Area income rises, but we still lag

December 3rd, 2013

News Coverage:

Published: December 3, 2013 3:00 a.m.

Area income rises, but we still lag

5.05% per capita gain; survey ranks region 13th of 14

Sherry Slater | The Journal Gazette

By the numbers

Northeast Indiana officials annually compare this region’s performance with 14 Midwestern cities, chosen for their similarity to Fort Wayne. Those with outstanding economic performance in recent years are considered “stars.” Those with performance similar to northeast Indiana are on the “peers” list. One way to compare northeast Indiana with other cities is to look at the average – or per capital – income. This 2012 ranking also includes U.S. and Indiana averages:
$45,876...Des Moines, Iowa, star
$45,401...Peoria, Ill., star
$43,735...United States
$43,295...Davenport, Iowa, star
$40,928...Wichita, Kan., star
$40,769...Roanoke, Va., star
$40,437...Evansville, peer
$38,796...Dayton peer
$37,925...Toledo peer
$36,956...South Bend, peer
$36,846...Rockford, Ill., peer
$36,400...Knoxville, Tenn., peer
$35,975...Kalamazoo, Mich., peer
$35,720...Grand Rapids, Mich., peer
$35,509...Northeast Indiana
$34,412...Chattanooga, Tenn., peer
Source: Northeast Indiana Regional Partnership

At a glance

Eight industry clusters were identified as the region’s advanced manufacturing sector:
•Chemical, pharmaceutical and fertilizer
•Computers, electronics and precision instruments
•Industrial machinery
•Medical instruments
•Motor vehicles
•Cable and wiring
•Steel, metalworking and machine tools
Source: Northeast Indiana Regional Partnership

The average income in northeast Indiana increased last year at a faster rate – 5.05 percent – than average incomes in 14 Midwestern cities chosen by local officials for comparison.

That’s the good news.

The bad news is that the region’s average income in dollar terms ranked 13th of 14. The $35,509 earned in local per capita income was more than $10,000 a year less than the average earned in Des Moines, Iowa, which ranked No. 1 on the list.

Because local residents earn less, on average, the same increase in dollar terms creates a larger percentage increase. Consider: If two workers each receive a $5-an-hour raise, the worker originally making $10 an hour just earned a 50 percent pay increase while the worker earning $20 an hour received a 25 percent raise.

The Northeast Indiana Regional Partnership will release these statistics and more this morning as part of its State of the Region presentation prepared by the Community Research Institute at IPFW. The briefing will include two reports, the 2013 Regional Dashboard Update and the Northeast Indiana Manufacturing Study.

Officials met last week with The Journal Gazette to review the findings. Per capita personal income has been the top metric for measuring the region’s progress for about the past five years because it reflects the quality of jobs in the region, not just the number of jobs.

Katy Silliman said the partnership created the regional dashboard last year to share information with the public on how the region is doing.

“It’s hard to know if you’re progressing if you don’t know where you are,” said Silliman, who is executive director of the Northeast Indiana Fund, which is under the partnership’s umbrella.

“I think what the information has shown us is that we’re making progress, but we’re not there yet,” she said. “We haven’t arrived.”

The dashboard compares northeast Indiana’s performance in various categories to nine “peers” and five “star” cities.

The peers and stars were chosen after extensive fact-gathering about numerous Midwestern cities that aren’t state capitals, aren’t too populous and aren’t home to a major university.

Increasing annual average income is important because that’s more money that can be spent on products and services in the region. Doctors, lawyers, real estate agents and pizza delivery drivers are among those who benefit when more high-paying jobs are in the market, said John Stafford, former director of the Community Research Institute.

Stafford is consulting with the organization until year-end, when he’ll retire. He worked on the report with Ellen Cutter, the new director.

Higher wages also result in more local taxes collected – money that can be spent on roads, bridges, and police and fire departments, he said.

Northeast Indiana’s per capita income was in a downward spiral from 1994 to 2009, driven by the departure of Lincoln National Corp.’s headquarters, high-paying jobs at General Electric Co. and executive positions with other companies.

“I think we all feel the impact when they come here, and we all feel it when they leave,” Stafford said.

The 2012 per capita income number used differs from the numbers released Nov. 21 by the Bureau of Economic Analysis. The bureau included only Allen, Wells and Whitley counties information to generate a personal income number of $37,226. The dashboard data used the average of 10 northeast Indiana counties to produce its $35,509 figure.

One of the partnership’s goals is to correct perceptions people have about how the region compares to other areas.

For example, people often say the lower cost of living offsets lower wages. But that’s not true, Silliman said.

The region’s cost of living is 95 percent of the national average while per capita income is only 81 percent of the national average, she said.

A comparison of gross metro product – or the value of all goods and services produced in an area – since 2001 shows that northeast Indiana was hit harder than its peers by the recession.

Productivity in northeast Indiana has risen slightly more than its peers since 2001 and slightly less than the star communities, data shows.

A similar look at the young adult population shows that northeast Indiana’s has declined by more than 9 percent while the U.S. average has dipped 2.5 percent.

“If I were a prospective employer, that chart would bother me,” Stafford said. “I’d wonder where my future workforce is coming from.”

The researchers created an index to measure performance on each of the five pillars of Vision 2020, a plan to bring change to the region.

Northeast Indiana ranked in the Top 5 in business climate, entrepreneurship infrastructure and quality of life.

The region landed in the middle of the pack in workforce talent prepared with 21st-century skills. Areas of weakness include the numbers of knowledge jobs, creative jobs, bachelor’s degree and graduate or professional degrees.

Today’s presentation also will include a manufacturing study.

“It’s just a huge part of our economy,” Stafford said. “We tend to think of it as this monolith,” but it’s made up of independent sub-sectors.

Researchers focused on three questions: What are the key components of advanced manufacturing in the region? What are the occupations most likely to be critical in the region’s advanced manufacturing growth? And which supplier-producer connections are stronger or weaker than expected?

Northeast Indiana’s advanced manufacturing operations include steelmakers, orthopedic device-makers, auto suppliers and others. The report includes growth projections for each of the eight industry clusters.

The study found that almost half – 47 percent – of the region’s advanced manufacturing establishments are in the steel, metal and machine tools sector.

In northeast Indiana, the average combined wages and benefits for those jobs is $64,538.

Attracting more advanced manufacturing jobs, officials said, will help increase the region’s average income.