MICHIANA BUSINESS. The Bureau of Business and Economic Research Presents: Page 1

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1 The Bureau of Business and Economic Research Presents: MICHIANA BUSINESS 1 st Quarter 2016 Judd Leighton School of Business & Economics Indiana University South Bend Page 1 INSIDE THIS ISSUE Introduction 1 st Quarter 2016 Summary Summary of Regional Economic Conditions in the 1 st Quarter of 2016 Regional Economic Indicators 3d11 st Quarter 2016 Summary This issue presents an analysis of economic conditions in the South Bend Mishawaka and Elkhart Goshen metropolitan statistical areas (MSAs) as of March 2015, the latest month during the quarter for which all data are available for the indicators shown in the tables and graphs on pages 3-6. These indicators are for the most part, seasonally adjusted index numbers that permit a comparison of conditions in the two metropolitan areas. The data are collected and processed by the Judd Leighton School of Business and Economics Bureau of Business and Economic Research. 1. SUMMARY OF REGIONAL ECONOMIC CONDITIONS IN THE FIRST QUARTER OF 2016 U.S. Bureau of Labor Statistics data1 during the first quarter of 2016 showed that the labor force expanded slightly by 72 people in the South Bend Mishawaka MSA yet continued to shrink by 848 people in the Elkhart Goshen MSA. Meanwhile, payroll employment data showed 1,015 and 1,331 jobs lost in the South Bend Mishawaka and Elkhart Goshen metropolitan areas respectively. The number of unemployed increased by 1,087 and 484 people in the South Bend Mishawaka and Elkhart Goshen metropolitan areas respectively. Consequently, under the above labor market dynamics the jobless rate in the South Bend Mishawaka metropolitan area went up 0.87 percentage point to a quarterly average of 5.33 percent. Similarly, the unemployment rate climbed 0.53 percentage point in the Elkhart Goshen metropolitan area in the first quarter of 2016 to the quarterly average of 4.13 percent. It seemed that the continuous decline in the unemployment rate in both metropolitan areas was halted at the end of The employment data by industry 2 conveyed dismal news in the South Bend Mishawaka MSA too. Overall, total nonfarm employment in this region lost 4300 jobs in the first quarter of 2016, reflecting 3.00 percent job loss from the fourth quarter of No industry observed job additions. Instead, job losses were witnessed in the following industries: percent in natural resources, mining and construction (-667 jobs); percent in manufacturing (-867 jobs); percent in trade, transportation and utilities (-567 jobs); percent in financial activities (-67 jobs); percent in professional and business services (-367 jobs);

2 -3.14 percent in private educational and health services (-1,200 jobs); percent in leisure and hospitality (- 400 jobs); percent in other services (-67 jobs); and percent in government (- jobs). The employment in the information sector remained constant. Similar gloomy picture was seen in the employment by industries data in the Elkhart Goshen MSA in the first quarter of Total nonfarm employment in this region cut 4,667 jobs in the first three months of 2016, 3.61 percent decrease from the last quarter. losses were observed in the following sectors: percent in natural resources, mining and construction (-433 jobs); percent in manufacturing (-3,300 jobs); percent in trade, transportation and utilities (-200 jobs); percent in financial activities (-33 jobs); percent in professional and business services (-233 jobs); percent in leisure and hospitality (-333 jobs); and percent in government (-167 jobs). Private educational and health services experienced small job growth of 0.28 percent (+33 jobs). Information and other services had no job change. Page 2 2. REGIONAL ECONOMIC INDICATORS As the table below shows, the monthly average total non-farm employment index in South Bend Mishawaka lost 1.74 points from the fourth quarter of 2015 to the first quarter of In particular, the manufacturing employment index of the area lost 3.63 points whereas the non-manufacturing employment index was down 3.95 points this quarter. The index of industrial electricity usage in South Bend-Mishawaka decreased 3.67 points in the first quarter of The housing sector in the South Bend- Mishawaka MSA was still stagnant in the first quarter of The average index of new building permits of single family housing was 27.07, down by 6.40 points from the fourth quarter of The average total value of these permits dropped even more by points to The average seasonally adjusted index of the average value of new permits went down 1.83 points to In addition, data from Indiana Association of Realtors showed that the number of existing single family homes sold increased 28.2 percent but the median sales price declined 14.2 percent in March 2016 compared to March By the end of the first quarter of 2016, the South Bend-Mishawaka MSA s monthly supply of inventories declined 32.2 percent. The area s year-over-year inventory of homes for sale fell 24.9 percent in the first quarter of The average seasonally adjusted index of monthly manufacturing employment decreased 3.45 points in the Elkhart Goshen metro area during the first quarter of Specifically, the monthly average nonfarm employment index in the Elkhart Goshen metro area dropped 6.45 points and the monthly average non-manufacturing employment index went down 0.89 point in the same quarter. Meanwhile, the average index of electricity usage ticked up 0.75 point to a quarterly average of In summary, the strong growth of the labor market in the South Bend-Mishawaka MSA in the fourth quarter 2015 did not carry over to the first quarter of Payroll jobs were cut that added to the unemployment pool. Meanwhile, a small number of workers who previously were out of labor force became actively looking for jobs. The labor market dynamics resulted in a small rise in the jobless rate in the first quarter of By the end of the first quarter of 2016, the unemployment rate in the South Bend-Mishawaka MSA was 5.5 percent. Moderate job losses were observed in both manufacturing and nonmanufacturing sectors. The further lower index of electricity usage in the first quarter of 2016 also implied weaker production activities. Attributed to the cold weather, fewer numbers of new building permits were issued in the first quarter of 2016 and the total value of building permits went down too resulting in the lower average value of a new building permit. The

