Industrial Upturn? Northwest Indiana Workers Secure Raises

MUNSTER, Ind. (AP) — Steel, oil refinery and auto parts workers in northwestern Indiana are getting their first pay raises in years, and an economist says their bigger paychecks will boost the region's economy by giving people more disposable income to spend.

Steelworkers at ArcelorMittal and U.S. Steel will receive 14 percent raises over the next four years, while workers at BP Whiting Refinery will get 11 percent raises over the next three years, The (Northwest Indiana) Times reported . Workers at Lear's seat-making factories also secured unspecified wage increases.

The United Steelworkers union is proud of the raises the workers were able to secure, said Mike Millsap, the union's District 7 director.

"Workers made sacrifices to get the companies to the point where they're at today," he said. "Many are happy to get decent wage increases."

The raises will give a "shot in the arm" to the area's economy by giving workers more money to spend at local businesses, said Micah Pollak, an assistant professor of economics at Indiana University Northwest.

"They bring more disposable income into the hands of its residents, which, in turn, is multiplied into greater spending in our local economy, which will spill over into other sectors like retail, food service, entertainment," he said.

The raises also point to a recovery in the region's industrial sector, Pollak said.

Northwest Indiana saw strong overall economic growth last year, with a 2.3 percent growth rate that was more than double that of the two previous years, he said.

Whether that growth continues over the long term will depend both on how long the nation's current trade-war "and anti-globalization sentiment" continues and how the political and financial uncertainty that's forecast for 2019 plays out, Pollak said.

President Donald Trump's administration has imposed tariffs that have raised prices on imported steel and aluminum, but Pollak said tariffs alone can't give a boost to northwest Indiana's heavy industry forever.

"While the tariffs have been effective so far at import substitution, there are several long-term concerns we need to be aware of," Pollak said. "First, many manufactured goods have long supply chains, many stages of which may be international. Rebuilding these supply chains in the U.S. will take some time."

He noted that BP recently announced that it's seeking some exceptions from the tariffs on steel because it requires a steel product that's not currently produced in the U.S.