PRINCETON Ind. (Reuters) - President Barack Obama took credit for an improving jobs picture on Friday, but blamed businesses for stingy pay policies that are preventing workers from having enough money to get by.

A day after giving an economic speech at Northwestern University touting the success of his administration's economic policies, Obama reveled in a new report showing the U.S. jobless rate had fallen to a six-year low.

But at a town hall-style meeting at a manufacturing plant in Indiana, the president said companies that have the strongest balance sheets in history were not sharing their wealth with the employees who helped fuel their success.

"It's not as if companies don't have some room to pay their workers more. They're just not ... doing it," Obama told a friendly audience at Millennium Steel Service.

"A greater and greater share has been going to the corporate balance sheet and ... less and less of a share is going to workers."

Obama is hoping economic improvements will help buoy Democrats in November congressional elections and avoid a Republican takeover of the U.S. Senate. But despite a jobless rate down to 5.9 percent, many Americans are still without jobs and feel disenfranchised in the current economy.

Obama said companies were taking advantage of a still-soft labor market in which people were afraid of leaving their jobs for fear of not finding employment elsewhere.

The latest jobs figures could help change that. U.S. non-farm payrolls rose by 248,000 last month and the jobless rate fell two-tenths of a point to 5.9 percent, the lowest since July 2008, according to the Labor Department.

"We're on pace for the strongest job growth since the 1990s," Obama said.

Echoing his comments from Thursday, Obama said the positive economic trends were a direct result of policies implemented by his administration, including the government bailout of the U.S. auto industry.

He pressed companies to raise the minimum wage and rejected arguments, in otherwise friendly questioning from the audience, that doing so would make them less competitive.

Obama also got into a discussion with Indiana's Republican Governor Mike Pence, a potential 2016 presidential candidate who has resisted the Democrat's entreaties to expand the Medicaid healthcare program for seniors in his state.

During a lengthy exchange on the tarmac after Air Force One arrived at the Evansville airport, Pence told the president he would prefer to expand a state program for the elderly instead of accepting the federal government's option.

Opposing the expansion of Medicaid is a position many Republican governors have taken for their states as a way to resist parts of Obama's signature healthcare law, the Affordable Care Act.

"We have ruled out expanding traditional Medicaid, but as I reiterated to the president today, if we have the opportunity to build on the Healthy Indiana Plan to expand coverage the Indiana way, we're open to doing that," Pence said.

White House spokesman Josh Earnest said Obama told Pence that "thousands of Hoosiers would benefit" if Pence accepted Medicaid expansion.

(Additional reporting by Steve Holland and Roberta Rampton in Washington. Editing by Andre Grenon)