEI has lagged the U.S. since that time. In the early 1980s, NEI lost a major employer, International Harvester, and with it, over 10,000 jobs. The U.S. was in a recessionary period, and NEI fared worse than Indiana and the nation. NEI managed to regroup, and its employment gains relative to the state of Indiana were consistently higher from 1985 through 2000, and even came close to the national growth during this period. After the 2000/01 recession, NEI has experienced an extended period of employment malaise and is again lagging behind the state in relative employment change[3], something that has not been witnessed since the early 1980s, and that period was not as pronounced as the current lag.
Chart E-2.
Source: BEA Wage and Salary (CA25), indexed by CRI
NEI Employment by County
Chart E-3 on the next page indicates the change in wage and salary employment growth since 1979 for each of the 11 counties. The manufacturing build-up during the latter part of the 1980s and the first part of the 1990s contributed to a significant increase in employment growth in many counties, with Steuben County leading the way. Steuben’s employment more than doubled by 1999, but has recently been undergoing a substantial decline. Although this recent loss of jobs is no doubt economically painful, Steuben’s employment has still increased by 88 percent since 1979, and Steuben currently holds the top spot for the best performing NEI-county since 1979[4]. Other counties such as Noble, DeKalb, and LaGrange saw substantial increases in employment. On the flip side, Wabash and Grant have not been able to maintain their 1979 employment levels. Allen County, the largest county in population and employment, has increased employment by only 25.8 percent since 1979 compared a 29.4 percent increase for the remainder of the region.