Average/Median–Or Lying With Statistics

I have previously mentioned–and sometimes quoted–my friend Morton Marcus. Marcus   is an economist; he is retired from Indiana University, where for many years he headed up the Kelly School’s business research center. Morton and I have been friends for a long time, and have just co-authored a book on the women’s movement. (More on that when it’s published.)

Morton also writes a weekly column on economic data  called “Eye on the Pie,” explaining in relatively simple language what various data points tell us about Indiana. That column runs in a number of the remaining small newspapers around the state. In a recent column, he made a point that I think is so important I feel compelled to share it.

Morton fashioned his column as “A note to Gov. Holcomb,” and began by saying that normally, he doesn’t write to the Governor.

But this week is different. A few days ago, you gave your “State of the State” address to the General Assembly. It was a nice talk and very well presented.
You had some good ideas for our state, but, and this is awkward for me to say, you don’t have a staff that keeps you from making the same mistake time-after-time. You’re not the only Governor who makes this mistake. I’ve known them all from Gov. Whitcomb onwards and they all make the same mistake.

And what was that mistake? (I must admit, it’s an error I have often made too.) Let Morton explain:

Almost always the Indiana Economic Development Corporation (IEDC – bless their hearts) tells us the average wage going to be paid by a firm they have arranged (lured, bribed) to open or expand in Indiana.

Most of the media (bless their hearts) regurgitate the press release because they don’t have the time or energy to remember that the average is the mean of a set of numbers. It can be heavily influenced by extreme (high or low) values.

The median, however, tells a different, more meaningful story (if you’ll excuse a little pun there). The median is the wage above which half of the employees will get paid and below which the other half of the workers will be paid.

Let’s say the top gun gets paid $150,000 per year. The #2 gets $75,000, the other eight get $30,000 each. That’s a total payroll of $465,000 for ten employees or an average (mean) annual wage of $46,500. Yet the median pay is $30,000. That’s $16,500 (35%) below the IEDC-advertised average.

From what I hear, Governor, you’re not the type who intentionally misleads or lies to the people of Indiana. But by using the average (mean), rather than the median figure, you’ve been passing on some real whoppers over the years.

If I might have just a bit more of your attention, let me note the average (mean) annual pay for all occupations in Indiana in 2021 was $50,440 (37th in the nation) or $12,110 (32%) above the median Hoosier pay of $38,330 (39th among the 50 states).

With just two years left in your term of office, you said you were going to work harder than ever for all Hoosiers. Maybe you could get IEDC and your staff to give you the most accurate, realistic numbers. Then the people of Indiana would not continue to be misled by excess enthusiasm and just plain ignorance.

When I read this column, it immediately reminded me of a book I read several years ago, debunking several of the claims that were then being made about the “failures” of the nation’s public schools. The authors noted that much of the data being uncritically reported about “averages” was similar to the rather misleading result one would get when averaging a mouse with an elephant.

If you average my income with that of Bill Gates, you’ll come up with a pretty impressive average…

Actually, Morton’s column does inadvertently highlight a failing of the education system: too many Americans (including, I am sorry to say, the one writing this blog) are innumerate–lacking a basic knowledge of mathematics and arithmetic. That innumeracy encourages the use of statistics to mislead. As the saying goes: statistics don’t lie, but liars (and innumerate folks) do use–or misuse– statistics.

The Governor’s error perpetuates the erroneous belief that Indiana is succeeding with an economic development approach that relies almost entirely on keeping the state’s  taxes low–and ignores the fact that those low tax rates prevent the state from spending tax dollars to achieve a quality of life that would be far more likely to attract the businesses and skilled workers we need.

More on that to come….

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It’s Not Just In Washington

It seems as if the rule of law is under assault everywhere.

A recent story by Reveal, a nonprofit news organization, alleges that during the competition for Amazon’s second headquarters, the state made four safety citations against the company “go away.” (I find it illuminating–and incredibly depressing– that the Indianapolis Star simply published Reveal’s investigative report. It’s just one more bit of evidence that the Star itself no longer has the capacity to engage in investigative journalism or fulfill its watchdog role.)

When an Amazon worker was killed by a forklift in a Plainfield warehouse in 2017, the state of Indiana’s investigator found the company was at fault. The state cited Amazon for four major safety violations and fined it $28,000.

But an investigation by Reveal from The Center for Investigative Reporting has found that, as Gov. Eric Holcomb sought to lure Amazon’s HQ2 to Indiana, state labor officials quietly absolved Amazon of responsibility. After Amazon appealed, they deleted every fine that had been levied and accepted the company’s argument — that the Amazon worker was to blame.

The investigator on the case, John Stallone, had arrived at the warehouse a day after 59-year-old Phillip Lee Terry was crushed to death. He was so troubled by the pushback he was getting from higher-ups that he secretly recorded his boss, Indiana OSHA Director Julie Alexander, as she counseled the company on how to lessen the fine.

“It’s like being at a card table and having a dealer teach you how to count cards,” Stallone said.

Stallone is quoted as saying that pressure to back off came from “as high up as the governor’s mansion.”

The governor has reacted angrily, sending Reveal and the Star an intimidating “cease and desist” letter, and insisting that he was not involved in handling the dispute. The officials at the labor department have thus far declined to be interviewed.

