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

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Managing Editor, Brittany L. Hotchkiss

Lafayette forecast 2021

Author photo

Community Development Regional Extension Educator, Purdue University

The Lafayette Metropolitan Statistical Area (MSA) continues to be viewed as a booming area given its population growth and strong economic performance. The introduction of a pandemic in 2020 certainly altered its economic trajectory, and the region will feel the effects for many years. Data available at the time of this writing does shed some light on the level of resiliency found in the Lafayette MSA during 2020 and provides hope for an optimistic rebound in 2021.

The Lafayette MSA (defined in this article as Tippecanoe, Benton and Carroll counties)1 has experienced an 11.9% population growth between 2009 and 2019. In 2009, the MSA passed the 200,000 population threshold; and in 2019, the city of West Lafayette broke the 50,000 population benchmark.2 The estimated 2020 MSA population stands at 226,730 residents. The MSA’s strong growth stems from the diverse economy in the Lafayette/West Lafayette area and the economic activity associated with Purdue University. This is especially apparent as the smaller surrounding counties continue to see declining population numbers.

Since 2000, the MSA has expanded by 47,800 residents (26.7%) with nearly 2,400 new residents per year. The Indiana University Center for Econometric Model Research (CEMR) projects a 0.9% growth in the region in 2021 (+2,000 residents), pushing the total population count to 228,723 individuals (see Figure 1).

Figure 1: Annual Lafayette MSA population

Line graph from 2009 to 2023 showing population increasing steadily.

Note: Data for 2020 through 2023 are projections.
Source: U.S. Census Bureau and Indiana University Center for Econometric Model Research


In February 2020, the Lafayette MSA labor market had an unemployment rate of 2.8% and 116,652 individuals employed within the region. The MSA was on par with the projections for the year. Then COVID-19 happened. April 2020 showed the sharp contraction due to nonessential work shutdowns throughout the nation in March, with nearly 10,000 workers added to local unemployment rolls.

The Lafayette MSA consistently had lower unemployment rates between April and September (the most recent data at the time of this writing) than the state and nation (see Table 1). This performance reflects the quantity of essential workers in the MSA, as well as the ability of employers to pivot and allow workers to work remotely or safely in-person. As restrictions eased throughout the summer and early fall, employment numbers increased, leaving nearly 5,600 individuals looking for work as of September 2020.

Table 1: Labor force and unemployment for the Lafayette MSA

Year Month Labor force Employment Unemployed Lafayette MSA unemployment rate Indiana rate U.S. rate
2019 August  110,961  107,392  3,569  3.2  3.4  3.8
September  113,589  110,850  2,739  2.4  2.8  3.3
October  115,869  112,718  3,151  2.7  3.0  3.3
November  116,509  113,330  3,179  2.7  3.1  3.3
December  116,335  113,510  2,825  2.4  3.0  3.4
Annual  114,006  110,648  3,358  2.9  3.3  3.7
2020 January  116,292  113,638  3,654  3.1  3.6  4.0
February  120,058  116,652  3,406  2.8  3.4  3.8
March  114,766  111,569  3,197  2.8  3.2  4.5
April  102,225  89,174  13,051  12.8  17.0  14.4
May  107,767  95,178  12,589  11.7  11.9  13.0
June  110,438  100,008  10,430  9.4  11.1  11.2
July  107,214  99,588  7,626  7.1  8.0  10.5
August  106,757  100,320  6,437  6.0  6.5  8.5
September*  109,945  104,387  5,558  5.1  5.8  7.7

 *Preliminary data
Source: U.S. Bureau of Labor Statistics

It is worth noting that the number of individuals in the labor force dropped by 10,100 from its February peak to September 2020. Individuals may have dropped out of the labor force for personal or professional reasons associated with the pandemic. For 2021, the MSA will continue to rebound, with dropping unemployment rates as those seeking employment find it. As job seekers find employment, more individuals will likely enter the labor force, seeking similar opportunities. This ebb and flow of supply/demand of workers will likely cause the unemployment rate to stay within the 4-5% range. Increased wages would certainly play a factor in enticing individuals back into the workforce, especially as employers return to or exceed their pre-pandemic production levels.

