One thing most workers expect is growth in income over a five year period. If 2% inflation is to be considered normal, then we think our income should grow at least by 2%. In truth, we expect good income growth, good being defined as better than our neighbors.

This column is on the aggregate level of states and Hoosier counties. We’ll look at total personal income, which has three components:

1. Earnings which are basically wages and salaries, less what we and our employers pay as contributions for government social insurance programs (such as Social Security and Medicare).

2. Property income (dividends, interest, and rent, including the rental equivalent of our homes, if we own them.

3. Personal current transfer receipts (government benefits, mainly Social Security and Medicare payments).

Indiana’s personal income grew from 2018 through 2023 (encompassing the Covid years). But how much? The data available for the counties sums to $2 billion less than the latest state level numbers.

If we go by the older data, Indiana’s growth was 34.2%; if we follow the data released before the government shutdown in October, our growth was 34.9%. The difference is critical because the national growth rate was 34.6%. Our bully boosters love seeing us grow faster than the nation, but our anxious analysts lament growing slower. The depressed doubters among us just plough ahead, indifferent to the data.

Boone County led a group of 8 counties with personal income growth rates in excess of 40% from 2018 to 2023. Although Marion County had the 11th highest growth rate, it increased its leadership in personal income from 15.8% of the state total to 16.4%, capturing 18% of the state’s $107 billion personal income growth.

Marion County and its 7 adjacent counties captured 46% of the state’s earnings by place of residence. The center of the state extended its dominance of the state’s growth. Only Shelby County at 27%, fell below the state average growth rate for this component of personal income growth.

The 8 Indianapolis counties had 42% of the state’s growth in dividends, interest and rent. Of our 92 counties, only 34 saw this component increasing its share of personal income.

Transfer payments constituted 24% of the increase in personal income, increasing in importance in all but 3 Indiana counties (Parke, Daviess, and Randolph). The 8 Indianapolis counties accounted for 23% of the increase in transfer payments

In summary, earnings accounted for 59% of the increase in the state’s personal income, property income represented 17% of that increase and transfer payments accounted for 24%. This pattern is largely a result of an aging population which is working less, reducing past savings, and increasingly dependent on Social Security and Medicare.

As I wrote in a book 20 years ago, the answer lies in making the working population more productive by increasing its education, specifically in the primary and secondary grades. Increasing the years of schooling, adding layers of certification, without increasing the education, won’t work. But our legislature and Congress never has learned to read the writing on the wall.
Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed his podcast.

© 2025 Morton J. Marcus

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