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Jobs back after recession; pay lags

Manufacturing loss means a smaller payback for many

First, the good news:

The U.S. has regained the 8.7 million jobs that were lost during the Great Recession, and employment has even surpassed a pre-recession peak of 13.4 million jobs in 2008.

And now, the bad news:

Americans are being paid less, to the tune of 23 percent less than they were before the recession.

That's according to a new study released by a task force of city mayors Monday. The study also highlighted a growing wage gap between the highest earning households and the poorest.

The report, prepared for the U.S. Conference of Mayors, even touched on how much median household incomes are expected to grow in certain metropolitan areas throughout the coming years. At first glance, things are not good for Fort Wayne.

According to the report, median incomes in Fort Wayne will grow about 2 percent through 2017, which ranks as the 360th fastest-growing area out of 363 in the report. Bloomington came in 357th with a growth of 2.2 percent.

Lawrence, Kansas, has the fastest-growing median income growth at 5.3 percent.

While a lot of the decline has to do with the loss of manufacturing jobs, the report said, those numbers can be a bit misleading, according to economists.

“Indiana actually came out of the recession ahead of a lot of other states,” said Jim Diffley, an economist for IHS Global and the author of the study. “There has been a lot of growth in other places, places that are still catching up with a deeper recession. So some of (those results) are just a timing issue.”

The report found what has not come as a surprise to economist or others keeping there eyes on the news.

The rich have gotten richer while the middle- and lower- classes have fallen further behind.

The study found that the highest 20 percent of households saw their share of income rise from 43.6 percent in 1975 to 51 percent in 2012. Meanwhile, the 2012 household median income of $51,017 was the lowest – in real terms – since 1995.

In 2013, Fort Wayne's household median income of $49,300 ranked 160th out of the 363 metropolitan areas studied in the report.

And many Hoosiers have felt the same widening wage gap experienced across the country, according to Derek Thomas, a senior policy analyst at the Indiana Institute for Working Families, which conducts research and promotes public policies that help Hoosiers maintain economic self-sufficiency.

Thomas said the pay in low-wage jobs has continued to decline in real dollars and that while Indiana lawmakers and officials are trying to lure companies to bring jobs here, in many cases those are jobs that do not offer a sustainable wage for families.

Recently, the Indianapolis mayoral administration touting the recent announcement that Lowe's will locate a call center in that city, which will bring 1,000 jobs. Most of those jobs, though, pay $10 to $14 an hour.

Hardly enough to support a family, according to economists.

“I think Indiana sort of has these low-road growth strategies,” Thomas said. “

We're interested in attracting almost any job.”

Those jobs are needed, though, and being taken, according to the Conference of Mayors study. That is also contributing to the growing wage gap.

High-paying manufacturing and construction jobs were among the most lost in the nation from the first quarter of 2008 to the second quarter of 2014.

Among the top jobs gained during the same time frame have been in the accommodation and food services and retail trade, both which pay an average annual wage considerably less than manufacturing and construction.

Mayor Tom Henry's administration responded with a statement saying it had not had the opportunity to fully review the Conference of Mayors wage gap report.

“However, according to the most recent data, the post-recession economy in Northeast Indiana delivered an upturn in per capita personal income, which is an important economic indicator,” the statement said.

“The city of Fort Wayne has been part of a comprehensive approach to bolstering Fort Wayne's job market with our partners in economic development, education and the private sector. As such, Mayor Henry has been committed to strengthening the local economy through providing a structure for business growth, like infrastructure investment, improving permitting and providing an outstanding quality of life for Fort Wayne residents, which in turn creates, retains and attracts jobs.”

David Dilts is a professor of economics at IPFW.

In Allen and the northern counties during the recession, there was a huge dent in the sales of recreational trailers and vehicles like RVs as well as automobile jobs, Dilts said. The loss of jobs in those sectors affected other areas, such as retail.

“Those were big, high-paying jobs that supported households,” Dilts said. “When you lose those, you lose other jobs because they support other industries.”

Dilts pointed to empty storefronts at strip malls as well as Jefferson Pointe and Glenbrook Square as evidence of this happening in real time. People who had manufacturing jobs but had to take a $10-an-hour gig are no longer buying the goods or living a lifestyle they had lived before.

“You can't support your local friendly Mexican restaurant when you don't have the money to spend on a burrito,” Dilts said. “You're home making hot dogs.”

Dilts said bolstering industries with more union jobs will help Fort Wayne and bring back more retail. He also said pumping money into IPFW to make it an independent university – complete with a medical school, law school and other state of the art education – would help bolster the city, much like big universities have helped places like Houston, Ann Arbor, and what's known as the triangle in North Carolina with Raleigh, Durham and Chapel Hill.

“There are thousands of things that can be done,” said Dilts, who added that he is retiring soon and putting money into IPFW now would not affect him. “You have to have a good, cold hard look at the economics.”

jeffwiehe@jg.net

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