Indiana is earning a reputation as a low-income state. Its leadership should acknowledge that bleak reality and make a reversal of that trend an economic policy priority.
As reported earlier this month by CNHI’s Maureen Hayden, Indiana has experienced a troubling rise in poverty during the past six years. Only five other states in the U.S. saw a larger percentage increase in the number of officially “low-income” families since the recession hit in 2007. About 1 of every 3 Hoosiers fall into the “low-income” category, which amounts to $22,980 a year for individuals and $47,100 for a family of four, according to a study released by the Indiana Institute for Working Families.
Hoosiers are working harder for less money, the institute concluded. The median hourly wage stands at $15.24, below all neighboring states except Kentucky. If gains in wages matched workers’ increased productivity since the recession began, that median hourly wage would be $29, the report stated. Median family incomes dropped from $78,599 in 2000 to $57,148 in 2011, the second-largest decrease in America.
Not surprisingly, poverty is more widespread. Since the institute’s 2011 report, poverty rates have increased in two glaring age groups — kids 18 and under, and children under 5. Now, 45.9 percent of youngsters live in low-income homes, more than any neighboring state. Fittingly, as of 2011, 71 percent of Indiana jobs were in occupations paying less than “what is required for economic self-sufficiency,” the report said, and 24 percent paid wages below the poverty line. The leisure and hospitality industry, which includes fast-food restaurants, has seen the strongest growth over the past year.
Policymakers in Washington are popular targets of blame for the econony’s slow recovery, but Indiana’s unemployment rate has remained above the national average for the past year, the report said. Though the total number of Hoosiers working reached the highest level in four years last month, the jobless rate rose to 8.4 percent. The problem is worse locally. In June, 17 of Indiana’s 92 counties had double-digit unemployment rates, including all six local counties — Sullivan (second highest at 11.9 percent), Vermillion (fourth at 11.4), Vigo (fifth at 11.2), Parke (13th, 10.1), and Clay and Greene (tied for 15th at 10.0).
Skeptics may doubt the findings by assuming the institute — a program of the nonprofit Indiana Community Action Association — has an agenda. Yet, in May, the Indiana Chamber of Commerce issued similar poverty findings, showing that Indiana had the 12th-lowest poverty rate in 2000 but dropped to 34th by 2011.
The Institute for Working Families report created an awkward backdrop for an announcement that same week by Indiana Auditor Tim Berry and Gov. Mike Pence. The state ended its fiscal year with a larger than expected $483-million surplus, boosting the overall reserves to $1.94 billion. “The balance sheet of Indiana is strong and growing stronger,” Pence said. The governor predicted the frugal government spending and budgetary surplus would appeal to job-creating businesses.
The question is, how is “strong and growing stronger” manifesting itself in the lives of average Hoosiers? Or in the lives of Indiana children, with nearly half of them living in “low-income” working families? Pardon those Hoosiers if they’re not smiling along with the powers-that-be in Indianapolis. Scott Pelath, the Indiana House minority leader from Michigan City told Hayden, “The leaders of our state worship these surplus numbers like they are ends in and of themselves. … Families still are struggling to keep their heads above water.”
His point touches many nerves. Indiana’s governor, and legislative and business leaders have appropriately targeted steps to improve the skills and earning capacity of a large sector of the workforce needing higher education, vocational training and workplace behavior improvement. Those officials rightly see an enhancement of early childhood learning as a tool in curbing poverty. Their focus needs to stay on those areas. The gloating over billion-dollar surpluses needs to subside; it is meaningless in too many Hoosier homes.