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Monday, October 23, 2017
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  • INDIANAPOLIS – “Week after week. Don’t you get depressed or bored telling us about Indiana’s problems and shortcomings?” That was Faye of the Forest, a sprite sitting on the rail of the deck overlooking our trees and creek. Her newly blue and blonde hair was down to her shoulders in ringlets. “Why the change in hair color?” I asked. “To celebrate Indiana,” she answered. “And I want to impress the governor when I see him with the fierce idealism of the Hoosier forest people.” “Yes, you’ve had some success recently saving forested land in Indianapolis,” I said. “Don’t forget the comprehensive urban forest maintenance program we’ve initiated in Highland,” she boasted. “It’s going to remove and replace rotted trees, keep older neighborhoods beautiful and sustain property values.”
  • INDIANAPOLIS – Last week in this space we reported on the poor performance of Indiana in terms of adding jobs (47th in the nation) and advancing incomes (48th). This week we’ll go down to the county level and see where there are bright spots and where conditions are dismal. The rate of change in the number of jobs is a measure of economic success the press and politicos have identified as important. The U.S. Bureau of Economic Analysis reports, from 2005 to 2015, jobs in the nation grew, by 5.9%. Through that recession and recovery, Indiana jobs increased by just 2.3%. Yet 16 Indiana counties surpassed that national rate. Of those 16 counties, four (Bartholomew, Decatur, Sullivan and White) stand out because they also saw average compensation for jobs grow faster than the nation’s 9%. These four are the super stars of a difficult decade.
  • INDIANAPOLIS – Finance is confusing, manufacturing is inspiring, retail is risky, but construction is so …. permanent. What we build shapes lives for generations. We identify with the built environment. It opens us to the world and constrains our behavior in that world. Construction is so fragmented. We know the few big firms in automotive manufacturing, telecommunications, pharmaceuticals, food processing, etc. But can you name the top firms in building highways, sanitary sewers, homes, offices, pipelines, airports? Construction is local and layered with sub-contractors. The company that excavates does not do the paving, paint the lane markings or install the signage. Government regulations are everywhere, yet is the oversight and enforcement adequate? Labor shortages abound, despite union and non-union, public and private training programs. For Indiana, 2015 federal statistics show 13,000 construction establishments with 117,000 employees. That’s 9% of all business establishments and 4.4% of all employees. And those figures are accurate but wrong.
  • INDIANAPOLIS – I’ve been impressed by writings on the Amazon call for proposals concerning the location of their second headquarters. Some writers believe Indianapolis should be flattered by being qualified to compete for the second headquarters to be built by this massive, transformative company. Others contend we don’t have the financial resources required by Amazon’s list of desirable attributes to make the final cut. How would we finance the modern, comprehensive transportation system Amazon envisions? Does Indiana offer the appreciation of innovative thinking Amazon imagines necessary for its new location? However, I find it strange no one objects to the paternalistic, self-congratulatory, insensitive attitude of Amazon’s proposal. The company demands much and offers little in return to its all-too-eager metropolitan supplicants. Amazon wants to add (perhaps) 50,000 jobs to the blessed area, paying an average of (perhaps) $100,000 in total compensation, and (perhaps) $5 billion in construction outlays.
  • INDIANAPOLIS – “Workers,” says the human resources manager. “Customers,” says the small business owner. “Young families,” says the home builder.“Students,” says the school superintendent. “We’ll get what you need,” says Monique representing ManMover, the population recruiting company. “We find the communities that are attracting the people you need. Then we examine what they have done to get those people.” The next day I get the call. “Hi, it’s Monique,” she says. “Got a job for you; tell me which Indiana counties are best at attracting different types of people. Send me what you can in the next 24 hours.” I know a consulting scam when I hear one, but I need the work. “It’s done,” I say and email this information to her: According to the American Community Survey, five-year report for 2015, the largest age group of in-migrants (people who crossed a county, state, or international border to live in Indiana) was those ages 18 to 24. We think of these people as predominantly college students and that is true for certain counties, including Knox, Vigo, Grant, Vanderburgh and St. Joseph. But young people who don’t go to college also move for jobs and/or to establish their own households in counties like Steuben, Spencer and Posey.
