Fort Wayne forecast 2022

Rachel Blakeman, J.D.

Director of the Community Research Institute, Purdue University Fort Wayne

Heather L.R. Tierney, Ph.D.

Assistant Professor of Economics, Purdue University Fort Wayne

Our fingers are crossed that this is the last forecast in our lifetime where we need to consider a viral pandemic. Although we have been living this public health and economic crisis for almost two years, its consequences continue to play out in Fort Wayne in new and unexpected ways. This includes shrinking labor force numbers, difficulty filling plentiful open positions, and a widespread desire of workers across the pay scale to balance their professional and personal lives.

For the 2022 outlook, we are using 2020 employment, wages and population data to identify what’s ahead. In short, local data does not show a consistent pattern against the state and nation; sometimes it is more favorable and sometimes it underperforms the comparison groups.

Purdue University Fort Wayne’s unemployment model for 2022 indicates Fort Wayne’s tight labor market will continue into next year, requiring employers to offer more favorable wage and benefits packages to attract needed workers.

Employment and wages

Although the initial pandemic shutdowns were nearly two years ago, data reflecting the pandemic’s economic consequence are still coming out. The U.S. Bureau of Labor Statistics’ average annual wages and job counts via the Quarterly Census of Employment and Wages (QCEW) came out in June. The 2020 personal income statistics (which include data about unemployment payments) from the U.S. Bureau of Economic Analysis release in November, and 2020’s gross domestic product at the local level is set to release in December.

When comparing the 2020 regional private sector employment data from the 11-county northeast Indiana area¹ to a year before, a few key themes emerge, as shown in the Table 1 series:

• Loss of jobs in all 11 counties: The region’s employment declined 5.9% between 2019 and 2020, reflecting a loss of 19,529 jobs. The local loss, as measured by percentage, outpaced Indiana’s 5.6% decline but was less than the 6.7% reduction in the U.S.

• Regional wages declined more than $22.5 million: When comparing the 2020 total annual private sector wages to 2019, the greater Fort Wayne region lost nearly $22.6 million in wage payments. Unlike the loss of jobs, this was uneven across the region. The reduction was seen in Adams, DeKalb, Huntington, Kosciusko, LaGrange, Noble and Steuben counties. Allen, Wabash, Wells and Whitley counties increased. Neither the state nor nation experienced a wage loss. While the multimillion-dollar decline sounds large, the percentage decline between 2019 and 2020 was fractional at only -0.1%. The increases for the state and nation were essentially flat in percentage terms, at 0.6% and 1.3%, respectively.

• Average private sector wages went up across studied geographies: Despite the loss of workers and the decline in total wages, the average wage² went up in all 11 counties, as well as Indiana and the United States. The regional average annual wage increased from $46,028 in 2019 to $48,858 in 2020, a 6.1% increase. Unfortunately for local workers, the state and national averages were above the regional average and had a larger increase from 2019 to 2020. Indiana’s 2020 average wage was $52,210, compared to $49,023 in 2019, reflecting a 6.5% jump. The national average increased 8.5%, going from $59,202 to $64,238.

• Number of establishments increased year-over-year: Like the average wage increase, the number of establishments—think of them as locations, not the number of employers—increased in this same time period at the local, state and national levels. The region and nation’s establishments increased 2.6% and Indiana’s increased 2.5%.

Looking at the wage and employment data in sum, the loss of wages at the county level demonstrates the need for the supplemental unemployment benefits that were enacted at the onset of the public health crisis. Working from the assumption that these payments are infused quickly into the local economy through rent payments, utilities, gasoline, grocery and restaurant purchases, infant and child necessities, and routine household purchases, these payments were spent quickly and kept money flowing through the economy. As noted above, aggregated data about those payments at the local level hasn’t been released at the time of this writing, but we can expect those collective wage losses to be offset by increased government transfer payments.