According to Reveal,

Indiana OSHA issued four serious safety citations, for a total fine of $28,000. Stallone sought more, but he was getting pushback. On Nov. 20, 2017, Stallone joined his boss, Julie Alexander, the Indiana OSHA director, as she called Amazon officials. He secretly recorded the conversation, which is legal in Indiana, and shared the recording with Reveal.

During the call, Alexander told the Amazon officials what she’d need from them in order to shift the blame from the company to “employee misconduct,” according to the recording….

Some days after the conference call with Amazon officials, Stallone said Indiana Labor Commissioner Rick Ruble pulled him into his office. The governor was there, too, standing by the commissioner’s desk, according to Stallone.

He recalled that Holcomb told him how much it would mean to Indiana if the state won the Amazon headquarters deal. Then, Stallone said, the commissioner told him to back off on the Amazon case — or resign.

Stallone did resign, and reported the situation to OSHA.

The same day Stallone sent his whistleblower email, Amazon’s corporate offices in Seattle gave a $1,000 campaign contribution to Indiana’s governor. It was years before Holcomb would next face reelection, and Amazon hasn’t donated to him before or since.

Perhaps–as the Governor and labor officials insist– Stallone is just making entirely innocuous actions seem nefarious, although it is difficult to imagine what his motive might be. Or perhaps, the prospect of winning Amazon’s headquarters–or at the very least, avoiding measures that might make the state less competitive–persuaded the Governor and other officials to make an exception to the rules.

These days, everywhere you look, exceptions are swallowing the rules.

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Asking A Favor

I want to ask a favor of my readers in central Indiana–especially those who live or work in downtown Indianapolis, but also those who come downtown for sporting events, theater, restaurants and other entertainment.

I have previously posted about the upcoming project to repair crumbling Interstate bridges and roads in Indianapolis’ downtown. The city has a once-in-a-lifetime opportunity to correct the dysfunctions that were a consequence of poor decisions made 50 years ago, but it has become increasingly clear that INDOT — the state agency responsible for the project–is determined to dismiss the alternatives presented to them for consideration, and simply augment and buttress the existing configuration. (The agency claims to be evaluating the alternatives, but when they “explain” that putting the downtown interstates in a tunnel would be prohibitively expensive using an example from Syracuse that required boring through solid rock (Indianapolis would only have to dig a ditch), it is apparent that they are not acting in good faith. Apple-to-apple comparisons are available.

Downtown businesses and civic groups, Historic neighborhoods, architects and planners and lots of downtown residents have formed a coalition to push for that evaluation. We aren’t arguing about the need to repair this infrastructure, but we don’t want to lose the opportunity to mitigate the problems caused by the original construction.

The favor? Write a letter to Governor Holcomb, asking him to instruct INDOT to produce  legitimate, comprehensive, good-faith evaluations of the alternatives available. Here is the letter I have sent; feel free to use it as a template.

Dear Governor Holcomb,

I am writing to you as a citizen of Indiana and a resident of downtown Indianapolis who is concerned about a major project being planned by INDOT to repair and widen the portions of Interstates 65 and 70 commonly referred to as the “spaghetti bowl.”

Fifty years ago, when the interstates were constructed, they were routed through an Indianapolis downtown that had been largely abandoned for the suburbs–a downtown dramatically different from today’s vibrant city center. The decisions made at that time divided neighborhoods, exacerbated public safety problems, and significantly delayed the ensuing commercial and residential redevelopment of our downtown.

Those interstates and their bridges are now deteriorated and require extensive and very expensive repairs. Indianapolis thus has a once-in-a-lifetime opportunity to dramatically improve what everyone concedes is a thoroughly dysfunctional system. A thoughtful revamping could improve traffic flow and restore community connectivity and walkability; it could also spur economic development that would significantly add to the city’s tax base.

Whatever decisions are made now will be in place for at least fifty to sixty years, so it is critical that this project fix current problems and enhance—not degrade—the city’s quality of life.  A routine, “off the shelf” repair and lane widening project will simply lock the current problems into place.

In the face of INDOT’s clear intent to proceed with that “off the shelf” plan, a coalition composed of planners, architects, landscape architects, and business and civic leaders has come together and proposed two potential alternatives to the currently proposed approach. Both alternatives would free up considerable acreage for commercial development that would add to the city’s tax base, while the plan currently being considered—with massive concrete walls, longer underpasses and increased noise and air pollution– would substantially reduce the assessed value of a large number of properties, as well as the desirability of significant portions of downtown’s residential and historic neighborhoods.

When the current interstate routes were chosen, Indianapolis had no historic districts; today, those interstates disrupt five such districts. In our city, as elsewhere, historic district designations have generated an enormous amount of investment. Property values have continued to rise due to the attractiveness, walkability and residential character of those districts. INDOT’s current approach threatens that investment.

Fifty years ago, mistakes were made. Indianapolis has a rare opportunity to correct those mistakes. Members of the Coalition do not dispute the need for major repairs. We do dispute the clear preference of INDOT to effect those repairs using a standardized approach with which they are familiar and comfortable (and which would be entirely appropriate in a suburban or rural setting).

This is an issue requiring leadership that can only come from your office. I hope you will ensure that the alternatives proposed by the Coalition receive a genuine, unbiased evaluation.

Yours truly,

If you decide to email or snail-mail the Governor, I’d really appreciate a note telling me you did so!

Tomorrow, we’ll return to my usual ranting….

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