News From Terre Haute, Indiana

August 29, 2010

MARK BENNETT: Report shows Terre Haute MSA saw 1.2 percent increase in personal incomes in 2009 … but the numbers may be misleading

Mark Bennett
The Tribune-Star

TERRE HAUTE — Somewhere, someone thinks the grass is greener around Terre Haute.

And the paychecks are, too.

No, those people aren’t hallucinating. (Well, probably not.) Instead, they may be under the influence of statistics.

This month, the U.S. Department of Commerce issued its annual report on the personal incomes earned last year by Americans in 366 metropolitan statistical areas — urban places with 50,000 residents or more. Only one community in Indiana saw personal incomes rise more than the Terre Haute MSA, which includes Vigo County and portions of Knox, Sullivan and Vermillion counties.

No way, you say? Well, it’s true … sort of.

Terre Haute’s 1.2-percent increase in personal incomes in 2009 was surpassed by only the 1.9-percent rise in Bloomington. (Naturally. It seems like we’re always a step behind B-town, but never mind that.) The average personal income (per capita) for Hauteans and our close neighbors amounted to $29,995, according to the U.S. Bureau of Economic Analysis. That’s $343 more than in 2008, or about one car payment.

Just two other Indiana metros experienced a boost in 2009 — Anderson at 0.8 percent, and Muncie at 0.4. In fact, Terre Haute is among an elite minority, nationally. Personal incomes fell in 223 of the 366 metros in the U.S. last year, as the nasty three-year recession peaked. Some of the hardest hit places were Hoosier towns that rely on vehicle manufacturing. Incomes in Elkhart dropped 6.5 percent, Kokomo, 5.1, and Columbus, 4.4. Even people living in the Indianapolis-Carmel MSA absorbed an average 2.4-percent loss of income.

That seemingly greener grass in Terre Haute actually contains some artificial turf, though.

Americans’ “personal income” comes from numerous sources. Wages and salaries accounted for more than half of all personal income in the U.S. last year. But that category also includes investment income (such as rent and dividends), and “transfer payments” (which is economist lingo for government payments, such as unemployment compensation, Social Security checks and disability benefits).

In Terre Haute, wages and salaries dropped in 2009. Rental income and dividends slid, too.

But a solid increase in government payouts of unemployment, Social Security and disability benefits to Hauteans offset the drop in wages and investments. Unemployment, alone, continues to loom large in Terre Haute. The jobless rate hit 11.6 percent this June, up from 10.8 percent at the same point in 2009.

“The general story across the country is that earnings declined in most metros, in most private sectors,” said David Lenze, an economist for the Bureau of Economic and Business Research. The steadiest pay came in places with a large federal government presence, such as military bases and contractors, hospitals, postal service outlets and public utilities, Lenze explained.

Just five U.S. metros experienced their greatest growth through private-sector incomes.

The country’s highest per-capita income belongs to the Connecticut financial district in Bridgeport-Stamford at $73,720, followed by San Francisco’s $59,696. The lowest is McAllen, Texas, at $19,720.

Terre Haute can relate to McAllen much better than Bridgeport-Stamford. Incomes here have trailed the national and state averages for decades. Only two other Indiana metros have smaller per-capita personal incomes — Michigan City and Muncie. At least that’s an improvement. In 2008, only Muncie residents earned less than Hauteans. The average American income last year was $40,757, or $10,762 more than folks around Terre Haute.

The lingering low pay is directly connected to the education level of the workforce. Most local workers don’t hold college diplomas. Even with five colleges filled with students and faculty, only 19.4 percent of Hauteans over age 25 have a bachelor’s degree. Many private employers large enough to accommodate workers without degrees have departed.

“We don’t have anything to employ people who graduated from high school but didn’t graduate from college that pays 20 dollars an hour,” said Robert Guell, professor of economics at Indiana State University. “There’s a steep cliff between the hyper-educated and the people who just graduated from high school.”

Indeed, the local economy has lost some high-paying employers, particularly Pfizer two years ago.

Terre Haute’s economic development crews are competing with every other community for industries that would fill the local void. Such a wish list of potential high-paying firms might include a medical-device maker, a drug company, a manufacturer of hybrid-electric car batteries, an assembly plant for hybrid-electrics, or a producer of metal blades for wind-energy turbines, Guell suggested.

“If a significant hot industry landed a facility in Terre Haute — the kind of $15- to $20-an-hour employer, with benefits, that has left the area, that would help,” Guell said.

Terre Haute incomes also lag behind because the community lacks corporate headquarters.

Those hubs of national or regional companies typically employ professional services people, managers and financiers, said Tim Slaper, director of economic analysis at the Indiana Business Research Center. That dearth also applies to other parts of Indiana, a state whose economy has relied on jobs in the recession-hammered manufacturing industry.

“That set of [financial] occupations, we’re relatively weak at,” Slaper said.

The remedy, he added, is to grow our own brain power (smart young people) and keep them here, so they’ll develop high-technology, high-human-capital businesses, Slaper said. Their communities must offer quality-of-life amenities that attract and retain those talented folks.

That way, our own grass will be greener, and very real.

Mark Bennett can be reached at (812) 231-4377 or