INDIANAPOLIS — Recent reports reveal an alarming contrast between Indiana business owners and the Hoosier workforce. While CNBC may have ranked Indiana among the top 15 states to grow a business in, a recent report reveals that the Hoosier state is nearly dead last for employee pay growth.
ADP released its National Employment Report that used the salaries of nearly 10 million individual employees over the past 12 months to determine year-over-year annual pay growth across the United States.
When ranked up against the rest of the nation, Hoosier workers found themselves holding the short straw when it came to growing their paycheck.
Indiana ranked near the very bottom — at 47th — in annual pay growth over the last year. The Hoosier state joined the company of Iowa, Arkansas, New Jersey and Delaware in the unenviable bottom rungs of the rankings (D.C. was included in the state rankings, making a total of 51).
According to ADP’s report, Indiana’s year-over-year annual pay growth was 5.2% over the last year. This stagnant growth in pay not only lags behind the national median of 6.2%, but it also pales in comparison to neighboring states such as Kentucky with a whopping 7.3% pay growth or Michigan and Illinois which offer Midwest workers a pay growth rate of 6.4%.
But while Indiana’s median annual salary of $55,400 may stand on even footing among its neighbors, even outclassing Kentucky and Ohio, the Hoosier state still shows slow overall growth and alarming division between workers and business owners.
CNBC placed Indiana at 13th in its annual rankings of “America’s Top States for Business” citing a low cost of doing business as a boon for business owners. But in a parallel ranking, CNBC also named the Hoosier state “one of the worst states to live and work in.”
That low cost of doing business? CNBC’s methodology measures employee wages as part of that ranking along with tax breaks and incentives. Indiana placed fifth in cost of doing business.
For the actual workers of Indiana, CNBC had grimmer news positioning the state as the seventh worst state to live and work in. CNBC pointed out the state’s lack of inclusiveness (with limited protections against discrimination) along with a second-worst ranking in number of childcare facilities as reasons for the low ranking.
CNBC also awarded Indiana a D- in Life, Health and Inclusion. A D+ in Education. A D+ in Workforce. Indiana did land an A+ in Cost of Living, however, along with scoring an A- in infrastructure.
Joining Indiana in the dregs of the “worst states to live and work in” rankings were mostly southern states that include Arkansas, Tennessee, Missouri, Alabama, South Carolina and Louisana along with firebrand states such as Florida and Texas.
CNBC and ADP aren’t alone in pointing out the worrisome state of Hoosier workers. Another recent report issued by Scholaroo found that Indiana was among the worst states for people to find a job in 2023 while a study published by Prosperity Indiana revealed that wages weren’t keeping up with climbing rent in Indiana.
Experts with the Kelly School of Business at IU say wage growth issues stem back several years.
“Since the great recession, Indiana has struggled with wage growth,” said Phil Powell, the executive director of the Indiana Research Center at IU. “And the reason is that the skills of our workforce is not what the economy needs.”
Powell said Indiana’s skill gap is growing, which means Hoosier workers are not getting rewarded like they are in other states.
“We lack skilled workforce in technical skills, engineering, science, mathematics and technology,” Powell said.
Powell said affordability is a short-term issue. Solving wage problems requires long-term workforce solutions, he said.
“In order for Indiana to be strong in wage growth, it requires long-term solutions for our workforce from our state,” Powell said. “Luckily the General Assembly passed a number of bills this session that brings more innovation and speeds up and makes it easier for younger workers to upskill and prepare themselves for the modern workforce.”
Indiana lawmakers passed a bill during this past session that creates workforce training opportunities in the manufacturing sector for adults with disabilities. Lawmakers also passed another bill that creates workforce development pilot programs that provide career and support services to adult students of state educational institutions.