By Morton Marcus
Frankly, I find most of us who discuss, or profit from, “practicing” economic development are not sure what we are talking about.
Therefore, until further notice, I’ll avoid that phrase in this column and revert to the language of political leaders. We’ll focus on jobs and wages, the stuff that “economic success” is made of.
Jobs, we are told, are “the” measure of a successful campaign to enhance the economy of every town, county and state. How has Indiana been doing?
We can go back to the heady days of the tech boom, when our greatest worry was Y2K and elevators stopping at midnight. From 1998 to 2016, the nation added 35,200,000 jobs, a 22 percent increase. Indiana added 314,000 jobs, a nine percent increase.
“Oh,” I hear someone saying, “That’s just another attempt to use data to run down our state. You could pick another, more recent, starting point and come up with a better view of Indiana.”
Sorry, I tried, and it doesn’t work. Except for 2010, Indiana’s rate of job growth was below the nation’s growth rate. That’s 17 of 18 years in which we failed to match the nation in adding jobs.
What does matching the nation mean? Being mediocre. Achieving the national average means coming in at the middle of the pack. From 1998 to 2016, Indiana, “the state that works,” the state with a right-to-work law, the state with low taxes on business, this most business-friendly state, ranked 47th in job growth.
We didn’t do better in compensation per job. After adjustment for inflation, the average Hoosier job in 2016 paid 85 percent of the national average. This was down from 92 percent in 1998. Our growth rate for average compensation ranked 48th in the U.S.
We went from the middle of the pack (25th highest average pay per job) to being a bottom feeder at 48th in the nation. And you ask why our children and neighbors are leaving? You still trumpet our low cost of living as a benefit when it is a consequence of our low incomes?
Of course, we could blame Hoosiers for the fact business chooses to locate and expand elsewhere. We could blame our schools for failing to turn out students who are imaginative, knowledgeable, malleable and disciplined. (Let’s not mention that our schools are underfunded.)
We could blame our communities and our business leaders for lacking ambition, and encouraging a combination of contentment and resignation to mediocrity. We could blame our agricultural heritage and the rural myths that dominate the thinking of Hoosiers in towns of every size.
Or we could blame the sum of these parts, the concretion of irrelevance and irresponsibility known as the Indiana General Assembly. But blame does not provide remedies. Maybe we need to rethink economic development and our measures of economic success.
Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to letters@dailyjournal.