3 supply of existing homes in St. Joseph housing market continued to decline but the sales of existing homes went up in the first quarter of The labor market in the Elkhart-Goshen MSA backslid in the first quarter of The labor force shrank by 848 people and the payroll employment lost 1,331 jobs, offsetting the growth in the last quarter of The unemployment rate rose to an average of 4.13 percent. Job losses occurred in both manufacturing and nonmanufacturing sectors as well. 4th Quarter 2015 October November December Monthly Average Total Non-farm Manufacturing South Bend - Mishawaka Non-manufacturing Unemployment Rate Electricity Usage Single Family Housing Number of New Permits Total Value of New Permits Average Value of a New Permits Total Non-farm Manufacturing Non-manufacturing Elkhart -Goshen Unemployment Rate Electricity Usage Note: All figures except unemployment rates are seasonally adjusted indexes with the base year of 2002 = using BLS seasonal adjustment program. Page 3

4 Index Index in South Bend Metropolitan Area Total Non-Farm Mfg Non-Mfg in Elkhart-Goshen Metropolitan Area Total Non-Farm Mfg Non-Mfg Page 4

5 Index Percentage Unemployment Rate South Bend Elkhart-Goshen Industrial Electricity Usage South Bend Elkhart-Goshen Page 5

6 Index Single-Family Housing in St. Joseph County Number of New Permits Total Value of New Permits Average Value of New Permits Page 6 3. STUDENT RESEARCH SPOTLIGHT The Motherhood Penalty in Generation X: An Early Verification of Theory and Investigation of the Work Effort Hypothesis Susan Long, an Economics major student, shares her research findings on The Motherhood Penalty in Generation X: An Early Verification of Theory and Investigation of the Work Effort Hypothesis. This study was undertaken to fulfill the requirements in Econ-E490: Advanced Undergraduate Seminar in Economics a capstone course for the Bachelor of Science degree in Economics. It is well documented that women suffer a wage penalty for bearing children. Over the last four decades, researchers have been decomposing the motherhood penalty to investigate the possible factors which could contribute to mothers earning lower wages than their non-mother counterparts. While large portions of the penalty have been explained, there is still a small remainder which is a mystery. A full decomposition of the penalty is critical to moving the United States toward more equitably designed social and institutional policies, which halt the systematic penalization of women for providing a necessary function of continuing human existence. This paper is the first to test well-established hypotheses like human capital accumulation, part-time work penalties, and unobserved heterogeneity on the new data set. Using data from the National Longitudinal Survey of Young Women over the period , the findings are consistent with previous research and provide early insight into the lives and possible futures for working mothers. The women examined in the sample are still very young on

7 average with only 50% being high school graduates and about 15% holding a college degree. Roughly 33% of the women of the cohort are mothers, and half of them have an infant in the home. High school graduates are mothers to over 60% of the children in every age category. Their human capital differences to non-mothers make up about 70% of their wage penalty. About 63% work part-time which nets a 3% penalty to their wages. Unobserved heterogeneity accounts for almost the entire remaining penalty after controlling for human capital and part-time employment, leaving just a 4% penalty for two or more children. REFERENCES (1): Labor Force Estimates and Unemployment Rates (2) by industries: Monthly Current Statistics (CES) (3) Indiana Housing Market Update Michiana Bureau of Business and Economic Research BUREAU OF BUSINESS AND ECONOMIC RESEARCH STAFF: Dr. Hong Zhuang, Director Michiana Business is published quarterly by the Bureau of Business and Economic Research at Indiana University South Bend under the generous sponsorship of 1st Source Bank Subscriptions are available at no charge. For information, contact the BBER at Mishawaka Ave. P.O. Box 1700 South Bend, Indiana Page 7

MICHIANA BUSINESS. The Bureau of Business and Economic Research Presents: Page 1

MICHIANA BUSINESS. The Bureau of Business and Economic Research Presents: Page 1 The Bureau of Business and Economic Research Presents: MICHIANA BUSINESS 1 st Quarter 2017 Judd Leighton School of Business & Economics Indiana University South Bend Page 1 INSIDE THIS ISSUE Introduction