The bump in the average pay is likely to have occurred from a removal of low-wage workers who had jobs temporarily eliminated or hours scaled back—think movie theater employees, hotel cleaning staff or restaurant servers. The remaining workers were likely to be higher earners before the pandemic’s onset, often able to work from home with minimal disruption to work product. In other words, the 2020 raise may not have been seen in individual paychecks, but simply related to how averages are calculated. With the loss of lower-income and minimum-wage workers, this skewed the average wage upward, giving the false impression that workers’ paychecks increased.

The loss of workers seems to be continuing to play out even today. Employers in the Fort Wayne area are scrambling for workers with varying skill levels: both highly technical positions for manufacturing and health care, as well as relatively low-skill jobs in restaurants, retail or hotels.

The cause of the labor shortage appears to be multifactorial. Workers are retiring ahead of schedule thanks to comfortable retirement account balances, parents—mostly mothers—are sitting out of the workforce to manage school schedules (although that may be declining as schools are able to contain the virus and operate with in-person classes), and workers may switch careers and industries, leaving certain sectors scrambling. For example, the longtime restaurant line cook may have switched to a factory or warehouse job with better hours, higher pay, health insurance and retirement benefits.

Population

On its face, the decennial census numbers don’t look like they belong in an economic outlook, but in an age where many localities are facing population loss—fewer workers, fewer consumers, fewer children being born, and an increasing death rate—population trends are a critical point in understanding the direction of the local economy. After all, today’s population statistics are the future labor trends of the coming economy. The greater Fort Wayne area bucked the national trend of county-level population loss, according to data released from the U.S. Census Bureau’s 2020 census.

Northeast Indiana gained 37,985 people between 2010 and 2020, marking a 5% increase. The highest-performing counties by percentage increase were LaGrange at 8.9% and Allen at 8.5%. Only three counties lost population in the past decade: Noble at -0.2%, Huntington at -1.2% and Wabash at -5.8% (see Table 2).

Furthermore, seven counties exceeded the 2020 population projections from Indiana University’s demographers, with about 7,100 more people living in the 11-county region than projected (see Table 3). Northeast Indiana is proving to be more popular than expected.

The decennial census, unlike the Census Bureau population estimates, does not identify the migration numbers—the people moving in and moving out of a geography, but the overall population increase can serve as a vote of confidence for northeast Indiana.

Labor market outlook

Forecasting unemployment for the Fort Wayne MSA, which includes Allen, Wells and Whitley counties, proved to be a little more challenging this year due to the unemployment rate being in double digits from April 2020 to June 2020.³ Non-seasonally adjusted monthly unemployment rates from January 1990 to August 2021 are used to form the unemployment forecast. These data were obtained from the Indiana Department of Workforce Development.

To handle the outlier issue, a robust least squares model with three-lags of unemployment rates was used to form the forecasts.⁴ Barring any unforeseen shocks to the overall economy, unemployment is expected to range between 4.8% to approximately 4% from September 2021 to December 2022. This model projected a decline from September to November to close out 2021 and start 2022 around 4.4% (see Figure 1).⁵

Figure 1: Fort Wayne MSA unemployment model

Source: Purdue University Fort Wayne, using Indiana Department of Workforce Development data

The unemployment forecast seems to indicate that the tightness that Fort Wayne employers are currently seeing in the labor market should last until the end of 2022. Given the constriction of the present labor market, it is expected that wages will need to increase if employers want to attract and retain workers.

Looking at both the statistical model and real-time observations of the Fort Wayne labor market, the challenges in attracting workers to fill open positions may continue well into 2022. Workers are proving difficult to attract, so employers need to consider worker-friendly policies and procedures to fill open positions. Those incentives will look different across industries and occupations, but they include schedule flexibility, the amount of overtime required, and schedules with consecutive days off, work-from-home options, competitive pay structures and benefits packages, and policies that create favorable work cultures to incentivize workers to come and stay.