Purdue report: State officials should note possible economic development pitfalls

WEST LAFAYETTE, Ind. — State officials should consider several factors that might hinder Indiana from becoming a major national and global economic entity, according to a new report from Purdue University’s Center for Regional Development.

An unemployment rate of 3.4 percent, along with 20,000 new workers added to the employment force in the past year, provide reasons for optimism. But recent economic data indicate potholes on the road to becoming a larger economic factor nationally and globally.

“The ability of the state to achieve social and economic progress over the long term will rest, in part, on its capacity to produce, retain and attract talent,” said Lionel “Bo” Beaulieu, director of the Purdue Center for Regional Development and the main author of the report. “Nevertheless, ramping up its supply of educated and skilled workers will not be enough. Of equal importance will be the need to accelerate the number of quality jobs that can help stem the outflow of talent to other parts of the U.S. and beyond.”

The report “People and Places: The Nature and Location of Talent in Indiana,” outlines key  challenges that range from educational levels to the type of jobs offered in certain areas of the state, especially in Indiana’s nonmetropolitan areas.

The goal of the report is to give state economic development officials additional insights and ideas as they strive to design plans to improve the long-term vitality of the state, from its major cities to small cities and towns.

“The state has become a magnet for innovation in a variety of economic sectors,” said Steve Abel, associate provost for engagement.  “One of the central messages emerging from this report is a need for state and local leaders to build on and invest in the economic assets of both metropolitan and nonmetropolitan areas.” 

A method called spatial harmonization was used to examine data going back to 1970. Every county in Indiana is labeled in one of three ways. Counties with large areas, such as Indianapolis, are labeled metropolitan; smaller counties, with cities of 10,000 to just under 50,000, such as Wabash, are labeled micropolitan; and rural, less-populated areas are designated noncore counties, such as Rockville in Parke County. The designation each county had in 2010 was left intact when examining data points going back to 1970.

“By undertaking a harmonization process, we are able to undertake more accurate assessments of changes that may have occurred over many decades in the educational and occupational profile of metropolitan, micropolitan and noncore counties in the state,” Beaulieu said.

Challenges outlined in the report include:

• Indiana has failed to keep pace with other U.S. states in the proportion of adults with a bachelor’s degree or higher.

• While the percentage of adults with “some college/associate’s degree” has expanded at a faster pace in Indiana than the nation, the reality is that only 8.5 percent of these individuals have completed an associate’s degree. In order to address the growing need for middle-skilled workers by the state’s growing manufacturing and related industries, having adults with associates and technical degrees will be critical, Beaulieu said.

• About 110,000 jobs in Indiana are connected to the 68 occupations defined by the National Science Foundation as STEM-related jobs. While increasing the number of people with STEM-related degrees is a worthy goal, retaining STEM graduates will be dependent upon the state’s capacity to accelerate the number of STEM-related jobs available to these graduates.

• Employers will have to address gender-based salary disparities in order to attract women employees. Men with bachelor’s degrees had median earnings that were 35 percent higher than women with the same level of education. And the disparities in pay occur regardless of education level, as men with graduate or professional degrees had a median salary 28 percent higher than women.

• About 15 percent of STEM jobs and 16 percent of knowledge/creative positions are located in the nonmetropolitan areas of the state, facts that often go unnoticed by economic development leaders. State officials should consider pursuing efforts to expand economic development investments in nonmetropolitan areas, but the long-term prospects of retaining these types of higher-skilled jobs will necessitate expansion in the number of adult workers with formal associates and baccalaureate degrees, Beaulieu said.

A copy of the full report, “People and Places: The Nature and Location of Talent in Indiana” can be found at https://www.pcrd.purdue.edu/files/media/004-People-and-Places.pdf.

Media contact: Brian Peloza, 765-496-9711, bpeloza@purdue.edu 

Sources: Lionel Beaulieu, 765-494-4277, ljb@purdue.edu

Steve Abel, 765-494-2744,  abels@purdue.edu