States are often referred to as “laboratories of democracy,” a phrase coined by Supreme Court Justice Louis Brandeis. Although we might debate the utility of a federalist system in our shrinking, ever-more-connected world, it is certainly the case that different states pursue different policies and that the experience of, say, State A may have useful lessons for State B.
It is also the case that Governors tend to portray their own states in rosy terms. In Indiana, the last couple of administrations have certainly “accentuated the positive” and “eliminated the negative.” Scholars and policymakers seeking to evaluate the claims must go beyond the hype and ask inconvenient questions. (It’s wonderful that you brought the XYZ company to Indiana, but doesn’t it pay minimum wage and hire only part-time workers to avoid offering benefits?)
Which brings me to a recent report issued by Indiana’s Institute for Working Families. (Full disclosure: I am on the Institute’s Advisory Board.)
The Institute’s focus is self-sufficiency for Hoosier families, and it conducts research and advocates policies that are calculated to achieve that goal. Every two years, it issues a report measuring the economic health of Hoosier families. This year’s report (available on its website) does not support the rosy claims made by the Administration, to put it mildly.
Despite an improving unemployment rate, the number of impoverished and low-income Hoosiers is still on the rise, median household income is
still declining and income inequality in Indiana is growing… Hoosier families have steadily lost ground, too often at clips greater than the nation and even our neighbors. The data make it clear that Hoosier families are not the fiscal envy of the nation.
The report is lengthy, thanks to copious documentation, but highlights from an accompanying Infographic tell the story: 1,015,127 Hoosiers are below the poverty level—a record high. Another 1,260, 419 live on the edge of poverty. That brings the total number of low-income Hoosiers to 2,275,546. Indiana is home to approximately 6, 500,000 people, so slightly over a third of all Hoosier citizens are struggling.
Since 2007, the number of low-income Hoosiers has increased 20.7%. Indiana’s number of middle and high income residents has fallen by 8.7%.
Median household income in Indiana in 2013 was $47,529—down sharply from 2000, when it was $55, 182.
Indiana’s performance cannot simply be shrugged off as a consequence of the recession. Certainly, the recession was a factor, but between 2007 and 2013, while the country as a whole experienced a 20% increase in the poverty rate, Indiana’s increase was 29.3%.
What accounts for Indiana’s dismal income figures? The Institute’s research suggests a couple of culprits. First of all, there is what the Institute calls “the jobs swap”—during the recession and its aftermath, the state steadily lost jobs in mid-and high-wage industries, while the jobs we added were low wage positions. The numbers tell that story: Indiana added 14,726 low-wage jobs between 2007 and 2013; we lost 35,814 mid-wage jobs and 23,369 high-wage jobs.
And then there was government.
What was Indiana government doing to address the erosion of Hoosier wage levels? It was cutting public employment, trimming the social safety net–and bragging about how “right to work” and a low minimum wage had made Indiana “competitive.”
If we are a “laboratory of democracy,” our lab experiment failed.
On the other hand, I suppose we should be glad we aren’t Kansas…