Mix of occupations impacts metro income.

• Author: Slaper, Timothy F.

Indiana's per capita personal income (PCPI) was 86 percent of the PCPI for the United States as a whole in 2008. PCPI in the Indianapolis metro area, on the other hand, was 98 percent of the nation. Why is the Indy area doing so much better than Indiana?

Recent IBR articles have explained Indiana's lackluster personal income performance compared to the nation. (1) This article expands on that research to show that the occupational mix in Indiana's metro areas explain the differentials in PCPI across the state.

Figure 1 shows the share of total employment in the higher-earning occupations for Indianapolis, Indiana, and the United States. There are some striking differences. With the exception of the health care practitioner and technical occupations group, every top-tier occupation category is represented more highly in Indianapolis and the United States than in Indiana as a whole. While earnings in these top-tier occupation categories are generally higher in the nation than in Indianapolis, the metro has a similar wage and concentration advantage over the state in these higher-earning occupation categories. The extent to which Indianapolis mirrors the nation, and differs from the state, both in terms of earnings and concentration of higher-earning occupations suggests that the answer for Indiana's PCPI problems might lie in these occupations.

[FIGURE 1 OMITTED]

Figure 2 presents the same geographic comparison for middle-tier occupation categories. These occupations do not show nearly as uniform a pattern, but one category can be easily differentiated from the rest--production occupations. At 13 percent of Indiana employment, the concentration of production occupations in the state is almost double that in Indianapolis and the United States. The state's average production wage is below that in Indianapolis and, as a result, the heavy concentration does not help in terms of average overall wage for the state. Again, Indy's advantage seems to come from a concentration in higher-earning occupations.

[FIGURE 2 OMITTED]

To gain a stronger grasp of what is driving the discrepancy between PCPI across the state, consider two other metropolitan statistical areas (MSAs): Fort Wayne and Columbus. Fort Wayne's concentration and average wage for the top-tier occupations are pictured in Figure 3, alongside those for Indiana and the United States. Fort Wayne's PCPI is just barely below the Indiana average, 85 percent of the nation's PCPI. Again, with the...