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Gap between Hoosier wages, cost of living grows

Updated: May 21, 2014 6:43AM



INDIANAPOLIS — Rising inflation has left many Indiana residents with a widening gap between their salaries and living costs, and economic experts say the state needs to focus more on the quality of jobs instead of the quantity to close the distance.

Hoosier workers saw a mere 0.8 percent increase in pay last year, bringing the median wage to $31,990. But inflation grew 1.4 percent in the Midwest, according to federal data released this month.

Business leaders say a high number of job seekers has allowed many employers to hold down wages. Others say a lack of skilled workers is contributing to the growing wage gap.

“When people don’t earn money, they don’t have money to spend. When they don’t have money to spend, retailers cut back and don’t hire,” Richard Feinberg, a professor of consumer sciences and retail at Purdue University, told the Indianapolis Business Journal. “It’s a giant snowball. It hasn’t changed.”

Morton Marcus, former director of the Indiana Business Research Center at Indiana University, said each time the state’s economy recedes and recovers, it ends up a little further below the national economy. That’s largely because the backbone of the state’s economy — manufacturing — hasn’t changed, he said.

Indiana lost about 100,000 production jobs from 2001 to 2009, and has recovered only about 28,000. Many of those jobs are subject to a new two-tier wage system in which new employees earn significantly less than more experienced co-workers doing the same jobs.

Jeff Harris, a spokesman for the Indiana State AFL-CIO, said part of the decline is the result of workers making salary concessions during the recession just to keep their jobs.

Marcus said the state’s economic developers need to increase their focus on creating high-paying jobs in order to close the wage gap.

“Much of what they’ve been doing just doesn’t indicate that we’re getting a mix of businesses that have high-paying jobs,” he said. “Call centers give you (job) figures, but not very high wages.”

Indiana Chamber of Commerce President Kevin Brinegar acknowledged the tug-of-war between the quantity and quality of positions but noted that jobs are jobs.

“We need to focus on growing and attracting jobs, period,” Brinegar said, “but we also need to recognize we need to maintain a focus on the quality of jobs so we can reverse this trend” of weak wage growth.



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