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ADVICE TO GRADS:
FAST FOOD OFFERS HOT GROWTH
BUT STALE INCOME LEVELS
BLOOMINGTON, Ind. -- Thousands of Hoosiers leaving high school for the job market this spring face an important employment question: "Do you want fries with that?" A new Indiana University School of Business report highlights the pros and cons of finding work in the food industry.
The report, in the May issue of Indiana Update, said that employment at eating and drinking establishments in the state grew by a fast 14.9 percent between 1992 and 1996. That rate compares with the slower but still favorable rate of growth of total employment, 10.1 percent, and in the goods-producing sector, 8.4 percent, over the same period.
"If you think a youngster should go where the jobs are developing, then you would have to suggest that he or she seek work in restaurants, bars, fast food outlets and similar establishments," said Morton J. Marcus, director of the Indiana Business Research Center at IU and author of the report. "This seems contrary to our inclinations. Normally, we think young people should go into those goods-producing firms which have 'good' jobs and 'a real future.'"
A review of other Indiana economic statistics might suggest a shifting paradigm. Over the four-year period studied, eating and drinking establishments outpaced goods-producing employers, such as manufacturing, construction and mining firms, in three important areas.
Between 1992 and 1996, average hourly earnings, after adjustments are made for inflation, grew by 8.5 percent at restaurants and bars. Earnings at goods-producing workplaces grew only by a "weak" 1.7 percent.
The average number of hours a worker was employed in eating and drinking workplaces grew by twice as much as in goods-producing firms. Hours were up 5.3 percent for restaurants and bars, compared with an increase of 2.7 percent for goods producers.
Finally, in combination, these two factors yielded growth of 14.2 percent in average weekly earnings, after inflation is accounted for. Goods-producing jobs experienced weekly earnings growth of 4.4 percent.
But before one considers leaving a construction job for the griddle, Marcus recommends a closer examination of one other important statistic. "Workers in the goods- producing industries earn much higher hourly rates than those who labor in eating and drinking establishments," he said. "In 1996, this difference averaged $8.90 per hour."
The average hourly earnings of goods-producing workers last year was $14.76, or 152 percent higher than the hourly returns for those working at eating and drinking establishments.
"Even though hourly rates in eating and drinking places are growing rapidly, it will take nearly 49 years, at current growth rates, for the two industries to offer equivalent hourly compensation," said Marcus, who also is author of the new book, Tightrope to Tomorrow: Tensions, Productivity and Public Education (Technos Press, 1997).
"Many young workers do not have the patience to wait until they are ready for retirement to have superior pay rates. Can you blame them?"
Also in the May issue of Indiana Update is a summary of U.S. Census Bureau data on household income and poverty rates for Indiana's 92 counties. The most recent county projections, for 1993, indicate that many of the state's wealthiest counties surround Indianapolis.
Hamilton County had the highest median household income, at $54,141, followed by Hendricks County, $46,534; Hancock County, $43,347; Porter County, $43,321; Boone County, $41,364; Johnson County, $40,956; Warrick County, $40,359; Dubois County, $37,984; Posey County, $37,206; and Morgan County, $37,057.
The poorest counties in 1993 were Crawford and Starke counties, with 16.4 percent of their populations living in poverty. They were followed by Washington County, with a poverty rate of 16.3 percent; Lake County, 15.9 percent; Randolph and Scott counties, 15.8 percent; Delaware County, 15.7 percent; Switzerland County, 15.5 percent; Marion County, 15.1 percent; and Daviess and Grant counties, 14.9 percent.
Twenty-five counties had 13 percent or more of their population living in poverty. Indiana's poverty rate was 11.9 percent, compared with the nation's rate of 15.1 percent.
The poorest state in the nation was Mississippi, which had a poverty rate of 24.6 percent and the lowest median household income of $22,952.
Indiana's median household income in 1993 was $31,055 and the nation's was $31,241.
Indiana Update and other state data are available on the center's Web site, located at www.iupui.edu/it/ibrc