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March 17, 2013

Money flows across county lines throughout Indiana

TERRE HAUTE — Indiana gains from commuting. More money flows into Indiana than leaves the state from the daily movement of workers. In 2011, the difference between the inflow and the outflow was in excess of $4

billion.

At the county level, 70 counties are net recipients of these money flows from commuting, while only 22 see a net outflow. It is these 22 counties that provide the jobs that feed their neighbors.

As you would guess, the greatest outflow ($15.5 billion) is from Marion County where Indianapolis jobs support the rooftops of the surrounding counties. The largest inflow ($6.1 billion) is enjoyed by Hamilton County.

Among the 22 counties that are net importers of labor and exporters of earnings are the usual major employment centers (Vanderburgh, Howard, Elkhart, Bartholomew, Allen, Vigo, Tippecanoe and St. Joseph counties). Counties you might not think of for this list include Grant, Martin, Dekalb, Gibson, and Jefferson.

The counties that depend most on the inflow of funds via commuting are Franklin, Morgan, Ohio, Brown and Warrick. In each of these five counties, the inflow of earnings exceeds two-thirds of the total earnings realized by residents.

The major “donor” counties that “lose” earnings through commuting are led by Martin County (Crane) where 79 percent of earnings generated in the county leave to support households in other counties. Next are Ripley (56 percent), Gibson (48 percent), Clark and Pike (43 percent each).

Some people would want to make these data into policy issues. Where the ratio of outflow to inflow is high, one hears, “If only we had decent housing or schools or parks or places for young people or a creative class, then we would not be exporting so much money to the surrounding areas.”

On the other side, where the ratio of inflow to outflow is high, the talk is, “If only we had more jobs, our people would not have to travel as far to gather earnings.”

These arguments presume there is something wrong if commuting is taking place. If you have to go to the next county for a job, then you are using precious resources and clogging the highways causing congestion. Alternatively, if “foreigners” from the next county are coming in and “taking” jobs from your residents, then there must be a deficiency in your labor force.

Some economists would call either situation a “mismatch” — a disequilibrium between the demand for and the supply of labor that generates high personal and social costs.

The more simple truth may be that households seek out those jobs and those places to live where they get the most money consistent with the most pleasure from residing there. If it means crossing a county line to work, so be it.

Today there are many two-worker families. One worker (often the male) may travel some distance to a job while the other lives closer to work. But their jobs may be in different counties.

In a major metropolitan area, the big city may dominate employment, but not offer the expansive yards that so many Hoosiers believe are essential to the peaceful pastoral life. Hence we get suburban sprawl.

Our freedom to live where we please is reflected in these numbers. Others may choose to use them to support political or philosophical positions; I do not.

Morton Marcus is an independent economist, writer and speaker. Contact him at mortonjmarcus@yahoo.com.

 

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