Morton Marcus: Testing Hoosier’s economic development policies – The Daily Reporter

Last week in this space, data showed that Indiana fared well compared to most other states in the COVID-induced economic decline and rebound of 2020-21. Today, consider a longer period, from 2007 to 2019.

Why this duration of 12 years? 2007 was the last year before the financial meltdown demanded massive and innovative stimulus measures. 2019 was the last year before the global COVID pandemic from which we are still recovering.

While the short term is important, the long term tests our state’s economic development policies. Jobs are the favorite topic of economic conversation for many politicians. How did Indiana add jobs from 2007 to 2019?

Nationally, employment increased 9.3% and 6.0% in Indiana. But this national figure gives more weight to larger states than to smaller ones. So, without California and Texas, and their combined growth rate of 17.8%, the national rate fell from 7.4% to 9.3%.

However, the median job growth rate of the 50 states was a modest 5.8%. With that in mind, Indiana’s 6.0% rate was just above that median figure and 23rd in the nation. This allows our state’s professional pumps to proudly proclaim, “We’re in the top half of all states.”

The story is different if we consider employee compensation, which has two components: wages and salaries plus supplements paid by the employer. The latter includes the amount paid by employers for health, unemployment and disability insurance, as well as other benefits paid by employers on behalf of employees.

In 2007, Indiana’s average worker compensation was $47,388, the 31st highest in the nation and 14% lower than the national average of $54,969. A dozen years later, in 2019, the average compensation for Hoosier workers reached $61,262, without taking inflation into account. That was a drop to 35th place among states and 16% below the US average of $72,981.

So while our jobs growth rate (6.0%) was a respectably poor 23rd nationally, the dollar growth in compensation for our work ranked 44th nationally, $13,874.

It is true that Indiana’s average earnings growth rate was 29.3%, while the country achieved a growth rate of 32.8%. That puts us just 3.5 percentage points behind the average US growth rate.

“Chic, it’s not worth sneezing on,” would say many members of our sleepwalking General Assembly.

However, the Hoosiers know that percentage points don’t buy groceries or pay the mortgage or utility bills. It takes money to do these things, and the average Hoosier employee in 2019 was $11,719 lower than the average U.S. employee.

And please don’t spit out this oft-repeated excuse: “The cost of living in Indiana is lower than elsewhere, so we’re okay with lower pay.” In truth, the cost of living is largely determined by housing prices, which turn out to be closely related (wait for it) to employee compensation.

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