Northeast Indiana wage levels impact talent retention By Rachel Blakeman and John Stafford kpcnews.com
Know anyone looking for a job? With an unemployment rate hovering between 2.5 and 3 percent in northeast Indiana, local job seekers, especially those with a post-secondary credential like a bachelor’s degree or technical certificate, won’t be without a paycheck for long.
This is a dramatic turnaround from the Great Recession high of 13 percent unemployment at the beginning of 2010. Thanks in part to the strong presence of vehicle and medical-device manufacturing, employment has rebounded nicely in the past few years. Yet this only tells part of the economic story.
We have a lot of folks working in northeast Indiana – more than 375,000 in the Indiana Department of Workforce Department’s 11-county area data as of June – but the wages they bring home are frustratingly low when compared to other Midwestern cities and the country as a whole. This is highlighted throughout the Community Research Institute at Indiana University-Purdue University Fort Wayne report titled “A Comparative Assessment of the Fort Wayne Metropolitan Area Economy 2001-2016.” It was presented in May to the Allen County Board of Commissioners and is available on the CRI website at ipfw.edu/centers/cri/reports.
The average weekly wage for that 10-county region in 2016’s third quarter was $790, for an annual earned income of about $41,000. Things look a little better for workers in the Fort Wayne metropolitan statistical area of Allen, Wells and Whitley counties at $823 per week or $42,800 annually.
However both measures lag behind Indiana’s statewide average of $866 and Ohio and Michigan at $924 and $976 respectively. This means that Michiganders, on average, made $9,700 more last year than northeast Indiana’s workers. Furthermore, Fort Wayne metro’s $823 came in dead last when compared against the average wages of 13 comparable Midwestern cities including South Bend, Toledo, Dayton and Grand Rapids, Mich. Ouch.
The local wage totals don’t look better when evaluated over time. In 2001, the three-county Fort Wayne metro area had an average annual wage of $32,168. Jump ahead a decade and a half? The average annual wage in 2015 was $31,934 adjusted for inflation. And no, there’s no typo there. Real wages actually fell to what amounts to $978 when accounting for inflation.
Setting aside inflation adjustments, Fort Wayne metro average wages rose $9,768 between 2001 and 2015, according to the Bureau of Labor Statistics. In contrast, the U.S. metro aggregate wage increase was $16,667 in that same time. Since these earnings represent almost two-thirds of total personal income locally, lower earned income contributes to the area’s low per-capita income when compared to national figures.
It is tempting to look at the area’s recognized low cost of living as a sufficient offset to our lower-than-average wages, but that is not an equal trade.
The Bureau of Economic Analysis’s Regional Price Parity tool for 2015 puts the distance between the buying power of Fort Wayne’s metro wages for goods and services and Des Moines at about 5 percent, yet Des Moines residents on average make about 23 percent more than we do. This puts northeast Indiana in jeopardy of losing workers, especially the skilled employees we so desperately want, to other locations because they could opt to take the increased cost of living in return for even higher wages.
A strong argument can be made that at least part of our wage depression can be attributed to the loss of skilled, well-paying jobs like Navistar’s engineering center and ITT’s military radio production. The jobs that replaced them, especially those in the service sector, simply tend to pay less.
So what can we do to lift local wages? One of the best ways is to develop a better-educated, more-skilled workforce that commands higher pay in the market and attracts employers likely to pay more.
A 2017 Ball State Center for Business and Economic Research report found five of the top 10 Indiana counties with the highest rates of bachelor’s degrees also fell in the top 10 counties with the highest per capita income. No northeast Indiana county made either list.
Our manufacturing-heavy economy may have less demand for bachelor’s degrees than other cities, but new jobs projected to be created here between now and 2024 are going to need more workers with something between a certificate and an advanced degree than jobs requiring a high school diploma or less. Additionally under simple economic theory of supply and demand, we can hope that employers will respond to the tight labor market with higher wages to attract and retain workers.
The Fort Wayne area has come a long way since the economic downturn from seven to 10 years ago. People can find a job here if they want one, however it may not be at the pay they once earned. Or they may decide it’s time to take their skills elsewhere for a bigger paycheck.
John Stafford was the interim Community Research Institute director prior to the arrival of Rachel Blakeman. Contact the Community Research Institute director at 481-0274 or firstname.lastname@example.org.