  • INDIANAPOLIS - This nation mystifies me. In a country where most folks believe people must be responsible for their own lives, accept the consequences of their actions, we rush to help those who created their own hell. Houston is the latest example. This city paved itself over, failed to control its land use, sprawled in all directions, and now is reaping what it has sown. “Oh, that’s too harsh,” I can hear you say. “Those poor people have been hit with an extraordinary event. It may be the wrath of the All Mighty, but, nevertheless, we have to help.” When a tornado hits Indiana, we file for federal aid. When an earthquake strikes California, they expect federal aid. When a forest fire threatens homes in Colorado, we cheer the heroes paid with our taxes who fight the blaze. Let the White, Eel, Kankakee, Wabash, Tippecanoe, Ohio, or St. Joseph River over-run its banks, then listen to the cries for help.
             
  • INDIANAPOLIS – We used to be able to say that on Census Day (April 1) in 2010 a certain number of persons with certain characteristics lived in a given place. Now, however, you must accommodate the idea that over a one- or five-year period there was an estimated number of persons of given characteristics who lived in certain places. This is not really a new idea. We’re familiar with thinking that the August number of jobs describes a month. If we were honest with ourselves, there could be a different number for each week and, if it mattered, for each day. That’s true for much of the data we use.  In reality, the number of jobs is reported for the week in which the 12th of the month occurs. Each month, the Census Bureau’s American Community Survey (ACS) chooses approximately 295,000 residential addresses and sends questionnaires to the people who live there. That’s about 3.5 million households annually from which one-year data are available for places with 65,000 or more persons.
  • INDIANAPOLIS – What is the most important job of a mayor? Clearing the streets of snow? Garbage collection? Pothole filling? Providing jobs? Enforcing the law and local codes? Certainly all of these are important tasks. Yet number one on my list is land use. How we use the land in our communities is the basis for the future. Soon after he was elected I stopped in for a chat with Bloomington’s mayor, John Hamilton. I told him, in my opinion, the most important task he faced was the future use of the downtown block where the post office once stood. This property, owned by a nearby church, is one diagonal block from the courthouse.  No doubt there are many ideas of how this property should be used. Some would argue for a park. Others would endorse senior citizen housing. There are those who envision a monumental, mixed-use tower. Perhaps, this being Bloomington, a few dream of a gathering place for political rallies and evangelical tent meetings, with a dramatic fountain symbolically representing the free flow of ideas.
  • INDIANAPOLIS – My studies take me all over Indiana with frequent trips into the Data Dungeon. Today I saw Per Capita Personal Income (called PCPI by her friends) alone and sobbing. Passers-by don’t recognize her despite her popularity and stunning figure. “What’s up, kid?” I said to the sad fraction with the growing numerator and the pleasing denominator. “Politicians, economic developers and PR people keep talking about me and they don’t have the faintest idea who I am,” she said. “You know the score,” I told her. “People don’t bother examining both numerators and denominators. In your case, they don’t care how personal income grows in your upper parts as long as it does so faster than the population in lower reaches.”
  • INDIANAPOLIS – Here we are a few months after your daughter’s college graduation and she announces she wants to go into the clergy. Were you prepared for that? Did she prepare for that? No doubt you and she are aware of what kind of income is available for those who have this calling. Nationwide, the U.S. Bureau of Labor Statistics found half the persons in the clergy made less than $45,740, meaning the other half made more than that. This was the annual median wage for clergy in May 2016 when the survey was conducted. That’s not bad. It ranks right in the middle of 820 occupations covered by the survey, and just $180 (or a mere 0.004 percent) below the annual median wage for 140.4 million American workers. There are 49,320 clergy in the survey and they are scattered all across the nation, in numerous religions and denominations. Each may have a distinctive arrangement regarding housing, pensions and other benefits making comparisons difficult. Nonetheless, your daughter surely knew the 820 Hoosier clergy members would be earning less than their national counterparts.
