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EYE ON THE PIE: Hoosier wages not growing much

May 19, 2008

We've just come through an Indiana primary in which the competing campaigns kept emphasizing Hoosier jobs. It would have meant more if they had talked about Hoosier wages and salaries. But then, facts are harder to digest than rhetoric. Here are some facts you can chew on.

At the start of this century (2000), the average wage (total wages and salaries divided by total number of full- and parttime jobs) in Indiana was $30,401, ranking 27th in the nation. By 2006, we ranked 32nd. That decline of five places in the national ranking was tied by Utah and exceeded only by Michigan (down six places).

The average wage in Indiana did grow between 2000 and 2006. But our 18.2-percent increase was the fifth-lowest rate of growth in a country where the average rate was 20.9 percent. After adjusting for increases in the prices of what consumers buy, Indiana's real growth in average wages was a scant 3 percent over six years.

The highest average wages in 2006 were in New York, Connecticut, Massachusetts, New Jersey and California. The lowest could be found in South Dakota, Montana and Mississippi. Indiana, at $35,924, was nestled between Louisiana and Alabama.

Candidates from both parties would have you think Indiana's problems are new and possibly can be blamed on the North American Free Trade Agreement. The truth is that Indiana has not kept pace with the nation since 1979, when our average wage per job was 1.6 percent above the national figure. By 2000, we had fallen to 12.4 percent below the nation, and we have continued to decline to 14.4 percent in 2006, our lowest level yet.

At the county level, there have been some spectacular winners and tragic losers between 2000 and 2006. (The following figures refer to wages and salaries paid for jobs worked in a county, but they do not necessarily reflect the pay of those who live in the county.)

Led by Boone, Gibson, Greene and Martin counties, only 25 Indiana counties grew faster than the nation in average wages per job. Two counties (Vermillion and Henry) actually declined in average wages per job before adjustment for price changes. In addition, another 22 counties did not realize any real growth in average wages.

In 2000, seven Indiana counties (Marion, Hamilton, Howard, Martin, Vermillion, Posey and Bartholomew) enjoyed average wages per job in excess of the national level ($34,718). By 2006, the national level rose to $41,991, and Vermillion and Bartholomew dropped out of this charmed group. Martin replaced Howard in first place, Posey and Marion moved ahead of Hamilton, and Gibson became part of the elite six.

The greatest advance in rank was realized by Decatur County (before Honda) as it moved from 65th to 43rd place. Gibson County (with Toyota) had the highest growth rate at 47.5 percent. The issue for Indiana remains pay levels, not jobs.

Wages and salaries depend on the value of the goods and services produced by workers in Indiana. Education, effort and efficiency are all important. But if we do not have firms that produce what the world wants, our relative well-being will continue to decline.



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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