The unemployment rate in Indiana rose slightly to 3 percent in October new estimates from the Bureau of Labor Statistics. Each BLS release contains a preliminary figure which is revised the following month.
It is the first month since September 2021 to hit the 3 percent threshold. However, the rate is still low in comparison to the nation and Indiana’s historical courses.
“Historically, job markets are amazingly healthy now,” said Michael Hicks, an economist at Ball State University, noting that wages have risen in many industries. “It’s a really good place for low-wage workers right now.”
For example, in October 2022, the median retail wage in Indiana was nearly $18 an hour. according to the Bureau of Labor Statistics. That’s significantly more than the pre-pandemic median wage, which peaked at $15.69 an hour in November 2019.
“Although we should expect some slowdown in the coming months, we believe we are in a really good position,” he said.
The reason he and other economists expect the labor market to “slow down” boils down to this Inflation and the efforts of the Federal Reserve combat it by raising interest rates on loans. The expectation is that companies will borrow less money and, as a result, reduce production.
This will put less strain on the global supply chain and bring it to a standstill the sky high prices seen for things now like turkey.
READ MORE: Poll: Hoosiers can expect to pay about 14 percent more for Thanksgiving this year
But the Federal Reserve itself recognizes that this reduced production is also likely to lead to layoffs and wage cuts, which will hurt workers. The belief is that the current inflation hurt more people, stronger.
hiccups and other economists emphasize the value of further education in times like these. They say that a higher level of education can help protect workers from the effects of a recession or get them back on their feet faster.
but The Indiana workforce is broadly lacking in credentials and, he said, it may already be too late for many workers to get one before a downturn hits.
“If I may just put that in historical context,” Hicks said. “The last time we really went into recession because the Federal Reserve hiked interest rates to bring down inflation was in 1981 or 1982. So if you were alive and remember that time, and especially here in the middle West, it’s been an amazingly painful downturn.”
The difference, he said, is that unemployment and inflation rates were much higher at the start of this recession than they are now.
“Therefore, the sheer amount of lost demand that we need to do to fix inflation expectations is much smaller. And third, the sectors affected are likely to be manufacturing and construction, which today account for a much smaller proportion of the overall economy,” he said. “When I think back to 1981-82, it’s the same dynamic that’s at play. But conditions are so much more conducive today for a soft landing or a slight downswing.”
Join the conversation and sign up for the Indiana Two-Way. Text “Indiana” to 73224. Your comments and questions in response to our weekly text will help us find the answers you need about issues nationwide.
But manufacturing and construction tend to play a bigger role in Indiana than across the country. Manufacturing alone has the largest number of workers of the broad industrial categories of the state.
While total Hoosier manufacturing employees increased in the October preliminary estimates, several major layoffs have already hit parts of this industry in recent months.
“Even if it’s a soft landing or a very mild downturn statewide, the effect can be quite significant in these production-intensive, high-intensity places across Indiana,” Hicks said.
Across Indiana’s industries, the total number of layoffs and other layoffs remained steady, with a preliminary estimate of 31,000 in September 2022. This is the latest month available from the BLS Job Openings and Labor Turnover Survey (JOLTS) data. From January through July, that number had stayed at or below 26,000 — with an all-time low of 11,000 in May.
“When livelihoods are at stake and you hear unemployment has gone up or more people are being laid off. This is very worrying,” said Victoria Prowse, an economist at Purdue University. “[But] I think we need to remember that these are a small number of observations in the context of a larger situation.”
She points to the number of people quitting their jobs in the state, which jumped to 96,000 as of September, according to preliminary estimates by JOLTS.
“The higher unemployment could also be just part of people leaving their jobs to look for another job to try and get a raise,” Prowse said.
During the summer, the number of layoffs appeared to dwindle, slipping below 90,000 after months of being near or above 100,000.
prowse and other economists first saw the drop in layoffs between May and July as a sign that the “Great Resignation” could soon be coming to an end. Now she’s not so sure.
“It doesn’t look like we’re screaming that we’re heading for a recession, it looks like the job market is very tight,” she said. “Where it goes in the future I think is a bit unstable due to inflation adjustment. That’s new territory, at least recently, but I don’t think it’s alarming in any way.”
JOLTS estimates show that the total number of job openings in the state in August and September was well below the majority of the past two years. The number of new hires also fell slightly in September.
“Openings have gone down a bit, but in the broader context, they’re still up,” Prowse said. “So I think it’s the workers who really have the power here – [at] at least in terms of jobs, maybe not in terms of their wages or living conditions, and it is the companies that are struggling to hire and fill their positions.”
September’s preliminary estimates still had fewer jobseekers than open positions, about five to ten. This is a slight shift from previous months which had about three or four seekers for every 10 openings.
READ MORE: Some companies are still planning big hiring efforts despite a tight job market and economic warning signs
“We take often [job openings] As a leading indicator, it might give us a glimpse into the future,” Prowse said. “Openings are down a bit, but in the broader context, they’re still up.”
In the years leading up to 2021, it was far more typical that monthly estimates had fewer open positions than searchers.
Ball State economist Hicks notes that the tight labor market isn’t necessarily a good indicator of the quality of jobs people are getting or their ability to weather an economic downturn.
“It’s just people going from one company to another to get a sign-on bonus, because those companies give you a sign-on bonus, but they’re very reluctant to raise wages,” he said. “And so this kind of outflow at the bottom of wages gives the impression of a very dynamic economy, when in fact there isn’t much underlying economic growth here in Indiana.”
The data tells us that Indiana’s very tight job market may see some major changes soon. But numbers don’t tell the whole story. Are you, your family or your company affected? Share your story with Reporter Adam at [email protected] or on Twitter @arayesIPB.