Analysis shows Indiana job losses worst in the nation

INDIANAPOLIS -- Indiana has lost more jobs in the past two years than any other state.\nThe approximately 3 percent setback -- seven times worse than the national average -- is so severe that neighboring industrial states look prosperous in comparison, an analysis of recent government statistics shows.\nAmong sectors shedding the 95,000 workers were retailing, services and the state's core industry of manufacturing.\nEconomists say prospects for a rebound are uncertain.\nMore than in past recessions, competitive pressures to cut costs will force some manufacturers to buy machines or move work out of the country instead of hire back laid-off employees.\n"Everything depends on the future of manufacturing," Hudson Institute economist Graham Toft told The Indianapolis Star for a story published Sunday. "I am not sanguine about the uptick."\nDeclining employment, with its fallout of crimping state tax revenue, is only the latest symptom in a decades-long trend of Hoosiers losing ground in earnings.\nMuch of the problem is attributed to international competition and corporate buyouts that swept away well-paying management positions.\nLow unemployment rates are deceptive because they do not track people who drop out of the labor market. As the number of available jobs shrink, so does the number of people looking for work.\nThere's nothing new about a recession pounding Indiana. In the eight recessions since World War II, only in 1990-91 did Indiana do better than the country as a whole.\nThe current recession began in March 2001, and many experts think it ended late last year or early this year.\nAs a barometer of economic health, employment shows the total number of jobs available. Shrinking job opportunities usually mean people earn less money.\nThe two-year period beginning in January 2000 dates to a couple of months before the technology bubble busted and more than a year before the recession began, said IU economist James C. Smith, who analyzed the Bureau of Labor statistics.\n"Indiana just fared pretty poorly across the board," Smith said.\nYet, Hudson Institute's Toft, who formerly headed the state's economic development think tank, said the 3.16-percent loss is better than average for the state during recessions.\nIndiana's job-creation woes stretch back further than two years. Few jobs have been created since the mid-'90s, leaving total employment stubbornly entrenched at just below 3 million, Toft said.\nThe lackluster performance raises questions about whether many of the prized manufacturing jobs lost during the recession can be recovered.\nThe latest figures show the two-decade effort to diversify the state's economy was not aggressive enough, Smith said.\nAlthough Indiana has added thousands of jobs in well-paying services, 21.5 percent of all jobs are directly involved in manufacturing, still the highest dependence in the nation.\nTom McKenna, executive director of the Indiana Department of Commerce, said an obsolete tax structure is the greatest hindrance. He urged the General Assembly to enact the governor's proposed revisions.\n"We have a 19th-century tax structure, and we need a 21st-century tax structure," McKenna said.