The Journal Gazette
Sunday, June 24, 2018 1:00 am

Area economy's stubborn streak

Wages up, unemployment down, but local pay still lags behind rest of nation

Rachel Blakeman

Could the tight labor market, where every Indiana county experienced a lower unemployment rate from 2017 to 2016, actually be driving up wages? New private-sector wage data for 2017 indicate such might be happening. And 2017's growth often exceeded inflation, creating more buying power with dollars earned.

Anecdotal information about wage growth last year in northeast Indiana aligns with Quarterly Census of Employment and Wages data released by the U.S. Bureau of Labor Statistics this month. The 2017 average wages in all counties in this corner of the state increased, with many exceeding the national or state growth rate.

All wage data presented here does not include public-sector employers.

For the Fort Wayne metropolitan statistical area of Allen, Wells and Whitley counties, the average wage increased 3.5 percent from 2016 to 2017 or by almost $1,500. Average U.S. wages went up almost 3.4 percent on average, and Indiana's increased 3.74 percent.

Leading the pack in northeast Indiana wage gains was LaGrange County's 9.74 percent, followed by Whitley and DeKalb counties at 6.87 percent and 6.59 percent, respectively. Just two northeast counties – Kosciusko and Wells – had wage growth below 2017's inflation rate of about 2 percent.

Looking statewide, only three counties had wages go down from 2016 to 2017: Brown, Grant and Randolph.

Little wage progress

Enthusiasm over wage growth should be tempered by the wages themselves. Average private-sector wages for the Fort Wayne metropolitan statistical area were just under 80 cents for every dollar earned nationally – about the same as last year. That's a much greater gap than the difference in price parity – or cost of living – for the region and the nation. The Fort Wayne region stands at 89.9 percent on the 100 percent index in a measure of the cost of goods and services, according to the U.S. Bureau of Economic Analysis.

For an interesting comparison, cost of living for the Cincinnati metropolitan statistical area was 89.6 percent, but the 2017 average wage was $53,243 – so it is possible to have a low cost of living but an average wage that approaches the national average of $55,331.

Allen and most northeast Indiana counties still have average wages in the private sector below the state's average of $46,422. Kosciusko and DeKalb counties were the only ones to exceed the state average. Looking at metropolitan statistical areas wholly within Indiana, Columbus, Indianapolis-Carmel-Anderson, Elkhart-Goshen and Kokomo were above the state average wage, but all were below the national average threshold.

Just three Hoosier counties – Posey, Pike and Marion – have average wages above the U.S. average.

Under these measures, wages are attributed to the employer's county of location. Income and labor market statistics are credited to the person's county of residence.

Thus, someone earning $125,000 a year working in downtown Fort Wayne but living in Angola will have her pay added to the Allen County wage pool but credited toward Steuben County's personal income. Accordingly, if a Columbia City resident is laid off from his job in Huntington County, he will be in the Whitley County unemployment statistics.

Unemployment down

Just as it has been since 2015, most anyone who wants a job can find one, assuming unemployment below 5 percent counts as full employment due to the natural churn of employees.

Consistent with the strong labor market, the number of employed individuals went up between 2016 and 2017 for the state and northeast Indiana, according to Indiana Department of Workforce Development data. An additional 23,247 Hoosiers were working last year compared with 2016, with 2,967 of them in northeast Indiana and just over 1,900 of the increase coming from the Fort Wayne metropolitan statistical area.

Every county here and throughout Indiana saw both the number of unemployed and the percent unemployed go down from 2016 to 2017. Indiana's unemployment rate dropped nearly a full percentage point from 4.4 percent to 3.5 percent, while the national rate went down just a half a percentage point: 4.9 to 4.4.

The booming recreational vehicle industry is reflected in counties with the lowest unemployment. Elkhart had the lowest rate statewide at 2.5 percent. Adams and LaGrange counties were right behind it at 2.6 percent.

The counties with the highest unemployment rate – 5 percent or higher – were not geographically proximate. They were Vermillion, Lake and Fayette, at 5.4 percent, 5.1 percent and 5 percent, respectively.

Just six Indiana counties had unemployment rates above the 2017 national average, but 44 had unemployment rates above the state average.

The Fort Wayne metropolitan statistical area unemployment reduction, in terms of percentage, matched the state, going from 4.2 percent to 3.3 percent. While clearly below the full employment threshold, it doesn't match the record low of 2.7 percent in 2000.

The Elkhart-Goshen metropolitan statistical area, which is only Elkhart County and thus matches the county's rate, has the lowest metropolitan statistical area unemployment. The Gary division of the Chicago metropolitan statistical area had the highest metropolitan statistical area unemployment for Indiana at 4.8 percent.

Fewer workers

Some of the unemployment decline may be attributed to people leaving the labor force rather than finding employment.

Between 2016 and 2017, the state's labor market – those working and the unemployed actively seeking employment – dipped by about 6,700 people. For the 11-county northeast Indiana region, it shrank by 575 workers with nine counties showing smaller labor forces in 2017 as compared to 2016.

Some may be leaving employment willingly and voluntarily through retirement, returning to school full-time or to care for a family member, especially with baby boomers reaching ages 65, 70 and beyond.

Others may have left employment as the result of a layoff at some point but opted not to return when they discovered available wages didn't match what they were making in previous jobs. The misuse of opioids or other substances may also be causing some not to engage in the labor market.

Rachel Blakeman is director of the Community Research Institute at Purdue University Fort Wayne.

By the numbers:

92: Counties with a lower percentage of unemployed residents from 2016 to 2017

6: Counties with 2017 average unemployment above the national rate

44: Counties with 2017 average unemployment above the state rate

3: Counties with the average private-sector wage above the national average

12: Counties with the average private-sector wage above the state average

0: Indiana metropolitan statistical areas with the average private-sector wage above the national average

4: Indiana MSAs with the average private-sector wages above the state average

3: Counties with average private-sector wages that declined from 2016 to 2017

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