  • INDIANAPOLIS  – Pristina Plowmouth objected to last week’s column in this space. That contribution to social and economic awareness focused on the growing phenomenon of people living alone. “Disheartening,” she said, calling from her estate in Hamilton County. “People living alone are the tragic residue of society’s dissolution. It is the inevitable consequence of delayed marriage, divorce, inappropriate abortion, excessive consumption from bloated incomes, an unfortunate, yet foreseeable outcome, of misguided female emancipation, disregard of traditional generational integration, and blind obsession with personal gratification above familial obligation.” “Thank you,” was all I could reply. “You’ll delight in this week’s offering about unmarried couples living together.” “Where did you obtain such scandalous statistics?” she huffed. “Please, abstain from asking me to give credence to dirty data.” “Don’t you want to know how many such households are in Hamilton County?” I asked and answered before she could reply. “There were over 4,600 unmarried-partner households with opposite sex couples in your county in 2015 according to the Census Bureau’s 2015 American Community Survey. That’s just 4.1 percent of all households in the county.
  • INDIANAPOLIS – My friends have differing views about the money governments give to individuals. Some think it is immoral for any government to give money to people; it weakens individual responsibility and the effort to care for oneself. Others believe such transfers are necessary to keep the underclass from revolting against established authority. Still others foresee economic collapse if low income consumers do not spend enough to sustain a vigorous business environment. On the high ground stand those affirming governments are our agents, fulfilling our moral responsibility to care for the poor, the infirm, and the disadvantaged. Every federal, state, and local transfer program has both its supporters, who feel the warmth of social benefits, and its detractors, who detect the evil whiff of social decay. The following facts will not change the fixed perceptions of my friends. Government transfers to individuals exceeded $2.6 trillion in 2015. Hoosiers had $53 billion or two percent of that total.
  • INDIANAPOLIS – No topic generates more email for me than the persistent belief of readers that wages in Indiana are low because the cost of living is low. I argue that income determines local housing prices and hence the costs of living, given that housing represents 15.6% of consumer spending, exceeded only by health care’s 16.8%. How low is the cost of living in Indiana? If the nation’s cost of living is considered as 100.0, Indiana comes in at 91.4, tied with Louisiana for 36th place among the states and the District of Columbia. That’s just 8.6% below the national average. (These are U.S. Bureau of Economic Analysis (BEA) data for 2014, the latest available.) The highest costs of living are found in the District of Columbia (118.1), followed by Hawaii, New York and New Jersey. The lowest costs are “enjoyed” by residents of Mississippi, Arkansas and Alabama. What is the biggest difference between D.C. and Mississippi? Why is there a spread between them of 31.4 points on this scale of prices? The answer is simple: It’s the price of housing. In D.C., housing services (rented and owner-occupied) come in at 162.5, followed by Hawaii and California. Indiana ranks 39th in housing costs at 75.4 and Mississippi is 50th at 63.2, with Arkansas lowest at 62.5.
  • INDIANAPOLIS – It’s easy to emphasize the pleasant present and forget a troublesome past. With a low unemployment rate and some good economic initiatives, parts of Indiana are doing well today. However, elsewhere in our state, a weak past led to neglect of essential work to maintain resources. It’s not different from an ordinary household. When you’ve had sustained unemployment or low wages, you don’t repair things around the house as needed or replace worn tires on the car; you just don’t have the money. You don’t save as much for retirement or other future needs. Catching up after down times is hard to do. Today we’ll look at just three aspects of metropolitan economic growth from 2005 to 2015: 1) the value of the output in the area as measured by Gross Domestic Value (GDP), 2) the number of wage and salary jobs, and 3) the average compensation of employees (wages, salaries, and employer paid benefits).
