Indiana Economic Digest | Indiana
Advanced Search

• Most Recent




home : most recent : manufacturing February 23, 2019


9/10/2018 10:45:00 AM
The reality of today's economy in Indiana: Lots of jobs, little pay
Austin Fuller uses a piece of paper as a gauge as he adjusts the printer head during a 3D printing workshop at the Purdue Polytechnic Institute in this file photo. As part of the workshop, students assembled their own 3D printer. Staff photo by Don Knight
+ click to enlarge
Austin Fuller uses a piece of paper as a gauge as he adjusts the printer head during a 3D printing workshop at the Purdue Polytechnic Institute in this file photo. As part of the workshop, students assembled their own 3D printer. Staff photo by Don Knight

Christopher Stephens, Herald Bulletin

Preparing to speak at a Labor Day picnic at Beulah Park in Alexandria, Mike Fisher was disappointed at the handful of union members trickling in Monday for free hot dogs and potato chips.

Three decades ago, the Labor Day picnic would have been crammed by some of the thousands of workers at the General Motors factories just down Indiana 9 in Anderson.

“It’s sure not like it used to be," said Fisher, president of United Auto Workers Local 1963. "Those union jobs were good money, and those people were paying taxes." 

Though unemployment continues to reach record lows in Indiana, many jobs don't pay wages that can sustain a family. And, as the Hoosier business climate continues to shift, many experts say there will be darker times ahead for Indiana workers. The experts call for vast changes in education, training and workplace benefits to raise income.

The number of Hoosiers employed in manufacturing and production has fallen dramatically over the past few decades.

In 1990, manufacturing production jobs accounted for 55 percent of all Indiana jobs, according to the Bureau of Labor Statistics. That had fallen to 35 percent by 2017, about twice the rate of national production job percentage decline over the same period.

Last year, the average salary for the 531,325 people employed in manufacturing was $61,121 annually. That’s more than double the average salary, $27,411, for the state’s retail trade workers and nearly quadruple the average yearly wage of $15,967 for people employed in food services in Indiana. Combined, those two aspects of the service occupations alone employ roughly the same number of Hoosiers as manufacturing. The BLS designates nine subcategories under service.

As high-paying factory jobs disappeared, low-skill, low-pay jobs in retail and food services filled the void. But despite retail and restaurants managers struggling to find new workers, pay has effectively fallen as inflation continually overrides wage growth across the state.

Since 2013, wages have increased 2 to 3 percent year over year, according to the Bureau of Labor Statistics. Before the 2008 recession, they were moving along at around 4 percent every year.

The Pew Research Center found that, when adjusted for inflation, the state’s current hourly average wage has the same purchasing power as it did in 1978.

And most experts expect this downward trend in real wages to continue, even as Wall Street celebrates a long-term bull market and two companies, Apple and Amazon, have recently broken the $1 trillion valuation record.

Low wages and a dim outlook contributed heavily to a study conducted by the Indiana Institute for Working Families which determined when it comes to wages and poverty rates Indiana ranks lowest among its Midwestern neighbors. In a headline-grabbing conclusion, the IIWF considers Indiana a “southern state.”

In July, CNBC named Indiana the fifth worst state in which to live. Seven of the 10 states on the list were in the South.

The working families report analyzed data from state and federal sources, comparing Indiana to 12 Midwestern states and 16 Southern states.

"Indiana now resembles a Southern state as much as or more than our Midwestern neighbors when it comes to child poverty, low-income families, rates of adults with a post-secondary degree, and more," the report said. "Indiana has historically been tightly allied with the Midwest, so falling to lower wage and job standards and quality of life shouldn’t be taken lightly."

According to the report, Indiana’s high rate of low-wage jobs and low-income families, its minimum wage of $7.25 an hour and loss of high-paying jobs since 2004 has not helped.

For instance, the report said, Indiana's 2017 median hourly wage of $17.03 was second lowest in the Midwest and below national and Southern state averages. In fact, the average 40-hour wage earner in the South earned nearly $1,000 more per year, and the average Midwesterner made $2,100 more than the average Hoosier last year.

In addition, the report said, the top 1 percent in Indiana earns 17.3 times the average income of the remaining 99 percent, resulting in enormous wage inequality.

"The brunt of changes to Indiana’s economy have especially been felt by low-income families, women, children and Hoosiers of color," the report said.

TURNING THE TIDE

There are glimmers of hope, but turning the tide will take a massive effort from legislators and business leaders, said Kyle Anderson, an economist at the IU Kelley School of Business.

“There really are no easy solutions to it," he said. "Indiana is not alone; these are challenges being faced all across the Midwest and the nation." 

A new vocational education mixture could be part of the solution by equipping young people with transferable skills instead of relying on traditional trade or apprenticeship training focused on a single skill or machining technique.

It's a matter of “people having employable job skills, whether it’s some kind of higher-end or computer design skills or whether its electrician, in some professions that are always going to be in demand,” Anderson said.

But when it comes to the many Hoosiers pining over the “good old days,” when a single manufacturing income could easily support a family – Anderson is less optimistic. Especially when it comes to union jobs.

“That is a difficult one, because on the one hand, I absolutely believe unions played a great role in keeping wages up for those middle-class workers," he said. "On the other hand, its harder to attract manufacturers if you pay higher wages.”

Instead, when states and communities compete to attract major employers, Anderson said, it’s a “race to the bottom” of wages and benefits.

The Indiana Institute for Working Families suggests three changes the state could make to improve the plight of working Hoosiers.

First, the institute argues, state legislators must raise the minimum wage to $12 by 2026 and must improve job quality standards such as paid sick days, paid family and medical leave, fair scheduling and pregnancy accommodations.

Consumer protections against predatory lending and rent protections are also needed, to ensure that Hoosiers have access to stable, adequate housing, the IIWF study’s authors argue. And employers must remove non-academic barriers to employment by expanding access to necessary services such as childcare, transportation, affordable housing and the Internet.

Taking a longer view, Anderson argues that legislators and educators must take a forward-looking approach to education and job training.

“I do think we as a state need to be very proactive to think about what skill Hoosiers will need in the next 50 years, because I don’t think they are the same set of skills they needed back in the day,” the IU economist said.

Related Links:
• The Status of Working Families in Indiana: 2018 Report

Related Stories:
• EDITORIAL: Hard-working Hoosiers deserve a decent living
• Locals not surprised Indiana falling behind Midwest neighbors
• Unemployment low, but wages remain stagnant in Southern Indiana

2019 Community Newspaper Holdings, Inc.






Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


Software © 1998-2019 1up! Software, All Rights Reserved