IBJOpinion

WILLIAMS: Indiana must overcome wage gap

Brian Williams
January 8, 2011
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viewpoint-williams-brianDuring his last campaign, Gov. Mitch Daniels pledged to increase Indiana’s per-capita income. His pledge was consistent with public-private efforts to attract and develop high-wage jobs in technology and the life sciences.

Unfortunately, despite the governor’s pledge, the dollars spent by public-private entities and the recession, Indiana’s per-capita income has not risen. When per-capita income is evaluated in the context of the city’s and state’s ability to remain competitive, it is clear we must sharpen our focus.

Income and sales taxes provide roughly 75 percent of state government revenue, which funds education, infrastructure, Medicaid and other essential services.

Indiana pays lower hourly wages for 505 of the 657 occupations surveyed by the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics. In total, Hoosier incomes are about 85 percent of the U.S. average, but the cost of living in Indiana is about 92 percent of the U.S. average. This deficit is a contributing factor to the “brain drain.”

Because technology-driven occupations are fewer in Indiana and may pay less than the U.S. average, our efforts to attract these jobs at wages above Indiana’s current averages, but below national averages, do not help the state cross the insidious gulf between Indiana’s per-capita income and the national average. While any new Indiana business that pays its employees more than the current statewide average raises Hoosier incomes, it doesn’t help unless it pays more than the national average. The widening gulf between Indiana and the nation threatens our ability to fund schools, parks, libraries and infrastructure at nationally competitive rates.

Only 81 occupations included in the survey pay more in Indiana than anywhere else in the country, and 34 of those 81 are in manufacturing production, which includes automotive parts, medical devices or plastics. Typically, manufacturing facilities require significant capital investments, thereby benefiting the state and local community—high-wage jobs that generate proportionate sales and income taxes for the state and sophisticated facilities that generate property taxes for the local community. Property taxes provide the majority of local government funding for libraries: one institution we rely on to produce citizens, qualified workers, entrepreneurs and civic leaders.

If Indiana is to cross the per-capita income divide, we should pursue an industrial policy that rebuilds Indiana’s manufacturing base. Above-average wages reflect Indiana’s skills and capabilities in manufacturing.

Despite national policies that may facilitate the transfer of manufacturing capability to low-cost environs, Indiana can look to Oklahoma for a model on how to rebuild its manufacturing base. Oklahoma’s effort to build and create high-wage manufacturing jobs has created 400,000 jobs since 1993, nearly double the number of manufacturing jobs Indiana has lost since then.

Recently, Oklahoma tightened its focus by providing greater incentives to companies that provide jobs with an average annual salary of at least $94,000: nearly three times Indiana’s average wage and almost double the national average.

An aggressive industrial policy focused on high-wage production jobs provides a compound benefit to Indiana. It helps Indiana fund elementary schools, state universities and services to the elderly, infirmed and handicapped. Because Indiana has a flat income tax and one of the highest sales taxes in the country, we must recruit and develop more of these jobs.

An industrial policy also helps local communities. Without enhancing the tax base, local governments will find it difficult to fund libraries, police and trash services under property tax caps. We should not abandon efforts to create technology and life sciences jobs; however, they should be a secondary objective. In Indiana, we are really good at making things—and that is the future of our economy and way of life.•

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Williams is an Indianapolis-based entrepreneur and businessman, who is active in many community organizations.

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  • And the union
    And just to add: Daniels and his Congress are working against Unions, which will result in ever further decline in both wages as well as working conditions.
  • Regression
    So Indiana has a flat tax and high sales tax, both of which contribute to regressive taxation. And with all the talk about tax-abatements to corporations for a handful of high-income jobs ($94k wage is 2x national average), it just leads to further redistribution of wealth from the poor to the rich. If there is any redistribution, it should be the other way.

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  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

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