                
  • INDIANAPOLIS – It is a pity no town crier rings our news about the latest data for our nation and state. Last week the U.S. Bureau of Economic Analysis made public the 2016 GDP figures. Did members of the Indiana General Assembly or the state administration pause to study and reflect on these numbers? I doubt it. Possibly some isolated journalist picked up a news release on the Internet, but I doubt it. And what would that lone soul report? “Indiana ranked 42nd of the 50 states with a growth rate of just 0.8% in GDP during the closing three months of 2016, compared to the national advance of 1.9%.” No s/he didn’t, not if s/he wants to do any interviews with state officials in the rest of this calendar year. S/he would have to dig and find something cheerful to give every Hoosier a warm, fuzzy feeling: “Indiana doubled New York’s economic growth rate in the last quarter of 2016. Details at 11, 10 Central time.” This wouldn’t be exactly true, but close enough to be acceptable.
                
  • INDIANAPOLIS – “Is that all you got to say this week?” HomeFree asks as he bends over my laptop at the diner. He’s that kind of fellow. Named for his illiterate mother’s favorite movie star, he is inquisitive with a preference for the obscure. “Yes,” I reply. “I’m writing about the relationship between population in a metro area and its economy as measured by GDP.” “Bigger is better,” he says. “The more people, the more and better things an economy can produce.  That means the value of those things (their GDP) is also greater.”  “Not true,” is my rejoinder. “I took all 382 metro areas in the U.S. and found no meaningful statistical relationship between their population size and their Gross Domestic Product.”
  • INDIANAPOLIS – Last month we covered the basic population changes of Indiana and its 92 counties from 2010 through 2016. Now let’s go deeper to look at the components of population changes – natural increase, domestic and international migration. Populations grow because, usually, more babies are born than people die. We call that natural increase which accounted for 96% of Indiana’s population growth in the years of 2011 to 2016. That means migration (domestic and international) was responsible for just 4% of our growth. Economically, babies are important. They spur people to earn so they can spend on cribs, diapers, larger homes, and ultimately education and weddings.  Deaths, although important to selected sectors, do not have the wide economic impact of births. Marion led 70 counties in natural increase with 40,481 more births than deaths. In contrast, among the 22 counties experiencing natural decrease, Henry County (New Castle) led with 572 more deaths than births. The lowest ratios of deaths to births were in LaGrange (0.35) and Hamilton (0.38) counties, while the highest ratios were in Vermillion (1.32), Brown (1.30) and Fayette (1.27).
  • INDIANAPOLIS – Grabill is only 12 miles from New Haven. Both are within Allen County. You can drive from one to the other in less than 20 minutes. The Greater Fort Wayne Business Weekly (April 7) reports a furniture manufacturer is moving from Grabill to consolidated, larger quarters in New Haven. One reason for the short move is to keep 125 experienced workers together. They may even add 60 jobs in the future. That sounds good to me. A Hoosier company is doing well and sees a bright future. Workers are not losing jobs. No doubt their commuting patterns will change, but not drastically and most residents of Allen County will note no differences. It may not be good for Grabill, which will now have vacant buildings that could lead to lower property tax revenues. It will be good for New Haven because one of their vacant buildings will now be occupied, which should increase property values and hence tax revenues. Yet, the Indiana Economic Development Corporation (IEDC) has offered the company a total of $300,000 in tax credits and $60,000 for worker training, contingent on added workers being hired.
