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
-
-
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.
-
A positive step for public schools
Indiana is one of 10 states granted waivers last week from provisions of the federal No Child Left Behind law. The waiver appears to be a step forward for schools across the state.
-
An outstanding community effort
United Way of Cass County announced this week that it had raised more than $600,000 in its most recent campaign. The campaign’s success is a testament to the generosity of local residents and to the great work of the United Way and its member agencies.
-
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. -
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.
-
Another step forward for local trails
Local officials broke ground this week on the planned Eel River Run from downtown to Riverside Park. The project will expand a trail system of which the community can be proud.
-
White should not return to office
The conviction of Indiana’s secretary of state on charges of voter fraud has left Republicans and Democrats fighting over who will hold the office. No matter how the fight comes out, Charlie White’s ouster from office should be permanent.
-
Even in names, Eli beats Peyton
Columnist Dave Kitchell looks at the names of Cass County's babies in 2011 - and the effect they may have had on the Super Bowl.
-
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.
-
A grand success for Indianapolis
The just-ended Super Bowl was the result of decades of preparation. Indianapolis left a great impression on the thousands of visitors who descended on the city.
- More Opinion Headlines
-
Public forum
Nordic Festival Puts North Korea in Spotlight
'Rumor Has It' Adele's Rolling in the Grammys
Grohl, Grammy Nominees Cut Up on the Red Carpet
Greece Passes New Austerity Deal Amid Rioting
Coroner: Houston Autopsy Results Weeks Away
Raw Video: Greek Rioting Ahead of Austerity Vote
Raw Video: Child Rescued After Kosovo Avalanche
Pop Music Superstar Whitney Houston Dies at 48
Whitney Houston's Church Mourns Her Passing
Reaction to Houston's Death at Clive Davis Party
79 Turtles Seized at Shanghai Airport
Severe Cold Wreaks Havoc in China
Fuel Removal Under Way on Capsized Italian Ship
Police: Houston Found Dead in Her Hotel Room
Paul Suffers Narrow Loss to Romney in Maine
Palin Brings Anti-Washington Message to CPAC
Obama Scraps Birth Control Mandate
Navy Names Ship for Gabrielle Giffords
Uzbek Man Pleads Guilty in Plot to Kill Obama
Marines: No Punishment for Nazi-like Flag
