Indiana Wage Growth Slower than Most Other States According to New Report

A recent report by the ADP Research Institute has drawn some attention to Indiana, for the wrong reasons. According to several news reports, Indiana 47th in the country for wage growth, with Indiana wages growing at 5.2% over the past year; the nation at 6.2%. But is Indiana and our region as bad as that sounds?

According to ADP Chief Economist Nela Richardson, “The economy is doing better than expected and a healthy labor market continues to support household spending. We continue to see a slowdown in pay growth without broad-based job loss.”

Wage growth can be an indicator of what’s going on in the economy, but it only tells part of the story.

The simple truth is we all desire better pay. But at the same time, there is an important balance that businesses and organizations must maintain between what is a fair wage for the skill level and services delivered and what a consumer is willing to pay for those services. A lot of factors go into determining what is an appropriate wage.

Since the pandemic, it has been an employee market. A shortage of workers has led to higher wages as employers attempt to attract and retain top talent. Wages alone won’t do it, but remain a critical factor related to where people want to work. And those in positions where they feel undervalued or underpaid have a lot of options elsewhere.

Generally, pay growth has been a good thing for the US, Indiana, and the South Bend Region. For the most part, wages have recovered from large pandemic-era wage losses. And in our region, pay growth has outpaced rising expenses, helping Hoosiers continue to get ahead.

In our region, wages in industries like Education and Health Services (6.5%) and Construction (5.7%) have grown the most. A large portion of our population works in those fields, and recent projects like the new Memorial Hospital Tower and the GM/Samsung EV Battery Plant will continue to fuel growth in those fields.

Tourism and Hospitality (5.0%) and Manufacturing (4.8%) continued to hold steady and continued their big post-pandemic recoveries. On the other end, the Retail Trade (3.2%) and Professional Services (4.1%) showed the lowest wage growth in major categories over the last year.

I’d be more concerned about the 47th ranking if it wasn’t so affordable to live here. The numbers tell us that wage growth outpaced the cost-of-living expenses, as our region continues to be a great value for those that want to live here.

The cost-of-living index for our area saw a modest increase from 86.5% to 86.9 percent over the past year. The truth is it’s more expensive to live in many of our Midwest neighboring urban areas. In Chicago, it will cost you 27.5% more; Detroit 15.4% more, Louisville 8.9% more, and Indianapolis 6.3% more. In those communities, you’ll need higher wage growth to keep pace with rising costs.

So, what is an employee left to do to raise their wages? Upskilling is the easiest path. All studies draw the same conclusions, those with more skills, education, and training make more money. Our community is blessed with numerous education and training partners waiting for your call. Another option is a career change, to an industry experiencing more rapid growth and higher wages. With great demand for construction workers in the years to come, that might be one to consider.

And what is a community left to do to help drive wages up? The easiest path is to develop, attract, and incentivize higher skill, better paying jobs. Recent projects such as AM General, Memorial Hospital, GM/Samsung, Alkegen, and Verbio will help our community do just that.