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The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business

Indiana Jobs: Recession, Recovery

Demographer, Indiana Business Research Center, Indiana University Kelley School of Business

Indiana reached an important milestone in July 2014. Nearly seven years from the start of the Great Recession, the state finally has more private sector jobs than it did in June 2007—the employment peak of the previous business cycle (see Figure 1). Similarly, the U.S. eclipsed its pre-recession peak in March 2014. Nationally, the private sector job count is now at an all-time high, but Indiana is still below its high watermark set in the spring of 2000.

Figure 1: Total Private Sector Employment, January 1998 to July 2014

figure 1

Source: U.S. Bureau of Labor Statistics, data are seasonally adjusted

While Indiana has now recovered all the private sector jobs it lost during the recession, the structure of the state’s economy has shifted over the last six years. Not surprisingly, industries like health care, hospitality and food service are on the rise, while goods-producing industries like manufacturing and construction are down.

This article takes stock of employment changes by industry since 2007 and places those changes within the context of the Midwest and nation. Then, we consider how these shifts impact the wages of Hoosier workers. Finally, we’ll take a deeper dive into the employment data to identify the detailed industries where the state is building a competitive advantage and those where it is falling behind.

Employment Change Overview

As Figure 2 highlights, employers in the health care and social assistance industries were far and away the drivers of private job growth in the state between 2007 and 2013. Over this period, Indiana’s hospitals accounted for one-quarter of new jobs in this sector, while home health care providers added more than 7,600 jobs and employment at doctor’s offices increased by nearly 5,000. In terms of growth rate, this sector has expanded at a 2.1 percent annual rate since 2007, which is slightly slower than the U.S. average but outpaces the rest of the Midwest (see Figure 3).1

Figure 2: Indiana Private Employment Change by Sector, 2007 to 2013

figure 2

Source: U.S. Bureau of Labor Statistics

Figure 3: Average Annual Growth Rates for Indiana Sectors on the Rise, 2007 to 2013

figure 3

Source: U.S. Bureau of Labor Statistics

The administrative and waste management services sector ran a distant second place with 10,500 new jobs over the past six years. This surge is difficult to interpret, however, since the temporary employment services subsector—which places workers in a variety of industries—accounted for much of this growth (i.e., nearly 14,300 new jobs in this industry between 2007 and 2013). Occupation data at the national level provides some clues as to the type of industries that may be utilizing these services in Indiana. In 2013, production, transportation and material moving occupations and administrative support occupations each accounted for an identical 21 percent of all jobs in the employment services industry at the national level. The next closest occupation grouping was business and financial operations with 4 percent of the jobs in this industry.

The growth in Indiana’s administrative and waste management services sector translates to a 1 percent annual increase between 2007 and 2013—a mark that far outpaces the Midwest region (0.4 percent annual growth) and the U.S. (-0.2 percent). The only other sectors where Indiana is growing more rapidly than both of these benchmarks are agriculture and transportation and warehousing.

Looking to the other end of the spectrum, Indiana’s manufacturing sector has been the largest source of job loss over the past six years with a decline of nearly 60,000 jobs. Not surprisingly, the auto industry has had the largest losses within this sector, with employment at parts manufacturers down by nearly 10,500 jobs over this period and vehicle body and trailer makers losing nearly 6,400 jobs. Unfortunately, the Midwest and the U.S. have experienced even sharper declines in manufacturing employment than Indiana (see Figure 4).

Figure 4: Average Annual Growth Rates for Indiana Sectors in Decline, 2007 to 2013

figure 4

Source: U.S. Bureau of Labor Statistics

The same can be said for construction employment. Indiana has lost 28,000 jobs in this sector between 2007 and 2013, which works out to a 3.4 percent annual slide. However, the U.S. (-4.3 percent per year) and the Midwest (-3.9 percent) have lost construction jobs at an even faster clip.

It is important to note that comparisons between 2007 and 2013 alone can make the situation in many sectors look worse than it really is. For most sectors with fewer jobs now than before the recession, all the damage was done by 2010, and each has been on the rebound since. Manufacturing employment in Indiana, for instance, fell by more than 125,000 over a 24-month period beginning in June 2007—a 23 percent decline (see Figure 5). This sector has been climbing back steadily ever since, adding more than 86,000 jobs between June 2009 and July 2014.

Figure 5: Relative Monthly Employment Change in Indiana for Select Sectors, June 2007 to July 2014

figure 5

Source: U.S. Bureau of Labor Statistics, data are seasonally adjusted

The construction sector had a similar drop through the recession, and while its rebound has not been as strong as manufacturing’s, the sector has reclaimed 38 percent of the jobs lost between June 2007 and February 2010.

