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Last modified: Wednesday, June 13, 2007

Report: Earnings per job growing better than number of jobs in Indiana

June 13, 2007

BLOOMINGTON, Ind. -- While job growth in Indiana during the first half of this decade advanced by a mere 0.2 percent, average earnings per Hoosier jobs bucked normal trends by growing by 19 percent, according to a report from the Indiana Business Research Center at Indiana University's Kelley School of Business.

Without adjustment for inflation, average earnings per job in Indiana grew faster than in the United States, particularly during 2003. Indiana ranked 26th in this category, reported an article in the new issue of INContext. Nationally, average earnings grew by 17.5 percent.

"If jobs here are not growing as fast as elsewhere, there'd be more competition among workers and less among employers, keeping our earnings from growing rapidly," observed Morton Marcus, the author of the article and director emeritus of the IBRC, which publishes INContext in partnership with the Indiana Department of Workforce Development and the Indiana Economic Development Council.

While Indiana added just 7,300 jobs between 2000 and 2005, the state actually has rebounded from the 2000-2003 recession, when it lost 94,700 jobs. It is unclear why Indiana's average earnings are higher, when the state's share of all jobs is declining. Marcus said a couple of explanations need further study:

The state is shedding low paying jobs and developing higher paying jobs than elsewhere.

"This is contrary to what we believe to be true, but, just maybe, our new jobs are developing in industries that pay well but are not receiving much popular attention," Marcus said.

"For example, the state's emphasis on all aspects of healthcare might be paying off. This might be a very desirable condition, although many individuals may not be competitive in such a job market."

Manufacturers generally are cutting employment by eliminating workers with the least seniority.

"Average earnings [would] rise. Some of the dismissed workers get lower paying jobs or leave the labor market and that is what we hear about on TV," he said. "Yet, maybe, they get better paying jobs as time goes by."

Marcus based the findings on recently released county-level earnings and employment data by the U.S. Bureau of Economic Analysis.

Within Indiana

Within Indiana, Hamilton County added the most jobs -- 36,500 -- during the five-year period studied. With a 33 percent increase, Hamilton County ranked second behind Hancock County -- up 44 percent -- in rate of job growth.

Marion County had the greatest job loss, 38,900. The largest loss on a percentage basis -- 27 percent -- was in White County. Overall, 54 counties lost jobs over the period while 38 gained.

Gibson County -- home of the first Indiana Toyota plant -- posted the best percent gain in earnings per job, with a 56 percent increase.

Only two counties saw average earnings decline without adjustment for inflation between 2000 and 2005 -- Hancock and Henry counties.

"Even though Hancock had the highest rate of job growth, these must have been low paying jobs because average wages fell by 7 percent," Marcus said. "Henry may be the classic case of a loss in well-paying jobs followed by a decline in earnings per job because there are few alternative high paying positions available locally."

One-employee establishments

Also in the June issue is a report about one-employee establishments and their growing impact, by Vicki Seegert of the Indiana Department of Workforce Development.

A comparative analysis of third quarter files for 1996, 2001 and 2006 reveals a steady growth in the number of one-employee firms over the past decade. In 1996, there were 19,092 firms that had one employee for at least two of the three months of the quarter and a third month of one or zero employment. In 2001, there were 20,496, or an increase of 7 percent. That growth accelerated slightly between 2001 and 2006, when the count grew to 22,321 establishments, a 9 percent increase for the five-year period.

Other data including all employers covered under Indiana's unemployment insurance law indicated that there were 24,932 single-employee firms in the third quarter of 2006. Many such firms grow in size and there were 90,787 establishments with one to nine employees during that same quarter.

inContext is published online every month at, offering substantive articles on the Indiana economy in context within the state and the nation.

Established in 1925, the IBRC is an information outreach service of the Kelley School. It provides and interprets economic, demographic and social information needed by business, government, educational and other nonprofit organizations and individual data users in the state and throughout the nation. Its research can be found online at