The challenge: how can Indiana more fully participate in the national economic growth engine?

• Author: Barkey, Patrick M.
• Position: Indiana Indicators

THERE ARE SIGNS OF renewal and recovery in the Indiana economy For the first time since the year 2000, employment statewide has posted meaningful growth. In some areas, notably Bloomington, and Indianapolis, job totals are back to where they were before the recession began. Monthly state tax receipts have started to exceed expectations, instead of the other way around. And in a broad spectrum of industries, from constrution to consulting services to machinery and tools, there are signs of a pickup in business

But there is a challenge to growth in the Indiana economy that has very little to do with the recession. It was with us during the 1990s, when the U.S. economy added nearly 20 million net new jobs, and it was with us when the economic party ended in 2001. It is shared, to some extent, by most of our Midwest neighbors, although our state's challenge is larger than most. It is a challenge that has no quick solutions, yet cannot be safely ignored.

The problem is that Indiana is not fully participating in the national economic growth engine. We remain a production-oriented state with a less-skilled, less-educated, and less-well-paid workforce in an economy that continues to grow in a different direction. And for the regions outside of Indianapolis the problem is even worse.

The symptoms of this problem am familiar to many

of us. Earnings per job in Indiana are lower than the national average, and the gap has slowly grown over the last 30 years. In the mid-1960s, our state ranked 17th among the 50 states in per-capita income, but now we can do no better than 33rd. with the exception of manufacturing, where Indiana wages are at parity with their national counterparts, the average wage of every industry in Indiana is less than the national average.

How could we go about changing the Indiana economy so we can start climbing, instead of falling, in the rankings of economic performance and prosperity?

There are a lot of good ideas out there, and many are already being tried in communities around Indiana. One is to pursue what might be called targeted development. Since the needs are so great, and the public resources so limited, doesn't it make sense to concentrate our efforts on a smaller number of industries that have the best promise for growth?

That process can come up with some ideas that sound strange to long-time residents. After all, who ever thought that a major music resort could exist in the Ozarks? Or that the sleepy tobacco...