Table 2 looks specifically at regional employment between 2019 and 2020 in the Lafayette MSA. In the first nine months of 2020, the MSA experienced a 5.8% drop in employment, or nearly 6,300 jobs. The losses came from all sectors, with the strongest contraction in the leisure and hospitality sector (-18.6% or 1,878 jobs). The service-providing industries comprised 78.2% of all the nonfarm and government employment in 2020. It also had the largest year-over-year drop in employment due to the pandemic (-4,844 jobs, or -5.7%). The goods-producing industry sector lost 1,444 jobs—mostly in manufacturing, accounting for a 6.1% decline since 2019.

Table 2: Lafayette MSA employment

Industry 2020* Change since 2019 Percent change, 2019-2020
Total nonfarm 101,711 -6,289 -5.8%
Total private 73,600 -5,100 -6.5%
Goods-producing 22,156 -1,444 -6.1%
Manufacturing 18,533 -1,367 -6.9%
Mining, logging and construction 3,622 -178 -4.7%
Service-providing 79,556 -4,844 -5.7%
Private educational and health services 13,078 -122 -0.9%
Trade, transportation and utilities 13,956 -744 -5.1%
Leisure and hospitality 8,222 -1,878 -18.6%
Professional and business services 7,489 -411 -5.2%
Financial activities 3,344 -56 -1.6%
Information 733 -67 -8.3%
Other services 4,622 -378 -7.6%
Government 28,111 -1,189 -4.1%

*January through September data annualized for 2020. September data are preliminary.
Source: U.S. Bureau of Labor Statistics

The CEMR forecasts an employment drop of 5.8%, or 7,539 jobs in the Lafayette MSA for 2020, but estimates recouping 6,663 of those jobs in 2021. Most of the job growth will likely be in the service-providing sectors as they had the strongest contraction due to the pandemic. As the economy recovers and individuals reenter the workforce, the goods-producing sector (manufacturing and construction) will likely also grow.

Between the first quarters of 2019 and 2020, average weekly wages increased by 2.2% within the Lafayette MSA. This growth was less than anticipated, but expected due to the very tight labor market and high demand for workers. The administrative, support, waste management and remediation sector lands in the bottom quantile of average weekly wages, but had the largest average weekly wage increase at 9.4%, as seen in Table 3 (however, note that it also had the largest decline in jobs). As the economy continues to expand, wage increases may vary based on the industry demand relative to workers willing to reenter the workforce. Therefore, it is anticipated that a small wage increase of around 1% may occur in 2021.

Table 3: Average weekly wages in the Lafayette MSA

Industry Average weekly wage, 2020 Q1 Change in average weekly wage since 2019 Q1 Change in jobs since 2019 Q1
Total $963 2.2% -0.5%
Utilities $2,189 n/a n/a
Management of companies and enterprises $1,521 -2.3% -0.5%
Manufacturing $1,407 -2.8% -0.8%
Finance and insurance $1,368 -0.8% -1.7%
Professional, scientific and technical services $1,279 -0.7% 3.0%
Educational services $1,235 4.9% -1.9%
Wholesale trade $1,133 0.8% -1.9%
Mining $1,132 n/a n/a
Construction $1,009 1.4% 8.4%
Public administration $919 5.5% -3.0%
Health care and social services $894 6.4% 2.3%
Transportation and warehousing $874 0.9% 4.2%
Agriculture, forestry, fishing and hunting $823 8.7% 5.3%
Real estate and rental and leasing $820 4.2% 1.1%
Information $808 3.7% -2.3%
Other services (except public administration) $693 6.3% -0.7%
Administrative, support, waste management and remediation $569 9.4% -16.1%
Retail trade $531 3.7% -3.6%
Accommodation and food services $317 2.3% 0.9%
Arts, entertainment and recreation $270 1.1% 22.1%

Note: Data for mining and utilities were nondisclosable.
Source: STATS Indiana, using Quarterly Census of Employment and Wages data

The Lafayette MSA 2018 per capita personal income (PCPI) was $39,969, a 6.5% growth from 2017. The region lags behind the nation’s PCPI of $55,595, due to a different occupational mix and lower pay scales at the highest-earning tiers. Additionally, the greater Lafayette area is a college town; thus, it has a large number of people generating minimal amounts of income—which would drive down the PCPI figure. The Lafayette MSA’s PCPI is 71.9% of the national figure, falling short by $15,626. Compared to statewide figures, the MSA lags Indiana by $8,700 in its PCPI. Despite these gaps between national and state figures, the region’s PCPI has grown by 28.4% since 2010. The 2019 through 2023 projection for the MSA’s income shows a 3.9% annual growth.


