Indiana Economic Life
The centerpiece of Indiana public policy since 2004 has been corporate and individual tax cuts and reduced budgets for education, health care, and other public services. Indiana has been a trend-setter for the nation as to privatization of the public sector: including transferring educational funds from public to charter schools; establishing a voucher system to encourage parents to send their children to private schools; selling off public roads; privatizing public services; and recruiting controversial corporations such as Duke Power to support research at the state’s flagship research universities. The manufacturing base of the state has shifted from higher paying, and unionized, industrial labor (automobiles, steel, and durable goods) to lower paying non-union assembly work such as at the Amazon distribution center.
The positive narrative about Indiana economic growth presented by the current Governor Mike Pence varies greatly from recently published data. For example, between 2013 and 2014, despite enticements to business, Indiana grew at a 0.4 pace while the nation at large experienced 2.2 percent growth. Indiana’s economy historically has been based on manufacturing and has experienced declines since the 1980s and then some increases in recent years touted by the Governor. However, the newer manufacturing is mostly in low-wage non-unionized sectors. For example, the Indiana Institute for Working Families reported on data from a study of work and poverty in Marion County, which includes the state’s largest city, Indianapolis. Four of five of the largest growing industries in the county pay wages at or below family sustainability ($798 per week for a family of three) and individual and household wages declined significantly between 2008 and 2012 (Derek Thomas, “Inequality in Indy - A Rising Problem With Ready Solutions,” August 13, 2014, (www.iiwf.blogspot.com).
Further, Thomas quoted a U.S. Conference of Mayors’ report on wages and income: “wage inequality grew twice as rapidly in the Indianapolis metro area as in the rest of the nation since the recession.” This is so because new jobs created paid less on average than the jobs that were lost since the recession started.
Thomas pointed out that the mayors’ report had several concrete proposals that could address declining real wages and stimulate job growth. These included “raising the minimum wage, strengthening the Earned Income Tax Credit, public programs to retrain displaced workers,” universal pre-kindergarten, and programs to rebuild the state’s crumbling infrastructure. They may have added that declining real wages also relates to attacks on unions in both the private and public sectors and the dramatic reduction in public sector employment.
Thomas added that Indianapolis (and Indiana) should take these data seriously because in Marion County “poverty is still rising, the minimum wage is less than half of what it takes for a single-mother with an infant to be economically self-sufficient; 47 percent of workers do not have access to a paid sick day from work, and a full 32 percent are at or below 150 percent of the federal poverty guidelines ($29,685 for a family of three).”
More recently, November 10, 2014, the Indiana Association of United Ways issued a 250 page report on the state called the “Study of Financial Hardship.” The study, parallel to similar studies in five other states and prepared by a research team at Rutgers University, refers to Asset Limited, Income Constrained, Employed or (ALICE). ALICE refers to households with incomes that are above the poverty rate but below “the basic cost of living.” The startling data revealed that:
-a third of Hoosier households cannot afford adequate housing, food, health care, child care, and transportation.
-more precisely 14 percent of households are below the poverty line and 23 percent above poverty but below the threshold out of ALICE, or earning enough to provide for the basic cost of living.
-570,000 households are within the ALICE status and 353,000 below the poverty line.
-over 21 percent of households in every Indiana county are above poverty but below the capacity to provide for basic sustenance.
Referring to those within the ALICE category of wage earners who struggle to survive but earn less than what it takes to meet basic needs, Kathy Ertel, Board Chairperson of Indiana Association of United Ways said: “ALICE is our child care worker, our retail clerk, the CAN who cares for our grandparents, and our delivery driver” (Roger L. Frick, “Groundbreaking Study Reveals 37% of Hoosier Households Struggle With the Basics,” Indiana Association of United Ways, November 10, 2014, (Roger.Frick@iauw.org).
Assessing the current state of the Indiana economy depends upon where one is located in terms of economic, political, or professional position. Those Indiana men, women, and children who come from the 37 percent of households who earn less, at, or slightly above the poverty line probably have a negative view of their futures. For them, the tax breaks for the rich and the austerity policies for the poor are not positive.
Perhaps the starkest fact to note in reference to the growing economic insecurity in the state of Indiana over time is that in 1970 forty percent of Hoosier workers were in unions, then the state with the third highest union density. Today only 11 percent of workers are in trade unions. The most recent legislative defeats Indiana workers have suffered include passage of a Right to Work law and repeal of the state version of prevailing wage. The Daniels/Pence administrations have used charter schools and vouchers to destroy teachers unions. In addition, in his first day in office in January, 2004, newly elected Governor Mitch Daniels signed an executive order disallowing state employees the right to form unions on their behalf.
In 2005 the Indiana state government (legislature and governor) passed the first and most extreme voter identification law. Voters were required to secure voter identification photos. Michael Macdonald a University of Florida political scientist estimated that requiring voter IDs reduces voter participation by 4-5 percent, hitting the poor and elderly the hardest. In addition, Indiana law ends voter registration in the state one month before election day (the polar opposite of same day registration). And, polls close at 6 p.m. election day, among the earliest closing times in the country. Finally, requests for absentee ballots require written excuses.
Republican control of the executive and both legislative branches led to redistricting which further empowered Republicans and weakened not only Democrats but the young and old and the African American community. Nine solidly Republican congressional districts were drawn in 2000. As to the state legislature, by 2014 of 125 state legislative seats up for election, 69 were uncontested. Most shockingly, 2014 Indiana voter turnout was 28 percent, the lowest state turnout in the country. Indiana government has been controlled by Republicans (the governorship since 2004, and both legislative branches since 2010).
Traditionally when Democrats were in the Governor’s mansion and/or controlled a branch of the legislature, they too tended to support neoliberal economic policies, but less draconian, and had been more moderate on social policy questions. In recent years, many legislators and the two most recent governors have been friends of or received support from the American Legislative Exchange Council (or ALEC) funded by the Koch brothers.
With ALEC money, some active Tea Party organizations, the growth of rightwing Republican power, and centrist Democrats, Indiana government has been able to initiate some of the most regressive policies in reference to voting rights, education, taxing, and deregulation in the country. And as the data above suggests, the political economy of Indiana has increased the suffering of the vast majority of working families in the state. Other data suggests that the quality of health care, education, the environment, and transportation have declined as well.
The political picture is made more complicated by the fact that Indiana is really “three states.” The Northwest corridor, including Gary and Hammond, are cities which have experienced extreme deindustrialization, white flight, and vastly increasing poverty. The politically active from the area look to greater Chicago for their political inspiration and organizational involvement. Democratic parties are strong in these areas but voter participation is very low.
Central Indiana includes a broad swath of territory with small cities and towns and the largest city in the state, Indianapolis. Much of the area is Republican, many counties have significant numbers of families in poverty, and some smaller cities have pockets of relative wealth. Democrats hold some city offices but the area is predominantly Republican.
The southern part of the state, south of Indianapolis, in terms of income, political culture, and history resembles its southern neighbor Kentucky, more than the northern parts of the state. The state of Indiana was the northern home of the twentieth century version of the Ku Klux Klan. In the 1920s, the KKK controlled Indiana state government. That reality, the institutionalized presence of overt racism, must be remembered as an aspect of Hoosier history that may still affect state politics.
Part 3 will address resistance and the development of social movement responses to the changing national and state political economy.