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The Journal Gazette

Saturday, October 15, 2016 10:01 pm

All indicators pointing to change

Chris Douglas

Matt Will, an associate professor of finance at the University of Indianapolis, writing in the Indianapolis Star in June, referred to recent trends in disposable per capita income to argue that the Indiana economy is running on all cylinders. As a life-long Hoosier Republican in this our 200th year, I too am very much interested in how Hoosiers have done, especially since the election of 2004 in which we held the Indiana Senate and took the governor’s office, through most of which time we have also held control of the House.

Alas, as our great Hoosier philosopher, Abe Martin of Brown County, said, "Figures don’t lie, but you can group ’em so they’ll answer th’ same purpose." Back in our own locker room, I regret that I am not as impressed with our performance as Professor Will. Per capita income, based on an average, has been deceptive. In the extreme, if I am making $100 and enjoying pay increases, while four others are just getting by making $20 and without increases, then our average is $36 and increasing. In this extreme example, the median of the five of us, however, is still making $20 and struggling, no matter what the average is doing.

So we should ask how the median Hoosier household is faring. The answer isn’t pretty. From 2004 until 2015, the latest full year for which data are available, real median household income has risen 1.6 percent in the U.S., but it has fallen 2.1 percent in Indiana. Had income in Indiana at least kept up with the nation, Hoosier working-class households might each have nearly $2,000 more to spend on goods and services annually. Figuring in state and local taxes doesn’t seem substantially to improve the picture for our after-tax income.

While Will did cite median incomes to boast of superior gains from 2008 forward, from the economy’s peak in 2007, Indiana’s median household income has fallen more than 4 percent, compared to the nation’s drop of 1.6 percent.

More than 50 percent of Indiana’s counties have been depopulating, an ominous sign of their decline. Meanwhile, the expanding Indianapolis metropolitan area is netting growth only from its surroundings, not from out of state. In total, our low cost of living should therefore be read as struggling demand for goods and services, especially for housing in our rural counties. Hopelessness and lack of economic opportunity have combined to make Indiana’s rural counties among the nation’s leading producers and consumers of meth, a cottage industry.

Our great poet, James Whitcomb Riley, in "My Ruthers," extolled the Hoosier desire for independence when he wrote: "I tell you what I’d ruther do/ef I only had my ruthers/I’d ruther work when I wanted to/than be bossed round by others." So how is entrepreneurialism doing in Indiana?


Indiana ranks 44th out of the 50 states in business start-ups (the worst of all our surrounding states) and 45th in small business ownership.

Who replaced the federal government in 2016 as our largest employer, having driven out of business so many local economic mainstays? Wal-Mart.

Our grandparents’ generation levied taxes and broke up concentrated wealth so that our parents’ generation could graduate from our public universities debt-free; raise families unencumbered; buy homes, goods and services from others; and, indeed, start businesses themselves to supply those goods and services. But today the percentage of our college graduates carrying student debt has risen from 54 percent in 2004 to 61 percent in 2015, while the debt they carry has skyrocketed from an average of $19,400 to more than $29,200, with many owing far, far more than that. In per capita college graduates, we’re 43rd out of 50 states.

Let’s face it, my fellow Republicans. In spite of our good intentions, we’re not in a position to boast to the rest of the nation how we have succeeded for Indiana. Has reducing taxes, disempowering labor, and reducing public goods and services worked well? It has not. Our bond rating is strong, but most Hoosiers are worse off. America’s leading businesses are those that would not hesitate to change strategy if the times demand it. For Hoosiers and for Hoosier Republicanism, too, change means challenge and necessity, but also opportunity. Embrace it.