  • INDIANAPOLIS – I go to Econ Eddie, the go-to guy, when the inexplicable needs explication. “The Border Adjustment Tax (BAT) is really simple,” he says. “You’re a manufacturer and you ship something to some another country. You get paid for that shipment. But you don’t have to report that revenue on your tax return.” “Ye gads,” I shout. “The taxes I save are a direct subsidy from American taxpayers for me as an exporter. It also gives lower prices to companies and people in that other country, if I pass along my savings. It’s forced charity! Americans can hold their heads high for their generosity to other, poorer nations.”  “Oh, it’s more than that,” Eddie says. “Because you can sell for less, more buyers in other countries will want your product. This means you could invest more in America, hire more American workers, perhaps raise wages or increase your dividends, your executive pay, or up your stock price benefiting thousands of pensioners who hold your stock in their IRAs.”
  • INDIANAPOLIS – Through his budget proposals, President Trump is forcing all of us to be more explicit about our values. Take his desire to eliminate federal funding for the National Endowments for the Arts (NEA), the Humanities (NEH), plus programs for libraries, museums and the Corporation for Public Broadcasting (CPB). These federal organizations will lose $971 million in Trump’s budget. Indiana’s Arts Commission and its Humanities counterpart together get about $1.6 million. The CPB pumps $8.8 million into the state for public radio and TV. Museum and library support comes to $3.2 million. That totals to $13.6 million for Indiana from the feds. Weigh that against the Indianapolis subsidy for the Pacers (a presumably private, professional basketball team) to the tune of $16 million per year. What is the annual subsidy for the Colts? Is there a public subsidy for the baseball team in South Bend? For the hockey team in Fort Wayne? For the Evansville Otters? Let’s be clear, I’m a sports fan. This weekend I watched IU lose a (7-3) baseball game to Nebraska. Need I do more to prove my devotion (addiction) to sports?

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  • McCain rebukes Trump on draft deferments
    “One aspect of the conflict, by the way, that I will never ever countenance is that we drafted the lowest-income level of America, and the highest-income level found a doctor that would say that they had a bone spur. That is wrong. That is wrong. If we are going to ask every American to serve, every American should serve.” - U.S. Sen. John McCain, in a not-so-subtle rebuke of President Trump, who received five Vietnam War era draft deferments for bone spurs on his heel. Trump, who will need McCain’s vote on the budget and tax reform, threatened the ailing war hero last week saying, “I will fight back and it won’t be pretty.” As for the deferments, Trump said in 2016, “I had a doctor that gave me a letter — a very strong letter on the heels.” He said the condition was temporary and that it was “not a big problem, but it was enough of a problem.” 
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  • Hoosier deficit hawks turning into doves
    For years, no, make that decades, we’ve heard Hoosier Republicans from Mike Pence to Luke Messer and Todd Rokita decry the national debt and budget deficits. We’ve gone from a balanced budget when President Clinton left office in 2001 to a deficit of over $1 trillion when President George W. Bush left office in 2009. That’s deficits with a T rather than a B.

    On Wednesday, the Republican-controlled Senate passed a budget plan that will add $1.5 trillion in new debt over the next decade. There was nary a peep of criticism from the entire Indiana Republican delegation. So all these years, the deficit hawk stuff was just BS. Back in 2012, Rokita traveled with a power point presentation on the evils of deficits. "The debt hole is too great now that you can't just grow your way out," Rokita told the NWI Times. 

    In 2016, Pence explained, “I think the fact that under this past administration was of which Clinton was a part, we've almost doubled the national debt is atrocious. Indiana has balanced budgets. We cut taxes, we've made record investments in education and in infrastructure, and I still finish my term with $2 billion in the bank.”

    Last March, conservative radio host Laura Ingraham asked Vice President Pence, "Have you gone from a deficit hawk to a deficit dove?" Pence responded, "No, not in the least. Let me say the President's full budget will be out in a few weeks. The budget outline that was sent to Capitol Hill earlier this week is deficit neutral."

    This is where the “alternative facts” come into play and all the hawks become doves, charging up the federal credit card for the kids and grandkids to grapple with. - Brian A. Howey, publisher.
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