Indiana Chamber: Repairs needed for Indiana’s “leaking” workforce pipeline: Good tax and regulatory structure not enough

Indiana’s workforce pipeline is leaky and in need of repair, according to the Indiana Chamber of Commerce. While businesses have a comfortable tax and regulatory environment, the state’s poor educational attainment and lack of amenities hinders efforts to attract and retain businesses or employees. 

“Yes, business climate is important and we’re fortunate to be among the top states in that regard,” said Jason Bearce, the chamber’s vice president of education and workforce development, in a Tuesday press conference. “At one time, (that would) have been sufficient to attract that outside private sector investment but today – it’s a must-have, but it’s not sufficient in and of itself.”

Indiana continually lags behind its peers in terms of workforce even as it tops the list in overall business climate. That unqualified workforce means that Indiana has twice as many open jobs as it does job seekers, according to a chamber report. 

“We have been working vigorously to improve our tax climate, our business climate and our regulatory climate,” said Kevin Brinegar, the chamber’s president and CEO. “But where we haven’t made the progress we need to make to stay… as competitive as possible is in our education and workforce rankings.”

Students not getting the education they need

Problems with the workforce pipeline start early, with the poor availability of quality preschool or childcare, according to the chamber. Coupled with continuing poor state test results compounded by pandemic-related learning losses, huge swaths of students that do graduate high school leave with waivers — especially students of color. 

“We’re spending billions of dollars on our K-12 system and getting results that are not adequate to serve our economy in the future,” Brinegar said. “We have a lot of employers who want to expand and diversify their hiring (with) talented African American and Hispanic students but the reality is this overall system is not producing very many of them.”

Additionally, having 289 individual school districts doesn’t serve students well, the chamber concluded. Over half, 54%, of corporations have less than 2,000 students and are too small to offer the appropriate coursework, putting them behind their peers academically. 

The majority of the smallest districts, those with less than 1,000 students, don’t even offer physics to students, Brinegar said.

In their report on the workforce pipeline, the chamber urged the General Assembly to establish a fund to incentivize merging districts in order to improve class offerings – emphasizing “intentional career exploration” previously discussed by House Speaker Todd Huston (R-Fishers).

Children with access to quality childcare and preschool perform better in school – this shortage could be alleviated by expanding existing program eligibility but would need to be coupled with higher wages for underpaid childcare workers. Just as importantly, those opportunities allow their parents to rejoin the workforce. 

“We saw a lot of people pulled out of the workforce during the pandemic and the available data suggests that, to a large degree, is attributed to individuals not being able to find affordable or accessible childcare,” Bearce said. 

Indiana needs to increase the workforce pipeline by encouraging more Hoosiers – adults included – to pursue higher education, whether through a traditional four-year university or advanced certificate like welding. Brinegar suggested making college more accessible, and affordable, by auto-enrolling eligible students into the 21st Century Scholars Program and federal financial aid programs.

But perhaps due to Indiana’s history as an agriculture- and manufacturing-intensive state, many Hoosiers may believe that a high school education is enough for a career. But, in reality, nearly all new jobs require further education.

“I think there’s some wishful thinking… (that) students might not be going on to some sort of higher education but they’re going to work – I wish I could say that’s the case,” Bearce said. “But the labor participation for students today who aren’t going on to postsecondary (education is) on the decline. They’re not working, they’re not going to school and – in the long term – they’re not employable.”

Just over half of Indiana’s high school graduates pursue a postsecondary education, 53% in 2020, which corresponds with the number of job openings left unfilled due to a lack of qualified applicants. In 2022, 74% of companies told the chamber they left jobs open because they couldn’t find someone to fill the position – with 83% saying talent needs are a challenge. 

Problems persist post-college

Even after receiving their degree, most educated Hoosiers choose to relocate elsewhere in the country – further exacerbating the leaking workforce pipeline.

Less than half of the 60,000-plus who do graduate from Indiana institutions stay in the state five years later. Two-in-five students, 40%, leave within one year of graduation.

“Those 23,000 lost graduates each year could go a long way towards addressing Indiana’s talent shortages,” the chamber report said. “Our graduate retention strategies must be enhanced and incentives for graduate retention should be seriously considered.”

When the state first started making efforts to improve its post-secondary education attainment in 2012, 33% of Hoosiers had at least an associate’s degree or high quality credential. A decade later, Indiana has improved to 48% but that means less than half of Hoosiers have that additional education. 

Most states fare better than Indiana in their workforce pipeline – the state ranks 37th in the nation for education attainment. The U.S. average sits at nearly 52%, with some states as high as 61%.

Indiana will likely fall short of its goal to hit 60% before 2025 but Brinegar said that progress needed to be made regardless. Looking at current numbers, Hoosiers with higher levels of education are more likely to participate in the workforce. Nearly three-quarters, 72%, of Hoosiers with a bachelor’s degree or higher work while just over half, 54%, of those with a high school diploma do.

Even worse, for those thousands of students who don’t finish high school, the majority aren’t part of the workforce. Of that group, just 39% were working. 

“If we could lift up the skills of these individuals (who have a high school diploma or didn’t finish high school), we could fill a lot of the open jobs that we have right now,” Brinegar said. 

Both men seemed optimistic about chances for legislation addressing these issues in the 2023 session, noting that many lawmakers were already aware of the shortages and their importance. 

But Bearce said the state “needed to put its money where its mouth is” and make investments to fix the workforce pipeline.

“We think that there are smart, targeted investments that the state can make that will spur additional investment from the private sector… (in) talent development and talent retention,” Bearce said. “We don’t believe that government alone can solve these problems.”