If You Build It, They Will Come: Indiana's Labor Response to Changing Employment Opportunities
The title of this article comes from the 1989 movie “Field of Dreams” in which a mythical voice reassures the movie’s hero that his quest to build a baseball field in the middle of a cornfield is a wise decision. The Research and Analysis group of the Indiana Department of Workforce Development (DWD) is often reminded of this phrase when economic development entities working with various businesses on potential deals across the state request data on potential applicant pools specific to certain locations.
Obtaining applicant pools is a pertinent part of a company’s due diligence and DWD supplies these data frequently. It is worth noting, however, that the Indiana labor market has historically shown itself to be dynamic and adaptable when it comes to crossing from one occupation to another.
One measure of a labor market’s responsiveness is the level of churn. Churn is the rate at which employees move around the labor market and between positions. While excessively high churn can be problematic, a healthy level of churn is beneficial—signaling advanced opportunities for workers. A healthy labor market facilitates workers’ skill enhancements and the freedom to apply these skills in the workplace. As the needs of businesses rapidly change, a rigid workforce would be counterproductive to business interests. A sampling of Indiana wage records suggests a quarterly churn rate of approximately 8 percent, or approximately one-third of the workforce in Indiana churning every year (see Table 1).
Table 1: Workplace Churn, 2005 to 2010
|Workers in 2nd Quarter||2,838,957||2,954,654||2,963,175||2,949,462||2,769,483||2,838,957|
|Present in 2nd and 3rd Quarters||2,598,209||2,730,803||2,702,640||2,725,854||2,571,749||2,598,209|
|Present in 2nd but Not 3rd Quarter||240,748||223,851||260,535||223,608||197,734||240,748|
|Quarterly Churn Rate||8.5%||7.6%||8.8%||7.6%||7.1%||8.5%|
Note: Second and third quarter data were examined to minimize the impact of seasonal variations in employment.
Source: Indiana Department of Workforce Development, using Indiana Workforce Intelligence System data
A second measure of a labor market’s responsiveness is mobility. To assess the ability and willingness of Indiana employees to move, U.S. Census Bureau single-family home construction permit data for Indiana counties for 1999 to 2011 were analyzed to ascertain any correlation between housing starts and employment. (View methodology and regression results.)
The results suggest a positive correlation between county employment and the issuing of housing permits. The impact is both immediate and maintains a lasting impact over several years. The lingering impact of employment provides some evidence for the direction of causality. It appears that employment drives housing starts and not vice versa.
The Indiana labor market has shown itself to be responsive to the needs of the marketplace. In converting a cornfield into a factory, concerns over the availability of a successful workforce are likely overstated. For a position with comparable wages for a required skill, the Indiana workforce is shown to be dynamic in accommodating and filling these business needs. Just as Shoeless Joe Jackson came to the cornfield in the movie, if you build a factory, the workers will come.