There are two major elements to look at when examining a state’s government workforce—the number of employees and the level of their pay. Each element is measured relative to the national average and summed together to obtain an overall measure of workforce productivity. By this metric, Indiana has the eighth most productive state and local government workforce in the country.
As shown in Chart 1, for state and local government employment, Indiana ranks well below the national average with 15.1 employees for every 100 employees in the private sector—this is -8 percent below the national average of 16.4 and is the 42nd highest ratio in the country.
Additionally, as shown in Chart 2, for state and local government compensation, Indiana ranks very low with government employees earning -0.4 percent less than those in the private sector—this is below the national average of 13 percent and is the 42nd lowest compensation ratio in the country.
Both wages and salaries and benefits contribute to Indiana’s low government compensation ratio. As shown in Chart 3, for state and local wages and salaries, Indiana employees earn -13 percent less than those in the private sector—this is the 37th highest wages and salaries ratio in the country and significantly below than the national average of -8 percent.
As shown in Chart 4, for state and local benefits, Indiana employees earn 55 percent more than those in the private sector—this is -53 percent lower than the national average of 117 percent and is the 7th lowest benefit ratio in the country. Though the differential is highest for benefits, wages and salaries weigh more heavily since it constitute 72 percent of total compensation.
Of course, efficiency for local government is more usefully measured on a more local scale. As such, we have also calculated the employment and compensations ratios of local government workers for every county in Indiana.
The Indiana counties with the highest local government employment ratios include: Union County (42.4), Benton County (33.5), and Crawford County (32.7). The Indiana counties with the lowest local government employment ratios include: Vanderburgh County (6.1), Marion County (6.6), and Gibson County (6.7).
The Indiana counties with the highest local government compensation ratios include: Brown County (48 percent), Ohio County (34 percent), and Greene County (32 percent). The Indiana counties with the lowest local government compensation ratios include: Pike County (-36 percent), Posey (-34 percent), and Vermillion County (-29 percent).
Overall, it is both Indiana’s low state and local employment ratio and compensation ratio that is the source of the good government workforce metric.
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.