The real estate market in the Lafayette MSA had drops in three main categories: fewer listings (-6.3%), quantity of closed sales (-6.4%) and inventory of homes for sale (-59.6%), as shown in Table 4. All three counties in the Lafayette MSA had higher median sale prices than 2019. While the numbers are different, the housing story is the same within the MSA. The inventory of homes has declined due to fewer listings, and houses that are listed are selling at higher prices. As predicted, the Lafayette MSA’s housing market keeps tightening and prices are being pushed upward due to lack of supply of homes.

Table 4: Lafayette MSA residential real estate sales

Lafayette MSA Benton County Carroll County Tippecanoe County
2019 2020 Change 2019 2020 Change 2019 2020 Change 2019 2020 Change
New listings 2,432  2,279 -6.3% 79 73 -7.6% 172 133 -22.7% 2,181 2,073 -5.0%
Closed sales 2,020 1,891 -6.4% 60 69 15.0% 155 102 -34.2% 1,805 1,720 -4.7%
Median sale price n/a n/a n/a $92,750 $117,200 26.4% $127,000 $131,750 3.7% $183,000 $193,200 5.6%
Months supply of inventory n/a n/a n/a 4.2 2.5 -40.5% 4.9 1.5 -69.4% 2.4 1 -58.3%
Inventory of homes for sale 562 227 -59.6% 29 18 -37.9% 81 18 -77.8% 452 191 -57.7%

Note: Data reflect January to September for both years. Months supply of inventory and inventory of homes for sale are September values.
Source: Indiana Association of Realtors and Realtor.com Economic Research

Nationally, the housing market continues to see rising prices, which is causing some concern about pricing out potential buyers. Millennials are driving much of the purchasing of new homes and low interest rates are certainly helping create a sellers’ market. Residential construction builders (of both single-family and multifamily units) are seeing high demand for new construction, but facing challenges with increasing costs (a sharp uptick in lumber prices) and shortages of buildable lots and skilled labor.

The Lafayette MSA is experiencing several of the national trends and is expected to see little change for 2021. Housing inventory across all three counties will remain tight, likely pushing up median sale prices, reducing the amount of time existing homes are on the market and likely seeing fewer listings and closed sales due to the limited houses to sell/buy.

Given the dwindling housing supply, one would expect to see more housing permits issued. In 2019, the MSA had 1,337 permits issued, adding to the 1,818 permits issued the year prior (see Figure 2). Over 60% of the permits were for large housing units (5-or-more family units), reflecting the flurry of apartment and condominium housing units being built on the Purdue campus and within the greater Lafayette area. Between 2014 and 2019, the MSA has seen nearly 6,400 permits issued to build single-family homes and roughly 3,100 permits for the 5-or-more family units. As of September 2020, 961 housing permits have been issued with 71% for 5-or-more family units. Given the strong demand for housing stock, housing permit issuance should remain brisk. However, consideration must be made toward the state of the economy and the impact of higher lumber prices on individuals’ ability to afford building a new home.

Figure 2: Lafayette MSA Residential Building Permits

Line graph from 1990 to 2020 showing change in total units permitted over time.

Note: 2020 reflects year-to-date figures through September 2020 for the MSA.
Source: STATS Indiana, using U.S. Census Bureau data


In 2020, the Lafayette MSA was poised to remain in full employment status—setting up a situation where wage increases would drive new entrants to the labor force. Investments were being made that pointed to sustained growth. Instead, a pandemic acted as a wrecking ball on those well-laid plans. The region saw a rapid spike in unemployment with 10,000 newly unemployed on the rolls. Through it all, the region has been fairly resilient, thanks to the diversity in job type, essential status, and the ability of employers to shift to remote work or develop other safe working environments. Looking forward to 2021, it is anticipated that the MSA will continue to rebound, and individuals will reenter the labor market when the perceived risk level is low and wages are favorable. Increasing the quantity of individuals in the labor force will take time and an economy eager to grow.


  1. Warren County was added to the Lafayette MSA in the 2018 metro delineations. However, federal databases still mostly report based on the older delineation.
  2. U.S. Census Bureau, “Southern and western regions experienced rapid growth this decade,” May 21, 2020, www.census.gov/newsroom/press-releases/2020/south-west-fastest-growing.html