Growth in the Indianapolis-Carmel-Anderson metropolitan area (1) economy has been some of the strongest in the state, as unemployment continues to fall in Central Indiana. The unemployment rate for the Indianapolis metro stands at 3.9 percent, which is significantly below state and national levels.
The performance of the Indianapolis economy reflects broader trends of growth in urban economies, while more rural economies continue to struggle. However, even with decent job growth and low unemployment, real wages remain flat, holding down overall income levels.
Employment and wages
The Indianapolis economy is nearing full employment, with more than 1 million jobs in the metro and surrounding area and 40,000 unemployed.
The difference in the unemployment rate between Indianapolis and the rest of the state is largely attributable to differences in educational attainment. More than 30 percent of Indianapolis residents have a bachelor's degree or higher, whereas across the rest of the state, that number is closer to 20 percent. Given the current unemployment rate for college grads of 2.5 percent, it is not surprising that Indianapolis has lower unemployment and higher wages.
The unemployment rate is lowest in the suburban counties, specifically Hamilton, Boone, Hendricks and Johnson counties, and highest in Madison and Marion counties. Figure 1 shows the unemployment rate as of September of 2014 and 2016 for the Indianapolis region broken down by the 11 counties in the area. Every county in the area is showing lower unemployment rates than the national average of 5.0 percent.
Given the low level of unemployment, job growth may taper off in 2017. We will finish 2016 with about 37,000 new jobs added. We are unlikely to see that kind of growth again without some migration into the area from other parts of the state, the country or the world.
Not all of the employment news has been good for workers in the area. Despite strong job growth and low unemployment, real average wages have been flat over the last two years. Much of the growth in jobs has come from lower-paying sectors (e.g., retail) or in areas where real wages have declined (e.g., health care).
Higher-paying industries, such as manufacturing, have seen losses in jobs-leading to lower overall wages. The number of manufacturing jobs has stabilized recently, but the long-term trend is downward. There are currently about 90,000 manufacturing jobs in the MSA, compared to more than 120,000 as...