Manufacturing Wages Are a Boost for Indiana, Not a Drag

By Andrew Berger, Senior Vice President, Governmental Affairs, Indiana Manufacturers Association.

According to the annual wage and income data from the Bureau of Labor Statistics (BLS), Indiana workers only earned 83.3 cents on the dollar compared to workers across the U.S. This gap is not a new phenomenon, and while it is important to note that the low cost of living and low tax level closes a portion of the earnings gap, a lower wage level in Indiana deserves the attention of the public and policy makers.

As part of the habitual handwringing over this issue, there is a linkage made of Indiana’s lower than average wages with Indiana’s high proportion of manufacturing workers. The claim is that these jobs, characterized as “low-skilled,” require less education and are depressing wages. It is true that many manufacturing jobs do not require a college degree, but some post-high school technical education is increasingly required and always desired. Plus, educational level is not exclusively representative of a skilled workforce.

But what about the wages of these “low-skilled” workers? Using the same BLS statistics, we can compare business sectors across Indiana and the nation:

• In 2022, manufacturing workers in Indiana averaged $72,416 in annual wages.
• This was the third-highest of the major sectors following financial services ($79,113) and information ($74,367).
• Manufacturing workers were paid more than construction, trade, transportation and utilities, other traditionally blue-collar jobs.
• Manufacturing wages were also higher than education and health wages ($60,319), as well as professional and business services ($66,655).

The data does show that Indiana’s manufacturing businesses pay a competitive – if not better – wage than every other sector. And Indiana manufacturing is more competitive with manufacturing outside of the state than many other purportedly more desirable industries are in comparison with the same industries across the country.

This information is important for two reasons.

First, manufacturing has had to grapple with an outdated image of a dead-end or lagging industry for years as many have sought to steer potential workers towards other industries. While there are reasons manufacturing may not be for everyone, compensation is not usually one of them. Wide generalizations about low wages being linked to a large manufacturing workforce can be one more negative impression for potential manufacturing employees. This can have an impact not just on hiring but on student demand going into manufacturing related education programs. The State of Indiana has made quality investments in technical and career education at all levels. Students who enter those programs should be confident that they will earn wages to support themselves and their families.

Second, state and local governments have options on how to direct economic development efforts and resources. Thankfully, Indiana has had a lot of success attracting major manufacturing investments in recent months. Over $8 billion in manufacturing investment has been announced in the first half of 2023. Success in landing manufacturing investment pairs with commitments for high wage jobs. The Indiana Economic Development Corporation reported an average wage of $34/hour for job commitments in the last year.

Hoosiers should be confident that workforce education investment and economic development strategies that play to the strength of an already robust manufacturing economy will boost earnings for workers.