Economic developers want to bring high paying jobs to their communities. The boards of the development agencies also want high paying jobs. Their consultants have sophisticated models to identify which industries will provide such jobs.
Of course, everyone would be happiest if the firms with new high paying jobs proved to be those already in the area. Then it would not be necessary to have “foreigners” taking advantage of government location incentives. Life would be much simpler if the best match between our town and new jobs rested with folks we knew already.
We want industries that offer high paying jobs. What are industries looking for? One idea is that industries want to be where they get high output per dollar spent on compensation for workers (wages, salaries and benefits).
Recently I ran some numbers from the U.S. Bureau of Economic Analysis and found that Indiana offers $1.72 in output per dollar of compensation. That’s just two percent below the national figure for all types of non-agricultural activities. As for compensation per employee, we pay an average of $37,345 which is 11 percent below the national level.
But those numbers vary greatly by industry. For example, in primary metal manufacturing (aluminum and steel), Indiana offers output per dollar of compensation that is 41 percent below the national average. In addition, our pay per employee in that industry is 17 percent above the figure for the nation as a whole.
Undoubtedly, those more familiar with primary metals can tell us why these numbers seem to make Indiana uncompetitive for new investments in that industry. But that does not mean we don’t want firms from that industry. After all, Indiana’s average pay level in primary metals is 125 percent above the all industry average for the state.
The situation is a little different in petroleum and coal products manufacturing. Indiana’s output per dollar of compensation is $2.93 or 47 percent below the nation. But our workers are paid just eight percent less than the average worker in that industry nationwide. Maybe that’s one reason we see a major investment by BP in Lake County that should raise output per dollar of compensation closer to national levels.
At one time, Indiana communities with a more-than-average educated population talked about bringing in publishing and software firms. Some might ridicule this idea since we are neither New York City nor Silicon Valley. Yet our output per dollar of compensation is only two percent below the national level while our pay is 42 percent below the U.S. average.
How can we increase the value of output in that industry so that wages can rise? Are wages low in publishing and software compared to the rest of the nation because there is not enough competition in the industry locally and employees (talented students and spouses?) are not mobile? This could be an industry we might encourage since average compensation is 16 percent above our state’s average pay level.
Now that Hoosiers finally recognize Indiana as a manufacturing state, it is strange to find that we have almost the same average compensation and the same output per dollar of compensation as the nation. We’re just average compared to our sister states. Nonetheless manufacturing employment provides a 74 percent premium in average pay compared to the average Hoosier job. That explains why communities persist in seeking expansion of their manufacturing sectors in preference to other opportunities.
Morton J. Marcus is an economist, writer and speaker formerly with the Kelley School of Business at Indiana University. He can be reached at mortonjmarcus@yahoo.com
Opinion
Related Photos
Discussion
Criteria for economic development unclear
- Opinion
-
-
Taking the cow to school
Managing editor Kelly Hawes says a recent highly publicized prank shows the quality of kids in Logansport.
-
Public forum
Letters of up to 400 words may be submitted to Public Forum, Pharos-Tribune, 517 E. Broadway, Logansport IN 46947. The email address is publicforum@pharostribune.com, and the fax number is 574-732-5070.
-
More than just an extra day off
Monday is Memorial Day, a time when the nation pauses to remember those who have given their lives in defense of the freedoms we all enjoy. It’s great to have a long weekend, but let’s not forget the holiday’s original meaning.
-
Have fun, safe start to summer
Memorial Day weekend marks the unofficial start of the summer season. Have fun this weekend, but be sure to keep it safe.
-
Thorns & Roses
Thorns & Roses is our staff’s compilation of the best and worst of the week, but if you have your own nominations, feel free to send them along for publication in our Public Forum. Submissions of up to 400 words may be addressed to Pharos-Tribune, 517 E. Broadway, Logansport IN 46947. The fax number is 574-732-5070, and the email address is publicforum@pharostribune.com. Don’t forget to include your name, address and daytime telephone number.
-
Meeting students where they are
A mall-based alternative school in Indianapolis is working to reach students who weren’t able to succeed in a traditional classroom. The approach is similar to the one now being taken by Logansport schools.
-
A woman on both state tickets
Columnist Dave Kitchell writes about the running mates for gubernatorial hopefuls John Gregg and Mike Pence.
-
Public forum
Letters of up to 400 words may be submitted to Public Forum, Pharos-Tribune, 517 E. Broadway, Logansport IN 46947. The email address is publicforum@pharostribune.com, and the fax number is (574) 732-5070.
-
Postal service listens to small towns
The U.S. Postal Service plans to keep smaller post offices open by scaling back the hours at those and other offices. The postal service deserves credit for listening to the concerns of its customers.
-
Public forum
Letters of up to 400 words may be submitted to Public Forum, Pharos-Tribune, 517 E. Broadway, Logansport IN 46947. The email address is publicforum@pharostribune.com, and the fax number is (574) 732-5070.
- More Opinion Headlines
-
Taking the cow to school
Vatican in Chaos After Butler Arrested for Leaks
Jimmy Carter Endorses Egypt's Election Results
Biden Addresses West Point Graduating Class
Dozens of Children Killed in New Syria Attack
Raw Video: Activists Allege Massacre in Syria
NJ Man Charged With Murder in Death of Patz
Support, Fun for Kids of Fallen Soldiers at Camp
Fugitive Penguin Caught, Returned to Aquarium
50 Years Later, Underground Fire Still Burning
Light Show Transforms Sydney Opera House
Raw Video: Unruly Passenger Restrained in Miami
Raw Video: Robber Uses Drive-thru Window
Raw Video: Dragon Arrives at Space Station
Calif.'s Coronado Named Nation's Best Beach
CEO Salaries Become Sore Issue in Labor Disputes
