A report just released by the Brookings Institution takes a look at Indiana’s economy and workforce, including the impact of COVID-19, and where the state needs to go in the future.

“State of renewal: Charting a new course for Indiana’s economic growth and inclusion” is the last of a four-part project spearheaded by the Central Indiana Corporate Partnership (CICP).

Key findings of the report include:

• Indiana is the most manufacturing-intensive state in the country.
• Indiana has advanced industries, which pay higher wages and are considered economic drivers, in all 92 counties.
• Indiana saw the ninth-best recovery in 2020, losing 52,000 positions or 1.7% of the state’s employment.

While Indiana is fortunate to have some strengths, challenges also must be addressed. Brookings suggested three areas for consideration that would put Indiana on a good path for growth and prosperity.

According to a news release detailing highlights of the report, “While it has managed, by some measures, one of the stronger recoveries from the initial COVID-19 crisis among states, Indiana must now address a set of “preexisting conditions,” including multiyear productivity slippages in its advanced-industry sector, recurrent struggles with industry and labor market shifts, and a shortage of quality employment.

Among those pre-COVID conditions of special concern are the state’s modest rate of employment growth and slow real median wage growth — which at 0.5% a year ranked Indiana 46th among states.

Brookings identified three areas that need improvement:

• Advanced-industry sector competitiveness has been slipping, in part due to firm and industry underinvestment in IT.
• Indiana has struggled more than other states to adjust to economic shocks, creating “reallocation” challenges for its industries and workers.
• Indiana has been providing too few “good jobs,” defined by Brookings as sustainable jobs that pay at least a locally adjusted $40,700 a year and provide employer health insurance. In addition, access to a good job is highly uneven, with just 30% of Black workers and 25% of Latino or Hispanic workers holding such a job, compared to 44% of white workers.

In the news release, Mark Muro, a Brookings senior fellow who led the yearlong analysis, said, “As the pandemic wanes, the desire to ‘get back to normal’ will be understandable, but the state would do well to see if it can also make moves now to emerge from the COVID year in better, more competitive and inclusive shape than before.”

The report advises the state and its business partners to take steps in the immediate future to:

• Accelerate digital adoption to drive economic dynamism, productivity and competitiveness
• Promote favorable job creation and worker transitions to allow for a beneficial “rewiring” of the economy
• Do more to support workers who aren’t in good jobs so as to promote economic justice, inclusion, and broadly shared prosperity

Among these priorities are specific suggestions, such as supporting firms’ tech awareness and modernization; encouraging digital skills development; beginning to solve a lack of broadband; promoting advanced-industry growth; enhancing entrepreneurship; promoting worker adjustment; enlarging the state’s earned income tax credit; exploring a Medicaid buy-in program; addressing child care shortages; and supporting greater retirement savings.

“The Brookings work shows us that Indiana’s economy is at an inflection point. Fortunately, our state has a solid foundation on which to build. There are, however, challenges that need to be addressed with urgency and intentionality,” David L. Johnson, president and CEO of CICP, said in the news release. “The Indiana GPS Project reports provide us with incredibly valuable data and strategies for charting our path forward. Hoosiers at all levels of government, in all sectors of the economy, and at home in both urban and rural communities across our state, must commit to working together to build upon our great legacy and move forward to ensure growth and prosperity in our state.”

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