Same old story: Indiana incomes lag

January 30, 2007

New government figures show wages earned by Hoosiers are not growing as quickly as Americans’ wages as a whole.

Average compensation per job in Indiana increased 2.9 percent in 2005, to $44,095, according to Morton Marcus, formerly director of the Indiana Business Research Center at Indiana University. The figures are the latest available for a full year.

The U.S. average rose 3.9 percent—meaning the nation increased faster by a percentage point.

Marcus said the weak performance is the latest in a trend dating to the 1970s, when the state’s dominant manufacturing sector peaked. Indiana wages were similar to the U.S. average until back-to-back recessions of 1980 to 1982 began shaking out smokestack industries.

Many of the factors that began eroding the state’s core auto and steel sectors are still in effect, he said. Companies are using more technology and fewer people to accomplish tasks, meaning the traditionally well-paying jobs are squeezed out.

Automakers also are using less steel as they struggle to reduce weight in order to boost fuel efficiency.

“This is a very long-term relative decline in the kinds of industries that made Indiana strong in the past,” Marcus said. “We’re just not keeping pace with the nation.”

He predicted a decade or more will be needed to reverse the momentum so Indiana workers see their compensation rising faster than Americans in general.

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