Report: Indiana lags neighbors, peers in key business categories

The Indiana Chamber of Commerce released a report Thursday afternoon that says the state lags its neighbors and other competitor states in several key economic metrics.

The report evaluated Indiana in four general areas—talent, business climate, infrastructure and creative culture—and drilled into topics such as educational attainment, per-capita income, state and local government spending, health insurance premiums, smoking and obesity rates, electricity prices, internet connectivity and entrepreneurship.

Of the 32 metrics ranked in the report, Indiana made the top 10 of states nationwide six times and the bottom 10 four times.

According to the report, Indiana is excelling in the categories of state and local spending, regulatory freedom, job creation at businesses at least 6 years old, university business spinoffs, employment at U.S. affiliates of foreign companies, and exports as a percentage of gross domestic product.

But the state is not doing well when it comes to the percentage of adults starting new businesses, job creation at businesses up to 5 years old, smoking rates, and the percentage of the population with a bachelor’s degree in science or engineering.

In addition to providing a nationwide ranking in each data point, the report specifically looked at how Indiana compares to nine other states: Michigan, Illinois, Ohio, Kentucky, Utah, Tennessee, Iowa, North Carolina and Minnesota.

Kevin Brinegar, president and CEO of the Indiana Chamber of Commerce, said he thinks the report shows that the state is making progress, but the trick is improving faster than other states to maintain a competitive advantage.

For example, Brinegar said the percentage of Hoosiers with a post-secondary credential or degree has increased about 10 points since 2013, bringing it up to about 43%, but the state still ranked 38th in the nation in that metric.

Compared to neighboring and competitor states in that category, Indiana is ranked nine out of 10, just slightly above Tennessee. At least 50% of residents in Utah, Illinois, Minnesota and North Carolina have some post-secondary education.

“Some things to celebrate, but I think this snapshot report shows we still have much work to do,” Brinegar said.

Brinegar said he thinks Indiana could make significant progress in the coming year, given its strong financial position prior to the pandemic, and if state officials use the federal pandemic aid wisely. He added that he was pleased to see Gov. Eric Holcomb recently directed $50 million of the Coronavirus Aid, Relief and Economic Security Act funding to expand several workforce development programs.

One area Brinegar said needs attention is education, and he believes the Indiana General Assembly should hold teachers accountable for standardized test scores.

In the 2020 legislative session, lawmakers passed bills to hold schools and teachers harmless for two years for low scores on the new state standardized test known as ILEARN and to decouple teacher evaluations from student test scores.

“The results are what they are,” Brinegar said. “It’s not a bad test.”

He said education has ramifications for other key metrics, like per-capita income and the state’s smoking rate.

Indiana ranks 39th overall for per-capita income, and when adjusted for cost of living, the state is 26th in the nation. When compared to the nine neighboring and competitor states in the report, Indiana is ahead of only Kentucky and Tennessee for per-capita income. When adjusted for cost of living, Indiana ranks higher than only Kentucky and Utah.

The state’s smoking rate was nearly 22%, according to data from 2018, which puts it at 47th in the country. Out of the nine other states in the report, Indiana is doing better than only Kentucky.

“People with college degrees by and large don’t smoke,” Brinegar said. “Much of this is tied together, and it comes back to the education and training.”

Brinegar said the report shows the state also needs to make more progress in lowering energy prices, which could affect manufacturing, and stimulating entrepreneurship and venture capital.

Indiana is 31st overall in retail industrial electricity prices and 44th overall for the percentage of adults starting a new business each month, according to the report.

“Plenty of work yet to do,” Brinegar said. “We’ll just stay at this.”