Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers. His column appears in Indiana newspapers
It’s one thing to have a job and another to make a living. What does it take for a single parent to support a family with two children? How old are those children? Do they own or rent? Do they have a car or depend on public transportation? Do they have any savings in the event of an emergency?
It’s certainly more than the federal minimum hourly wage of $7.25 which has prevailed since July 2009. Many state and local governments have decided that $15 per hour is more appropriate. (If we assume 40 hours per week and 52 weeks a year, then $7.25 per hour = $15,080 per year and $15 = $31,200.)
How much do Hoosiers make in “a State that Works,” a state that boasts its friendliness to business? Back in 2007, in Indiana the average hourly wage was $19.93 or 99¢ less than the national average. If you prefer, we were worth 4.7 percent less than the average worker in the United States.
Sadly, that was our highest position relative to the nation in the subsequent decade. In 2017, our statewide average hourly wage was $24.45, up by $4.52 over 2007, an average annual pay raise of 2.1 percent. That growth exceeded the rise in consumer prices of 1.7 percent. Hence the real hourly increase, after inflation, totaled 89¢ per hour after ten years --- far less than the nominal or apparent figure of $4.52.
After ten years, where did we stand compared with the nation? Instead of being 99¢ behind the U.S. average hourly pay, by 2017, Hoosier workers were $1.87 short. They went from being 4.7 percent below the national average to down 7.1 percent.
But the full story of Indiana includes our various labor markets. In 2007, the Kokomo led all 13 Hoosier metropolitan areas with a $27.99 hourly wage. By 2017, Columbus was the leader at $29.86 per hour. At the bottom of the pay range in 2007 was South Bend at $17.56; that changed to Muncie at $19.53 in 2017.
Columbus in 2017 not only enjoyed the highest average hourly earnings, but also had the leading increase ($10.71) of our metro areas during the decade.
Today, the big story is the “shortage of qualified workers” as told with fervor and dramatic effect by employers. But they don’t mention average hourly earnings fell between 2007 and 2017 in Muncie, Michigan City, and Kokomo and the increases in Bloomington, Indianapolis and Elkhart failed to match the rate of inflation.
Maybe someday employers will understand if they want qualified workers, they will have to assume responsibility for training and retaining employees by paying better wages. That would involve not expecting government to fill employment potholes caused by economic storms.