Outside of government employment, the information sector and the real estate, rental, and leasing sector have had the weakest rebounds in recent years. Information has added back 17 percent of the 5,400 jobs it lost in the recession, and real estate, rental, and leasing has recovered 21 percent of its losses.

The Impact of Industry Shifts on Wages

One of the key consequences of this shifting employment landscape is that it is placing downward pressure on wages for Hoosier workers. The average wage for struggling sectors like manufacturing, construction and wholesale trade is well above the average for all jobs in the state. The ever-growing health care sector has above average wages, too, but they are well below those seen in the aforementioned sectors. Meanwhile, some of the other industries with large gains tend to offer wages that are below the state average.

To quantify the effects of industry change on wages, we borrow some approaches used by the National Employment Law Project to monitor the recovery at the national level.2 In this analysis, we look at annual private employment change and median hourly wage data for 2013 at the national-level for 88 different industries (i.e., all three-digit industries in the NAICS scheme).3 Industries were sorted from those with the highest median wage to those with the lowest, and then separated into three roughly equal groupings based on U.S. employment in 2013. The three groupings are meant to represent higher-wage, mid-wage and lower-wage industry classes.4

As Figure 6 shows, the higher and mid-wage groups, taken as a whole, accounted for all the net employment losses in Indiana and the nation between 2007 and 2013. Meanwhile, the lower-wage industries class managed to grow over this period. In Indiana, the largest sources of growth among lower-wage industries were administrative services, nursing care facilities and food service. By far, the largest contributors to the decline in higher and mid-wage jobs in the state were transportation equipment manufacturing and specialty trade construction contractors.

Figure 6: Employment Change by Wage Class, 2007 to 2013

figure 6

Source: U.S. Bureau of Labor Statistics

The picture for Indiana looks much better when we change the reference period to 2009 to 2013, however. Through the recovery, Indiana’s private sector growth has been remarkably balanced between the wage classes, while U.S. growth remains concentrated much more heavily in lower-wage industries (see Figure 7).

Figure 7: Share of Private Employment Growth for Each Wage Class, 2009 to 2013

figure 7

Source: U.S. Bureau of Labor Statistics

Indiana’s strong manufacturing rebound has been the catalyst behind this balanced comeback. Among higher-wage industries, transportation equipment manufacturing was by far the largest source of job gains. Professional and scientific services and hospitals also added a lot of jobs within the higher-wage class over this period. For mid-wage industries, ambulatory health care services led the way, but the fabricated metal manufacturing and plastic and rubber products manufacturing industries have also been important contributors of growth since 2009.

Indiana’s Industry Strengths and Weaknesses

So far, this article has focused primarily on employment changes for high-level, fairly nondescript sectors. In this section, we will focus on changes for more detailed industries (i.e., four-digit NAICS level) to see precisely where the state is outperforming the nation and where it is falling behind.

Due to the large number of four-digit NAICS industries, this section will focus only on those that meet several criteria. First, these are industries that tend to sell their goods or services to markets outside of their local area.5 Second, employment in an industry must be growing in Indiana or the nation. Finally, an industry must support at least 1,000 jobs in Indiana in 2013.

Table 1 presents industries in which Indiana both already has a competitive advantage, as indicated by a location quotient (LQ) greater than 1,6 and is continuing to build on that advantage with employment growth rates since 2007 that outpace the nation (see Figure 8). The industries in this table are sorted on the column labeled “Indiana Growth Rate Advantage,” which is simply the difference between Indiana’s growth rate between 2007 and 2013 and that of the nation. Four of the top five spots are held by manufacturing industries—including motor vehicle manufacturing, which has expanded in Indiana despite declining sharply elsewhere.

