Jobless rate stuck at "normal"

Although unemployment has almost continually fallen since the summer of 2009, 7 to 8 percent joblessness may be the new “normal.”
At least, for the foreseeable future.
“So much of what of I see with long term unemployment right now is we talk about a new normal,” said Jay County Development Corporation executive director Bill Bradley. “We always talk about 4 to 5 percent as the full employment. We may have a new normal for all we know at this point.
“That 7 to 8 percent is maybe our new normal,” he said.
Full employment is the term used to describe that “normal” unemployment rate, the baseline level of joblessness during average economic times. For Jay County, the last time the county saw rates that could be considered full employment were in 2007, when the unemployment rate sat at about 4 to 5 percent before the economic downturn — dubbed the Great Recession — officially began in November of that year.
The last time unemployment had noticeably spiked before that was in the first half of 2003 when rates shot up to around 9 percent. But after that half-year period, rates began to deflate, culminating with two strong years leading up the recession.
The annual average for 2006 and 2007 were 4.5 and 4.4 percent, respectively, the lowest rates since 2000’s annual average of 3.2 percent (which is a 20-year low for the county).
The recession, which national economists cite as beginning in November 2007, started slowly in Jay County. For the first year, unemployment climbed from about 4 percent to around 6 percent. But, as Bradley has noted on several occasions, employment tends to lag behind actual economic conditions, and as a national discussion of the recession grew, so did the most volatile market force — uncertainty.
“2008 you had the beginning of the banking bubble, the real estate bubble … a lot of uncertainty in the economy,” Bradley said. “The biggest question in the economy is uncertainty. … That was a period when we started to see for about a year when things just basically slowed down to a snail’s pace.”
Orders began to dry up and industries respondied by cutting manpower. In less than a year, joblessness in Jay County skyrocketed, more than doubling from 6.1 percent in October 2008 to 12.4 percent by May 2009. Unemployment peaked over the next two months at 12.7 percent.Despite the rapid increase, Jay County fared better than some neighboring counties like Adams County, which saw its rate shoot from about 4 percent in January 2008 to about 16 percent by February 2009.
The key, according to Bradley, is the diversity in the county’s economic base.
“It’s simply the diversity here that we’ve got,” Bradley said. “We’ve got a lot of manufacturing. … (But) we don’t have our eggs into one basket.”
Compared to counties like Adams, which boasts recreational vehicle and boat manufacturing, or Elkhart, which is heavily automotive manufacturing, Jay managed to weather the turmoil slightly better due to the variety of industries in the area.
“That’s the nature of that business,” he said of sector-dominated economies. “It’s feast or famine.”
The county also boasts some major industries that Bradley dubbed as recession-resistant, like Tyson Mexican Original in Portland (tortillas and corn chips) and Verallia (beer bottles) in Dunkirk.
“Food processing is a great thing, it keeps you recession-proof,” Bradley said.
“The other thing too that’s happening with places like Tyson, people are eating at home more. A lot of their products are much more in demand. And beer bottles too, people drink more (during hard economic times).”
Perhaps coincidentally, the Great Recession ended in June 2009 (although not determined by economists until about a year later), and the county began the long and current process of unemployment deflated back toward a new normal.
“A lot of our companies that supply other major corporations, reduced their orders substantially,” Bradley said. “What eventually does catch up is demand, people do, at a certain point, want those goods. … They now need that widget in their production process.”
Over the last two years, the unemployment rate has fallen at a rate of around 2.5 percentage points per year, although Bradley expects to see that deflation slow down in 2012.
Bradley said a major contributing factor to apotential unemployment decrease slowdown is the looming 2012 national election because of the uncertainty it creates when looking at the country’s future.
But other challenges are beginning to present themselves on the business front.
One critical weakness for Jay County, and one that likely won’t be remedied soon, is the county’s location.
“We’ll always still have the challenge of logistics in and out of the area,” Bradley said, noting the county’s lack of proximity to interstates and other transport hubs.
“That’s probably one that won’t be overcome any time soon.”
Another challenge is a lack of move-in ready locations.
Bradley has mentioned before the possibility of the county considering construction of a new speculation building, which could help to attract new business.
“The only building I’ve got left is the 20,000-foot spec building in Dunkirk,” he said.
 A third challenge will be to continue to stimulate workforce development to make sure that the county has capable workers to fill open positions. (See sidebar)
Ball State’s director of the Center for Business and Economic Research Michael Hicks agreed that having the right available workforce will lead to growth, but that a challenge is attracting and maintaining that kind of population.
“The bigger problem that East Central Indiana has as a whole basis is human capital and by that I mean I just think that the region as a whole faces a tough challenge in that there are not anywhere the number of very high-skilled available worker,” Hicks said. “I think that is partially remedied by two factors really. One is having a school system that is indeed delivering effective instruction. And then the second thing is what is really what are the reasons why someone would move to your community so you could attract workers that have geographic options?”
In order to achieve sustained growth, economist and former director of the Indiana Business Research Center Morton J. Marcus noted that all local leaders will need to play an active role in promoting economic development through attracting new business as well as developing the proper labor force.
“Clearly this region of Indiana has been hard hit over the past nearly 20 years now and it is not making a lot of progress relative to the state and the rest of the state is sinking relative to the nation,” Marcus said. “Muncie is sort of the leading area in the region and Muncie is not doing particularly well.
“(JCDC) has to do more than just look for firms that are interested in locating there, they really need to be the community cheerleaders to get people interested in economic development,” he said. “It’s a very tough job to do that. We need economic development people who are first and foremost the cheerleaders and the mentors for economic development. That’s a responsibility that the mayors have and the county commissioners have as well.
“We want wages to go up,” Marcus said. “We want people to earn more money because they’re worth more.”
Marcus also highlighted continuing development of high-speed Internet access as well as fostering retail growth, which can improve quality of life by having amenities more readily available, to help make Jay County a more attractive place for expansion.
Both Marcus and Hicks also advised that local leaders continue to analyze the strengths and weaknesses of the area — in a fashion like the recent 20/20 Vision project looking at the county’s future — and challenge the status quo as a way to help bring in new business and new workers.
“Every town thinks it’s a great place to raise their kids,” Hicks said.
“Every town says that they have great schools and half of them or more than half of them are wrong. And so the real question is why aren’t people living here and why aren’t they choosing it if it’s a place that is really great to live?”
“Another aspect, and this is sort of a more difficult one, is not being content with things as they are,” Marcus said. “One of the standards in Indiana is ‘If you don’t like it here, go someplace else.’ … The people that didn’t like it left.”
Part of that mantra, Marcus explained, is trying to keep entrepreneurs and highly-qualified workers from fleeing to typically more urban areas.
“What we’ve really got is a drain of energy. It’s not just (highly educated) people that leave — it’s people who have ambition. That I find is a statewide problem — the people who remain very often are just too content with the way things are.”
Bradley too, highlighted the needed effort to create more opportunities for that segment of the workforce as well.
“That is one of the biggest challenges we’ve got,” Bradley said. “Those are the kind of professional degrees we’re going to have to encourage more and more.”
In the meanwhile, the county may have to hold tight at current levels of unemployment for the next year, as Bradley predicted little change for Jay County on the unemployment front.
“I would say we’re going to be pretty steady, unemployment is going to be between that 7 and 8 percent level, which frankly puts us better than most people in this part of the world,” Bradley said. “We’re blessed this downturn hasn’t hit manufacturing as hard as it’s hits other sectors.
“Jay County is faring better than most places in east central and northeast Indiana.”[[In-content Ad]]