They tell you if you knuckle down and work hard, you'll get ahead in life. 

But Northwest Indiana residents haven't been making much progress financially — in fact, they've collectively been hit by a big pay cut over the last year.

On average, wages in Northwest Indiana declined by $1.25 an hour over the past 12 months, and the average income has fallen by $3,000 as a result of lower wages and fewer work hours, said Micah Pollak, Indiana University Northwest assistant professor of economics. It's a local problem: Wages actually rose by 24 cents an hour statewide over the same period, while workers nationally got an average raise of 33 cents per hour.

The average income in the Calumet Region has dropped to $40,000 from $43,000, a 6.6 percent decline, while workers nationally are making the same amount as they did a year ago. Northwest Indiana residents still make 6.1 percent more than their downstate counterparts, but the region's average hourly wage of $23.89 has slipped below the national average for the first time since July 2011.

"It's a 6.6 percent pay cut on average, which is quite significant," Pollak said.

So wages are down, no problem, just work some overtime or moonlight, right? Nope. Part of the reason overall income has fallen in Northwest Indiana is because employers have cut back on work hours.

"Not only are you getting paid a little less on average," Pollak said. "The amount of hours you work also has changed ... You're getting paid a little less, and working a little less."

Nationally, workers are putting in 24 fewer minutes per week than they did last year, though work weeks have grown by 12 minutes in Indiana. Region residents, however, have not been able to land as many full-time jobs, or pick up as many shifts — on average, they're working 36 minutes less than they did in 2013. The average Northwest Indiana worker clocks in for 33.5 hours a week, as compared to 34.5 hours a week statewide.

Pay and work hours have declined over the past year largely because of a structural change in the region's economy, a shift away from manufacturing and construction toward more service-related jobs, Pollack said. The local manufacturing workforce has been shrinking for a long time as a result of automation, overseas competition and a shift in the sector to cheaper southern states.

In the past year, the region has lost 3,000 jobs in manufacturing and construction, including 2,800 jobs in a construction industry that contracted after the $4.2 billion BP Whiting Refinery project wound down and last winter's polar vortex froze backhoes and front loaders in their tracks for a few months.

Such goods-producing jobs tend to pay well and have good benefits, but they are being replaced with lower-paying service jobs, such as in the retail and food service industries, Pollak said. The result is the region's average wage declines, and that, in turn, threatens to stifle the growth of the local service sector.

"The repercussion is that if individuals have less money to spend, consumer demand goes down, and it's a vicious cycle," Pollak said.

"It leads to lower-end retail, and there's a downward spiral. If you continue to pay workers less, they're not going to contribute as much to the consumer spending that drives the economy."

Over the last decade, Northwest Indiana has lost 5,300 jobs in the goods-producing sector, a decline of 9.1 percent. The service sector offset most of that loss, growing by 2.2 percent over the same period and creating 4,900 new jobs, chiefly in retail, health care and food service.

30-year lower-wage 'trend' continues

The trend dates back at least to the 1970s, and it's had a dramatic impact on the composition of the workforce, Pollak said. In 1990, 29.2 percent of all region jobs were in goods-producing industries, while 70.8 were in the service sector. Today, only 19 percent of region residents still build something tangible, whether in a factory or at a construction site. More than four out of five region residents now provide some type of service, whether preparing a last will and testament, or a side of curly fries.

Jobs that have been considered good-paying for generations also no longer pay what they used to. United Auto Workers at the Lear seat factory in Hammond, for instance, cried foul when the Michigan-based auto parts supplier decided to open a second plant in Portage, where starting workers will make as little as $11 an hour.

A recently released National Employment Law Project study found most Americans still perceive manufacturing jobs as good-paying jobs, though that's increasingly no longer the case. The average factory worker in fact made 7.7 percent less than the median wage of all occupations last year, after a 4.4 percent decline in manufacturing pay over the last decade, the study found.

"You do see a growth in jobs at the bottom of the wage scale, where workers are paid wages that look like fast food wages," said Sarah Leberstein, a senior staff attorney at the National Employment Law Project and one of the authors of the study. "There's a huge growth in low wages. Frankly, it's scary, and it's challenging our notions of what a manufacturing job is."

Manufacturing is still physical work that takes skill and exposes workers to safety hazards, Leberstein said. But after widespread wage cuts and the growing use of temp jobs, one out of four manufacturing workers in Indiana now makes less than $25,200 a year, which is about a third less than the state's median income — and just above the poverty line.

And factory jobs are not all created equal. About 10 percent of manufacturing workers in Indiana — about 32,000 in all — are now employed by temporary staffing agencies, which pay 33 percent less than companies that employ factory workers directly.

"Companies used to think of decent wages as a key to success," Leberstein said.

"But now there's no longer the idea that workers should be paid enough to afford the goods and services they provide. Low wages are an enormous drain on the economy, and these workers are often forced to rely on public services."

Manufacturing workers are making an average of $15.55 per hour in Indiana, but about a fourth of them now earn less than $12.11 an hour. Hoosier factory workers employed by temp agencies make an average of $10.46 an hour and in some cases as little as $8.09 per hour, which is just above the federal minimum wage.

Nearly three-fourths of temporary production workers in the state make less than $24,300 a year, well below the threshold for food stamp eligibility for a family of four.

The numbers are grim, Leberstein said. Governments could, however, encourage higher wages by being more selective when they give out tax incentives to new or expanding companies, and demanding more information about how much workers are paid.

"Our society is not good at connecting the dots," she said. "We say families are crucial, but don't ensure working parents can earn a decent wage to support their families and to even be able to spend time with their families. Low wages are why so many workers are forced to take overtime."

The Northwest Indiana Forum, a private Portage-based economic development agency that aims to bring more business investment to the region, focuses on luring high-paying jobs, said Matt Saltanovitz, the agency's director of economic development.

"The Forum is dedicated to increasing the wage of the average Northwest Indiana worker, and the only way to accomplish that is by attracting high-quality jobs to our area," Saltanovitz said.

"The good news going forward is we're increasingly seeing more companies looking to do business on our shores rather than overseas. And Indiana's superb business climate helps our position regionally."

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