Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed on a podcast: https://mortonjohn.libsyn.com.
Some Hoosiers will find delight in this week’s column because it shows the government sector in Indiana shrinking. Another segment of our population will see more evidence of government services going down the drain. Dataphobes in both groups will read no further.
Between 2007 and 2017, our increase in private non-farm (PNF) jobs rose by 5.6 percent, half the rate of growth in the U.S. (10.8 percent). While nationally state and local government jobs (S&LG) rose by 1.1 percent, Indiana had a 1.8 decline.
Those percentages translate in jobs important to families and citizens of every town. Nationally, the PNF sector added 16.4 million jobs, while Indiana added 181,000. However, while the U.S. added 210,000 jobs in S&LG, Indiana lost 7,300 jobs. Yes, there was a great recession in those years, but we did not see “our share” of the private sector recovery despite being “a state that works.” Our incentives, foreign junkets, Eastern Standard Time, lower than thou business taxes, even our treasured backwardness were not enough to lure more private sector jobs.
In addition, Indiana lost jobs in corrections, police protection, highways, public hospitals, and particularly in public education. Clearly, Hoosiers were in a boat the rising tide did not lift.
Why would state and local public sector jobs fall? It could happen because technology replaced human skills. But we have no measure of technological advances in policing, firefighting, or teaching although we certainly believe such displacements are taking place.
Likewise, public sector employment would fall if we outsourced jobs to the private sector. Vouchers may lead students to private schools rather than those operated by governments. So too private prison guards may take over from public employees. Public hospitals may fail while private hospitals construct new elaborate showplaces.
Again, we don’t have adequate measures of quality in either the public or private sectors. We do know, from these data produced by the U.S. Bureau of Economic Analysis, that in 2007, both PNF jobs and S&LG jobs paid 21 percent better in the nation than in Indiana.
In the private sector that difference shrank to 17 percent by 2017. Unfortunately, S&LG jobs in Indiana in 2017 paid not 17, but 26 percent less than their national counterparts. While earnings per S&LG job nationally increased by 27 percent over the decade, earnings per Hoosier S&LG job advanced by only 19 percent.
Wait a moment. Didn’t we have some inflation between 2007 and 2017? Yes, consumer prices rose by 18 percent, which wipes out virtually all of the 19 percent gains made by Indiana state and local government employees.
Do the returning and new Indiana legislators for our 2019-20 General Assembly know this story? Are they aware/do they care that public sector workers have been the greatest victims of legislative neglect?