Table 1: Indiana’s Competitive Advantage, 2013

Industry Average Annual Growth Rates,2007 to 2013 Indiana Location Quotient Indiana Employment, 2013 Indiana Growth Rate Advantage
Indiana Midwest U.S.
Other Nonmetallic Mineral Product Manufacturing 2.8% -1.0% -2.6% 2.2 3,306 5.4
Motor Vehicle Manufacturing 1.3% -4.4% -3.1% 3.6 14,368 4.4
Poultry and Egg Production 3.6% 2.9% -0.6% 2.7 2,276 4.2
Electric Lighting Equipment Manufacturing 0.0% -2.2% -4.0% 2.4 2,405 4.0
Other Textile Product Mills 0.8% -3.7% -3.0% 1.6 2,162 3.8
Coal Mining 3.4% -3.0% 0.2% 2.1 3,531 3.2
Sugar and Confectionery Product Manufacturing 1.8% 0.5% -1.5% 1.3 1,866 3.2
Couriers and Express Delivery Services 0.5% -2.6% -1.7% 1.4 14,248 2.2
Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing 2.1% 0.7% 0.1% 2.9 2,370 2.0
Iron and Steel Mills and Ferroalloy Manufacturing 0.2% -2.8% -1.4% 9.8 19,448 1.7
Motor Vehicle and Motor Vehicle Parts and Supplies Merchant Wholesalers 0.4% -1.1% -1.1% 1.7 11,749 1.5
Other Fabricated Metal Product Manufacturing 0.7% -2.0% -0.7% 1.6 9,581 1.5
Steel Product Manufacturing from Purchased Steel 0.6% -2.9% -0.8% 3.3 4,149 1.4
Coating, Engraving, Heat Treating, and Allied Activities 0.1% -2.0% -1.3% 2.4 6,985 1.4
Engine, Turbine, and Power Transmission Equipment Manufacturing 0.6% -1.3% -0.3% 5.7 12,295 0.9
Other Food Manufacturing 2.5% 2.7% 1.6% 1.3 5,033 0.9
Grain and Oilseed Milling 0.4% -0.8% -0.4% 2.2 2,842 0.8
Petroleum and Coal Products Manufacturing 0.2% 0.4% -0.5% 1.4 3,493 0.7
Warehousing and Storage 1.6% 0.7% 1.2% 1.6 24,743 0.4
Electric Power Generation, Transmission and Distribution 0.2% -0.3% -0.2% 1.3 10,853 0.4

Source: U.S. Bureau of Labor Statistics

Figure 8: Indiana’s Competitive Industries with a Growth Rate Advantage: Average Annual Growth Rate, 2007 to 2013

Figure 8

Note: Data are sorted by the Indiana Growth Rate Advantage.
Source: U.S. Bureau of Labor Statistics

Table 2 focuses on industries where Indiana does not currently hold a competitive advantage, based on LQs equal to or less than 1, but where it is gaining ground with growth rates that are greater than the nation (see Figure 9).

Table 2: Industries Gaining Ground Where Indiana Does Not Have a Competitive Advantage, 2013

Industry Average Annual Growth Rates, 2007 to 2013 Indiana Location Quotient Indiana Employment, 2013 Indiana Growth Rate Advantage
Indiana Midwest U.S.
Soap, Cleaning Compound, and Toilet Preparation Manufacturing 4.9% -0.6% -0.8% 0.9 2,095 5.7
Wholesale Electronic Markets and Agents and Brokers 6.0% 3.0% 1.1% 0.6 10,852 4.9
Software Publishers 6.9% 3.1% 2.7% 0.3 2,041 4.2
Cattle Ranching and Farming 5.7% 5.7% 1.8% 0.6 1,891 3.9
Basic Chemical Manufacturing 3.2% 0.0% -0.7% 0.9 2,923 3.9
Scientific Research and Development Services 4.4% -0.4% 0.9% 0.3 4,698 3.5
Dairy Product Manufacturing 3.9% 0.0% 0.5% 1.0 2,974 3.5
Other Heavy and Civil Engineering Construction 0.9% -2.3% -1.8% 0.7 1,608 2.7
Animal Slaughtering and Processing 1.7% 0.2% -0.8% 0.9 9,643 2.4
Activities Related to Credit Intermediation 0.3% -2.3% -2.0% 0.6 3,618 2.3
Petroleum and Petroleum Products Merchant Wholesalers 0.9% -2.2% -1.0% 1.0 2,177 1.8
Computer Systems Design and Related Services 5.4% 3.3% 3.7% 0.6 20,743 1.7
Fruit and Vegetable Preserving and Specialty Food Manufacturing 0.9% 0.7% -0.5% 0.9 3,430 1.4
Activities Related to Real Estate 2.3% 1.8% 2.1% 0.8 10,592 0.3
Utility System Construction 0.1% 0.8% -0.1% 0.8 7,475 0.2
Management, Scientific, and Technical Consulting Services 3.8% 3.4% 3.7% 0.5 13,290 0.1

Source: U.S. Bureau of Labor Statistics

Figure 9: Indiana Industries Gaining Ground: Average Annual Growth Rate, 2007 to 2013

Figure 9

Note: Data are sorted by the Indiana Growth Rate Advantage.
Source: U.S. Bureau of Labor Statistics

Table 3 lists industries in which national growth is outpacing Indiana. These include some industries where Indiana has a comparative advantage based on LQ and some where they do not.

