Morton J. Marcus is an economist formerly with the Kelley School of Business, Indiana University. His column appears in Indiana newspapers.
John Quill made his annual Spring appearance last week and may stick around for another few weeks. As we enjoyed a relatively warm afternoon on the deck, he asked:
“What do you think about the state of the State now?”
“Unchanged,” I said.
“Impossible,” he replied. “Just look at the news about all the plans for new jobs and civic improvements. There can be no doubt that Indiana is moving ahead.”
“Don’t confuse news releases with reality,” I said. “The party issuing the release attempts to relay an impression rather than convey a truth. Anticipated jobs, at best, are hopes, not achievements.”
“But the recently reported numbers about employment and unemployment are almost spectacular,” John said.
“Then look further and see what I see,” I said. “In 2013, Indiana remained 39th on the list of states in Per Capita Personal Income. You do remember old PCPI? Hoosier governors have been telling us for years it is a prime metric of economic wellbeing.
“Our slow slide down the rank of states continues. Ten years ago we were in 36th place; Tennessee, Oklahoma, Louisiana and Montana slipped ahead of us, while only Georgia fell below us during those years.”
“So, what’s behind this slippage that’s got you up in arms?” John asked.
“Money,” I answered. “It’s become fashionable to blame Indiana workers for our slide. First, there are those who blame our schools for not turning out students prepared for the job market. Second, there are employers who say we don’t have the right kind of work force. I don’t know if they mean that we have some industries that are unionized, as if that was something evil, or if they mean Hoosier workers don’t have the ability to learn new tasks and procedures.
“Yet, the major problem I see is a lack of investment by Hoosier firms in new equipment and procedures.”
“Well why would they invest if Hoosiers are not prepared to work?” John interjected.
“It seems clear to me progressive firms are not dependent on the local labor market. If they thought it was best to invest in capital, they should also be prepared to invest in labor through higher wages and necessary training.
“Yet many companies coming to or expanding here want to cut costs and shave wages. That’s why they tell cheery stories about our ‘good business climate’, by which they mean lax regulation, low wages, low levels of benefits, and low taxes to support public services.
“We’re still a prime location for call centers and fulfillment facilities where forklifts constitute advanced machinery. When companies are truly moving forward, they pay wages that attract the skilled workers they need, workers who will come great distances to get jobs.”
“Then most of the ‘good news’ about our economy,” John said, “is about doing what’s necessary for Indiana to run in place.”
“Right,” I agreed. “And even then we are slipping behind other states.”