Eye on the Pie and Economy and Wages and Regional News

Indiana wages now well below average

May 4, 2009
Last week the U.S. Bureau of Economic Analysis released its estimates of county personal income and all the detail comprising those data.

These data are important because they provide a consistent view over a long period of time. It's easy to focus on the immediate problems of our economy. However, we do ourselves a disservice when we fail to understand that today's problems are part of long-term issues.

Available for each state and county are average wages per job. This is not an all-inclusive number, but it is a fine estimate of the rewards realized by management and labor. Excluded are the earnings of business owners as well as the contributions that employers make to private pension and insurance plans and to government social-insurance programs.

The latest data show that the relative decline of Indiana's economy continues. In 1997, Indiana's average wage per job ranked 26th in the nation. Ten years later, in 2007, Indiana ranked 32nd. Where the average job in the United States paid $100 in 1997, an Indiana job paid $91; the Hoosier job slipped to $84 by 2007 compared to a national $100 average.

Average wages in Indiana grew by 3.2 percent per year between 1997 and 2007, 49th in a nation that saw an average annual increase (not adjusted for inflation) of 3.9 percent. Only Michigan (2.9 percent) had a worse decade. In eight of these 10 years, Indiana continued to grow less rapidly than the nation. Whatever we are doing to reverse the trend does not seem to be working.

While the state trailed the nation in growth of average wages, 10 Indiana counties exceeded the U.S. rate of improvement. First among these was Gibson County (Princeton), where Toyota opened its assembly plant. Gibson advanced from 63rd place in average wages in the state to fifth in the span of the decade, with an average growth rate of 7.1 percent.

Switzerland County moved from 86th to 53rd place, with a 5-percent growth rate, probably as a result of a casino opening. Martin County, home to Crane technology firms, had the third-fastest growth rate, at 4.4 percent, and moved into first place among Indiana counties, with an average wage per job of $54,476. Following closely behind in growth were Owen, Boone and Greene counties.

The five slowest-growing counties grew by less than 2 percent per year; Fayette, Madison, Delaware, Henry and Grant had each been a major manufacturing center.

Many counties saw little change in their rankings within the state. Marion County had the fourth-highest average wage in both 1997 and 2007, with the 18th-fastest growth rate (3.5 percent). Bartholomew County (Columbus) dropped from sixth to eighth place as Allen County (Fort Wayne) moved from 12th to 14th and Lake (Gary-Hammond) slipped from 10th to 11th.

Improvements could be found as St. Joseph (South Bend-Mishawaka) advanced from 24th to 20th place. Next door, Elkhart County (Elkhart-Goshen) moved into 15th place from 17th; Johnson (Franklin-Greenwood) had a nine-place jump from 65th to 56th; neighboring Shelby County eased into 25th place from 26th a decade earlier.

The spread is growing between the county with the highest average wages and the one with the lowest. In 1997, Howard County enjoyed average wages of $35,990, or 117-percent greater than Brown County's low $16,561. In 2007, Martin County reigned in the top spot at $54,476, 143 percent more than Brown County's state low of $22,398. Are these disparities something the state should consider in its economic development programs?

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Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com. >
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