Wages up, unemployment down but pay still lagging
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 that might be the case. Plus, 2017’s growth at the state level exceeded inflation, creating more buying power with dollars Hoosiers earned.
Anecdotal information last year about wage growth aligns with Quarterly Census of Employment and Wages data released by the U.S. Bureau of Labor Statistics this month. 2017 average wages in 89 counties increased, with many counties exceeding the national or state growth rate.
Indiana’s average wage increased 3.74 percent from 2016 to 2017, going from $44,750 to $46,422. In contrast, the national average wage went from $53,515 to $55,331, an increase of almost 3.4 percent
For Indiana’s metropolitan statistical areas (MSA), all had wage growth ahead of the 2 percent inflation in 2017. Elkhart-Goshen led the pack in wage growth at 7.61 percent, followed by Muncie and Terre Haute at 4.66 and 3.99 percent respectively. The Indianapolis-Carmel-Anderson MSA was just under the state rate at 3.71 percent, followed by Fort Wayne at 3.5 percent. Lafayette-West Lafayette MSA had the smallest growth of MSAs wholly within Indiana at 2.29 percent.
On the county level, 52 counties had percentage wage growth ahead of the national rate. Ohio County topped the list at 21.76 percent. Landing in second and third place were Pike and LaGrange counties at almost 12.75 and 9.74 percent respectively.
Looking statewide, only three counties had wages fall from 2016 to 2017: Brown, Grant and Randolph.
Enthusiasm over wage growth from private-sector employers should be tempered by the wages themselves. Ohio County’s eye-popping wage increase only brought the average to just above $30,000. Eighty Indiana counties still have average wages in the private sector below the state’s average. Just three Hoosier counties – Posey, Pike, and Marion – have average wages above the U.S. average.
Looking at MSAs 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.
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 Indianapolis but living in Carmel will have her pay added to the Marion County wage pool but credited toward Hamilton County’s personal income. Accordingly, if a Portland resident is temporarily laid off from his job in Delaware County, he will be in the Jay County unemployment statistics.
Unemployment down but also total number of workers
Just as it has been since 2015, most anyone who wants a job in Indiana 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, according to Indiana Department of Workforce Development data. An additional 23,247 Hoosiers were working last year compared to 2016.
Every county in Indiana saw both the number of unemployed and the percent go down from 2016 to 2017. Indiana’s unemployment rate dropped nearly a full percent from 4.4 percent to 3.5 percent, while the national rate went down just a half percent: 4.9 to 4.4. However, Indiana was still a full half percent ahead of the state’s record low of 3 percent in 1999.
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. Dubois County also matched Adams and LaGrange.
The counties with the highest unemployment rate – 5 percent or higher – were not geographically proximate. They were Vermilion, Lake, and Fayette at 5.4, 5.1, 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 Elkhart-Goshen MSA, which is only Elkhart County and thus matches the county’s rate, has the lowest MSA unemployment. The Gary division of the Chicago MSA had the highest MSA unemployment for Indiana at 4.8 percent.
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 – declined by about 6,700 people.
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 stopped looking when they discovered available wages didn’t match what they were making in previous jobs.
By the numbers:
92: Counties with lower number of unemployed residents from 2016 to 2017
92: Counties with 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 average wage above national average
12: Counties with average wage above state average
0: Indiana MSAs with average wage above national average
4: Indiana MSAs with average wage above state average
3: Counties with wages that declined from 2016 to 2017