The county is growing faster than the state and country, but rising labor costs and shortages are making it hard for local businesses to keep up.

Leaders from some of the county’s largest industries, along with a business professor from a south side university, discussed the county’s economic outlook during a chamber luncheon Thursday in Franklin.

The Johnson County Economic Outlook Luncheon was a new event from Aspire Johnson County which took place at the Garment Factory in Franklin. Local business leaders discussed how the coronavirus pandemic impacted their industries following a presentation about the county’s economy by Matthew Will, a business professor at the University of Indianapolis.

County is growing in more ways than one

Johnson County is outpacing Indiana and the United States in terms of population growth. The unemployment rate is also lower than both the state and national rates. That’s good news, Will said.

The county’s population grew by nearly 16% in the last decade, according to U.S. Census data. The county’s unemployment rate was 2.5% in September, while the state and national rates were 3.5% and 4.6% respectively. In August, the county’s rate was also lower, according to data from the Indiana Department of Workforce Development.

Among the county’s largest industries for growth over the last four years are transportation, warehouse, construction, administration and waste services, all of which are connected to supporting transportation industries. It is a national trend, but it is even higher in Johnson County, Will said.

“(The county is) in a sweet spot, and in my opinion, you need to leverage it. You need to play your strengths,” he said.

The wealthiest people in the county are making less than they did three years ago, while on the flip side, the lowest income residents are making more. That shift has caused higher-income jobs to have less wage growth compared to lower-income jobs, which is not necessarily a bad thing, Will said.

The county’s cost of living is roughly 5-6% lower than the national average, making it cheaper for people to live here compared to other places in the United States, he said.

Will offered recommendations about the future of the county’s economy. Officials should work to create a corridor that connects Interstate 65 to Interstate 69 and to Interstate 70 — bypassing Indianapolis altogether, he said.

He also recommended officials continue to focus on the quality of life in Johnson County, and brag about it. Officials should work to keep the cost of living low, and to maintain high-quality schools and safety, he said.

Business leaders discuss pandemic challenges

During the second half of the luncheon, Will and local business leaders spoke about the pandemic’s impact during a panel moderated by John Krull, director of the Pulliam School of Journalism at Franklin College.

The pandemic put a squeeze on many hospital systems, including Johnson Memorial Health. Last year was one of the worst years for health care, said Dr. David Dunkle, president and CEO of the local health network.

A lot of the services the county hospital provides do not make much profit. One of the few areas that does is out-patient surgery, which was shut down at times throughout the pandemic, Dunkle said.

“It was a great strain on us; 2020 was a rough year and the hospital still has not recovered,” he said.

The pandemic was also devastating to a lot of other businesses, including the retail industry. The silver lining, though, is the pandemic accelerated the growth of other concepts and highlighted the importance of drive-thrus and carry-out services at restaurants. Drive-thrus were an essential way to keep many businesses open during stay-at-home orders, said Jacque Haynes, a senior associate at Midland Atlantic properties, an Indianapolis-based real estate developer.

Retail sales remained strong, but how customers buy products changed. Mall, particularly, were hit hard by the pandemic. But among the counties surrounding Indianapolis, Johnson County has the lowest vacancy rate for mall retail spaces, Haynes said.

The manufacturing industry, like other industries in the pandemic-economy, encountered labor problems. For KYB Americas, they put an increased focus on expanding their labor market, said Lance Clark, a vice president and general counsel at KYB.

Rising labor costs, shortages to stick around

Krull asked business leaders about the tremendous change the country is facing, and what changes will remain permanent.

It is too early to tell, Will said.

In the retail industry, businesses are changing their footprints amid increasing sales. At Greenwood Park Mall, sales are up 20% from 2018, Haynes said.

“Are we coming out of (the pandemic)? Yes. Are we coming out of it differently? Absolutely,” she said.

In the health care industry, the increased use of telehealth or virtual health is likely to stick around. Health care providers have had the ability to offer telehealth services for a while, but insurers refused to cover it. It took a pandemic to change that, and by 2040, about 60% of health care will be done from home, Dunkle predicted.

Rising labor costs are also creating issues for businesses, but that’s not new. The difficult situation began before the pandemic, Clark said.

Employers need to tap into other sources of employment, and there needs to be a broader discussion about how employers attract potential employees. Schools continue to push going to college, which has caused some people to not consider factory work, he said.

The labor shortage has impacted everyone, and people should be prepared to be more patient when they go out to businesses such as restaurants, Haynes said.

The shortage isn’t expect to go away any time soon, so employers should also be prepared. Businesses will need to be more innovative to succeed, Will said.

By the numbers
Here’s a look at some economic statistics about Johnson County and the Indianapolis metropolitan area.
Population:
Johnson County – 2020: 161,765
Johnson County – 2010: 139,856
Percent change: 15.7% increase

Indianapolis-Carmel-Anderson Metropolitan Statiscal Area – 2020: 2,111,040
Indianapolis-Carmel-Anderson MSA – 2010: 1,888,078
Percent Change: 11.8% increase

Unemployment rate:
Johnson County – Aug. 2019: 2.6%
Johnson County – Aug. 2020: 5.7%
Johnson County – Aug. 2021: 2.9%

Indianapolis-Carmel-Anderson MSA – Aug. 2019: 2.9%
Indianapolis-Carmel-Anderson MSA – Aug. 2020: 7.3%
Indianapolis-Carmel-Anderson MSA – Aug. 2021: 3.8%

Johnson County employment growth by sector from 2018-2020:
Transportation and construction: 2,251 new positions
Construction: 531 new positions
Administrative and waste services: 156 new positions

Johnson County employment loss by sector from 2018-2020:
Retail trade: 747 positions lost
Accommodation and food service: 712 positions lost
Manufacturing: 361 positions lost

Sources: U.S. Census Bureau; STATS Indiana; Bureau of Labor Statistics; Indiana Department of Workforce Development