Table 3: Industries Where National Growth is Outpacing Indiana, 2013

Industry Average Annual Growth Rates, 2007 to 2013 Indiana Location Quotient Indiana Employment, 2013 Indiana Growth Rate Gap
Indiana Midwest U.S.
Commercial and Industrial Machinery and Equipment Rental and Leasing -6.1% -0.5% 1.3% 0.4 1,208 -7.4
Motion Picture and Video Industries -4.0% -2.1% 0.4% 0.4 3,018 -4.3
Agriculture, Construction, and Mining Machinery Manufacturing -2.1% 0.9% 1.5% 0.5 2,558 -3.6
Oilseed and Grain Farming 5.0% 8.7% 7.9% 3.9 4,460 -3.0
Farm Product Raw Material Merchant Wholesalers -2.4% 1.0% 0.2% 1.5 2,425 -2.6
Bakeries and Tortilla Manufacturing -1.9% -0.3% 0.3% 1.2 7,116 -2.2
Miscellaneous Durable Goods Merchant Wholesalers -1.9% 0.6% 0.2% 1.0 6,329 -2.1
Natural Gas Distribution -1.3% -1.1% 0.6% 0.8 1,827 -1.8
Beer, Wine, and Distilled Alcoholic Beverage Merchant Wholesalers 0.6% 1.8% 2.3% 0.8 3,055 -1.7
Accounting, Tax Preparation, Bookkeeping, and Payroll Services -1.3% -0.8% 0.2% 0.7 13,650 -1.5
Other Professional, Scientific, and Technical Services 0.4% 0.3% 1.3% 0.8 10,706 -0.9
Grocery and Related Product Merchant Wholesalers -0.7% -0.7% 0.2% 0.8 12,774 -0.9
Medical Equipment and Supplies Manufacturing -0.6% 0.5% 0.1% 2.7 17,904 -0.7
Management of Companies and Enterprises 1.6% 2.0% 2.1% 0.7 31,054 -0.5
Agencies, Brokerages, and Other Insurance Related Activities 0.2% 0.9% 0.7% 0.8 17,295 -0.5
Aerospace Product and Parts Manufacturing -0.1% 2.1% 0.4% 0.7 7,080 -0.4
Hog and Pig Farming 1.5% 1.1% 1.8% 2.3 1,525 -0.4

Source: U.S. Bureau of Labor Statistics


The structure of Indiana’s economy is constantly evolving. Often, this evolution occurs slowly, and sometimes an event like the Great Recession triggers abrupt changes. Some key industries in Indiana were certainly hit hard by the downturn, which led to the loss of many high-paying jobs.

Indiana has been adding jobs at a steady clip over the past four-and-a half years, however, and that growth has been surprisingly balanced between higher-wage and lower-wage industries. This could be the product of a natural, but limited, rebound after some employers cut back too deeply during the depths of the recession. But the trend does provide reason for optimism looking ahead. If Indiana can sustain this steady and balanced growth, the state can continue to chip-away at its wide per capita income gap with the U.S., as it has done in recent years, and raise the standard of living for many Hoosiers.


  1. For the purposes of this analysis, the Midwest region includes Illinois, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio and Wisconsin.
  2. “The Low Wage Recovery,” National Employment Law Project, April 2014, www.nelp.org/page/-/Reports/Low-Wage-Recovery-Industry-Employment-Wages-2014-Report.pdf.
  3. The employment data come from the U.S. Bureau of Labor Statistics Census of Employment and Wages program and the hourly wage data come from their Occupational Employment Statistics program.
  4. One caveat in this analysis is that the hourly wage data are for the U.S. only and are not Indiana-specific. An industry that is classified as mid-wage for the U.S., for instance, may actually fit into one of the other classes in Indiana.
  5. This eliminates industries in utilities; construction; retail trade; administrative and waste management services; educational services; health care and social assistance; arts and entertainment; and accommodation and food services.
  6. Location quotient (LQ) is an indicator of industry specialization that compares, in this instance, the share of Indiana employment accounted for by a particular industry to the share of total employment in that same industry nationally. An Indiana industry with an LQ of 1.0 would have a share of total employment identical to the national average. An Indiana industry with an LQ of 1.2 would have a 20 percent greater share of employment than its share nationally, which would indicate a degree of specialization.