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Jobs returning to rural Indiana, but workers still leaving

September 25, 2014

Jobs are returning to rural Indiana but a new Indiana State University report suggests there may not be enough skilled workers to fill them.

The total number of jobs in Indiana's 72 predominantly rural counties is expected to return to pre-recession levels by the end of 2015 and then steadily increase by 10,000 per year during the next decade, according to a study by the Rural Urban Entrepreneurship Development Institute (RUEDI).

But the study says adults in their prime working years are expected to continue to leave rural counties, reducing the size of a talented and experienced labor force.

"There is likely to be somewhat of a mismatch between the skill levels of the employees and the jobs that are available," said Robert Guell, professor of economics at Indiana State. "A mismatch occurs when the ability of the workers who are available to do the work is different than the work that is available."

Many low-skilled jobs that had sustained Indiana for years have disappeared and are not expected to return, the report said, and workers especially hard hit by the bursting of the housing bubble - in such fields as construction, finance and real estate - may need to adjust their career aspirations.

Most rural jobs are in retail, health services and food accommodations and are supported by the local community. The report says rural counties are most vulnerable to shifts in "traded clusters," a term coined by Harvard business economist Michael Porter, whose U.S. Cluster Mapping Project was used in the report.

Traded clusters are groups of related industries that serve markets beyond the local region and are free to relocate if a sufficient workforce is not available.

"Manufacturing jobs in particular but also service jobs will tend to cluster sort of like the restaurant industry always seems to be in one location in a city," Guell said. "The reason for that in the manufacturing sector is that the skills associated with the activity, the entities that are purchasing that output and the interactivity between the manufacturers themselves makes it such that the location decision by a manufacturer is positively influenced by that good being manufactured in the community."

Manufacturing remains the backbone of Indiana's economy and the report identifies the automotive industry as the largest "traded cluster" in the state's rural counties, with nearly 38,000 jobs, followed by distribution and e-commerce, with 35,000 jobs.

Indiana lost 25 percent of its total manufacturing jobs during the Great Recession, a smaller decline than the United States as a whole, which lost 27 percent of manufacturing jobs, Guell noted. A larger share of Indiana jobs are in manufacturing than in any other state.

The RUEDI report looked at demographic shifts as well as economics and, while much has been made of the Hispanic population boom in Indiana and elsewhere, most of the change the report projects between 2001 and 2021 has already occurred, noted Tom Steiger, professor of sociology at Indiana State.

"Fifty-six percent of the predicted change in race and ethnicity has already occurred between 2001 and 2011," Steiger said. "Though there is a lot of discussion about it, focusing on migrants and Hispanics filling the loss of young people who are leaving rural areas, we're still talking about a loss of a few percentage points. We're talking about going from 95.4 percent white non-Hispanic (in 2001) and by 2021 it is predicted to be 92 percent."

The fastest growing segments of the population are persons older than 50, in part because younger people are leaving rural counties, Steiger said.

The dependency ratio, the proportion of children 18 and under and those above 65 that is dependent on the working segments was 73 to 100 in 2001 and stood at 61 to 100 in 2011. By 2021, that ratio is expected to be one to one, he said

While the rural population is getting much more dependent, a larger share of older residents may help stabilize local economies, thanks to Social Security, including Supplemental Security Income, and pensions, Steiger said.

"They are going to have money. They will have buying power; they're not going to be destitute," he said.

Rural Indiana will continue to lag significantly behind urban areas in the percentage of residents with college degrees, but demand for more nurses and physician assistants to meet the medical needs of an older population could result in a more educated workforce, Steiger said.

"Rural counties are vulnerable as anchor establishments within traded clusters may decide to relocate to another region that can provide the competitive advantage necessary to sustain profitability," said Steven Pontius, RUEDI director. " Statewide efforts are underway to better engage partners in matching employer needs with a workforce that has both the technical and soft skills required in a knowledge-based economy. It will be up to regional workforce boards, community leaders, businesses and educational institutions to tailor solutions for the attraction and development of human capital."

The Rural Indiana Demographic and Economic Overview is online at http://www.indstate.edu/news/pdf/2014-08_IN%20Rural_Counties_Economic_Overview.pdf

Contacts: Robert Guell, professor of economics, Indiana State University, 812-237-2169 or robert.guell@indstate.edu; Tom Steiger, professor of sociology, Indiana State University, 812-237-3426 or thomas.steiger@indstate.edu

Writer: Dave Taylor, media relations director, Office of Communications and Marketing, Indiana State University, 812-237-3743 or dave.taylor@indstate.edu

 

 

Story Highlights

A new report from the Rural Urban Entrepreneurship Institute projects jobs in rural Indiana will return to pre-recesion levels by the end of 2015 but there may not be enough skilled workers to fill them.

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