Back in the Reagan era (1984), as we emerged from the recession of those years, 73 percent of Indiana’s personal income was generated by non-farm employment. In this Obama era (2014), as we emerged from what we call the Great Recession, non-farm jobs accounted for 70 percent of personal income.
Many will dismiss three percentage points as trivial, but that’s about $8 billion of 2014 income for Hoosiers.
This shift of income is accompanied by an increase in the share of personal income represented by government transfer payments (Social Security, Medicare and Medicaid payments, plus unemployment compensation). In the U.S., this increase was about three percent during the past 10 years and five percent in the Hoosier state. As of 2014, nearly 20 percent of Indiana’s personal income was derived from government transfers.
This is a core issue in our nation, particularly in this election year. Government transfer payments are considered by many people as excessive burdens imposed on higher income people by elderly, low-income voters. At the same time, these government transfers are seen by those with little wealth as necessary components of a social safety net readily afforded by a wealthy nation.
But there are other changes occurring within and among Indiana counties. Take Gibson County, for example. Most Hoosiers recognize the tremendous impact Toyota had on this southwestern county. Gibson ranked sixth in the state in the average annual growth of non-farm earnings over the past 30 years (7 percent) but 47th (4.3 percent) in the growth rate for personal income.
This disparity is caused by large numbers of Toyota employees not living in Gibson County. In sum, 48 of our 92 counties saw faster growth of non-farm income than they saw in the growth of total personal income.
Some, but not all, of this is caused by people choosing to live away from their places of work. In other cases, however, limited working opportunities in the home county caused people to find work where they could.
Fayette County, once a manufacturing center, saw non-farm earnings rise by only one percent on average during the past 30 years, the slowest growth rate in Indiana. Nonetheless, Fayette managed a 3.3 percent average increase in total personal income during those years with help from increased commuting and rising safety net payments.
Thus, the increased mobility of the workforce plays a major role in the fortunes of counties. This would be further increased if all of our counties enjoyed high-speed Internet service and employment could be more dispersed.
Interestingly, the much ballyhooed Regional Cities program explicitly did not address the connectivity of communities. Soft amenities for an imagined millennial workforce were encouraged while transit and communication infrastructure development was explicitly excluded from consideration.
This bias is found as well among some members of the economic development community. They now demand focus on upper-middle class values rather than better pay for the numerous Hoosiers laboring in lower paid jobs.