News From Terre Haute, Indiana

January 15, 2014

MARK BENNETT: Tackling entrenched economic problems could brighten local forecast

Mark Bennett
The Tribune-Star

TERRE HAUTE — Without a DeLorean, there’s no going back to 1995.

Still, it’s quite feasible, and enlightening, to compare that time with the present.

That contrast helps explain why the Terre Haute area economy may continue to languish in 2014, even if the state and nation experience a surprising revival. Two astute observers of the local economy — professors Bob Guell of Indiana State University and Kevin Christ of Rose-Hulman — explain the predicament in this month’s “Outlook 2014” edition of Indiana Business Review magazine. They co-authored the Terre Haute forecast in the publication, produced by the Indiana University Kelley School of Business.

Their analysis details “troubling long-term headwinds that will make it difficult for the region to remain an important economic hub.”

It’s tough stuff, but also crucial information the community can use in forming a strategy to reverse the trends.

So, we’re gonna go back in time, to 1995. Late that year, employment reached a peak in the Terre Haute metro area, which includes Vigo, Clay, Sullivan and Vermillion counties. Out of 170,000 residents of all ages and situations, 83,000 held jobs. Twelve years later, just before the Great Recession hit, the number of people participating in the local labor force was down to 77,000. Today, it stands at 70,000. Labor force participation also has dropped statewide and nationally, but the Terre Haute region is shrinking at a faster rate.

The causes vary. Baby boomers retired, but a significant number of folks whose jobs disappeared during the recession have not found work. The adage “it’s easier to find a job when you have a job” often plays out, turning unemployment into long-term unemployment. Terre Haute faces a significant problem with “structural unemployment” — a mismatch between the skill sets of available workers and the employers’ needs. The extent of that mismatch means the region’s “natural” (or usual) jobless rate may settle at 1 to 2 percentage points above the state and national rates.

“So even if the national unemployment sunk into the 5’s or 6’s, we’d still be in the 8’s,” Guell said in an interview Wednesday.

This spot behind the 8-ball has additional complications. As with the unemployment and labor-force participation rates, Terre Haute also lags behind Indiana and the nation in personal income. Private industry workers here earn about 70 percent of the national average. As a home to multiple colleges, education and healthcare jobs yield salaries matching state norms, as do many construction occupations, but jobs added in other sectors in Terre Haute often pay below-average wages and fluctuate seasonally, the analysis said.

And that reinforces another problem: brain drain. “They’re not the kind of jobs that are going to keep our college-educated youth or attract our college-educated youth,” Christ said Tuesday afternoon.

“The brains that we generate out of Rose-Hulman, [Saint Mary-of-the-Woods] and ISU tend to flee immediately,” Guell added.

Terre Haute isn’t alone, with Indiana incomes falling below national averages. “We’ve got this amazing education system in the state, but we’re basically training the rest of the country,” Christ said. Still, coupled with its other economic issues, Terre Haute particularly needs more of its local graduates to stay, work and raise families. The Terre Haute metro population grew just 0.9 percent from 2000 to 2010. Of the 11 largest Indiana metros, only Kokomo and South Bend grew less.

A couple of bright spots hold potential, as the Business Review piece stated. The completion of Indiana 641, a bypass through southeastern Vigo County, could spur development. The impact would come after this year, though.

In their analysis, Guell and Christ offer suggestions “for regional civic and business leaders to begin casting their nets a bit wider to attract new kinds of jobs that will stem the tide of employment loss that could contribute to a new sense of vibrancy.”

That could mean seeking large white-collar employers moving out of other regions, or encouraging a broader local network of innovative, small, start-up firms, perhaps enticing engineering and technology grads to settle down here.

“If you’re going to start something in a garage, do it in a Terre Haute garage,” Guell suggested, “and we as a community are going to do everything we can to foster it and help it grow.”

That, of course, involves more than just backing out the DeLorean to make room for the new business. It’s a community-wide change in mindset, with Terre Haute using its many virtues to turn these worrisome economic problems into an era of growth.



Mark Bennett can be reached at 812-231-4377 or mark.bennett@tribstar.com.