Indiana’s labor market is still ‘surprisingly healthy’ despite warning signs in new jobs data

Indiana’s unemployment rate slightly increased to 3 percent in October, according to new Bureau of Labor Statistics estimates. Each release of the BLS provides revised initial numbers one month later.

This is the first month to reach the 3 percent threshold since September 2021. However, the rate is still relatively low to the nation and Indiana’s historic rates.

“Historically, the labor market today is very healthy,” said Michael Hicks, an economist at Ball State University, noting that wages are rising in many industries. “Which is just a good place for low-wage workers, especially, right now.”

For example, the average retail wage in Indiana was nearly $18 an hour in October 2022, according to the Bureau of Labor Statistics. That’s significantly higher than the pre-pandemic average wage, which peaked at $15.69 an hour in November 2019.

“So while we have to anticipate some slowing in the next month, we are going from a really good place,” he said.

The reason he and other economists expect the labor market “slowing” down to inflation and the Federal Reserve’s efforts to counter it by increasing the loan interest rate. The hope is that the company will borrow less money and, as a result, reduce production.

It will reduce demand in the global supply chain and reduce it sky high price now seen for something like a turkey.

Read more: Survey: Hoosiers can expect to pay about 14 percent more for Thanksgiving this year

But the Federal Reserve itself recognizes that reduced production will likely also bring layoffs and reduced wages, hurting workers. The belief is that inflation is now people’s back pain, more significant.

Hicks and other economists strongly emphasize the value of further education in times like this. They say a high level of education can help insulate workers from the impact of the recession or get them on their feet faster.

fire Indiana’s workforce is widely lacking in confidence and, he said it may be too late for many workers to get one before a downturn hits.

“If I just put it in historical context,” Hicks said. “The last time we really moved into a recession, because the Federal Reserve was raising rates to reduce inflation, it was 1981 or 1982. So if you live and you remember that time period, and especially here in the Midwest, it was an incredibly painful decline .”

The difference, he said, is that unemployment and inflation rates were higher in that recession than they are today.

“So only the level of lost demand that we have to do to fix inflation expectations is smaller. Then thirdly, the affected industries seem to be manufacturing and construction, which is a smaller part of the general economy now,” he said. “Think back to 1981-82 , that same dynamic is at play. But the situation is more favorable today for a soft landing or moderate descent.

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But manufacturing and construction tend to play a bigger role in Indiana than they do in the nation as a whole. In itself, manufacturing has the largest number of workers of our country’s wide industrial category.

While the total number of Hoosier manufacturing employees rose in early October estimates, some major layoffs has attacked that part of the industry in the past few months.

“So even if it’s a soft landing nationally, or a very mild downturn, the effect can be quite significant in those intensive manufacturing, intensive places throughout Indiana,” Hicks said.

Across all Indiana industries, the total number of layoffs and other discharges remained steady, with a preliminary estimate of 31,000 in September 2022. That’s the latest month available from BLS’ Open Job and Labor Turnover Survey (JOLTS) data. From January to July, the number remained at or below 26,000 – with a historic low of 11,000 in May.

“When livelihoods are on the line, and you hear unemployment has risen or more people are being laid off. That’s very concerning,” said Victoria Prowse, Purdue University economist. “[But] I think we have to remember that these are a number of observations in the context of a wider situation.

He pointed to the number of people out of work in the country, which initial JOLTS estimates showed rose in September to 96,000.

“Higher unemployment may also be partly due to people leaving their jobs to find other jobs to try to raise wages,” Prowse said.

During the summer, it appeared that the number of quits began to decrease, dipping below 90,000 after months of being close to or above 100,000.

Browse and other economists first saw the decline of quits between May and July as a sign that the “Great Resignation” could come to an end soon. Now, he is not so sure.

“It’s not like it screams that we’re going into a recession, it’s just a very tight labor market,” he said. “Where it’s going going forward, I think, is a little bit unstable because of the inflationary setting. It’s uncharted waters, at least at the moment, but I don’t think it’s worrisome in any way.

The total number of job openings in the state for August and September were lower than the majority of the past two years, JOLTS estimates show. The number of new hires shrunk slightly in September as well.

“Openings are down a little bit, but they’re still high in the broader context,” 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 wages or living conditions, and companies are struggling to hire and fill their positions.

Early September estimates still have more job seekers than job openings, about five to 10. That’s a slight shift from the previous month which has about three or four seekers for every 10 openings.

Read more: Some companies are still planning big hiring efforts despite a tight labor market, an economic warning sign

“We often take it [job openings] as a leading indicator, it may give us a glimpse into the future,” said Prowse. “Openings have dropped a little, but they remain high in a broader context.”

In the years before 2021, it is more common for monthly estimates to have more openings than searchers.

Ball State economist Hicks said a 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 switching from one business to another to get a sign-on bonus, because that business will give you a sign-on bonus, but they don’t like the wage increase,” he said. “And that kind of churn on the lower end of wages gives the impression of a very dynamic economy when in fact there’s not a lot of economic growth going on here in Indiana.”

Data tells us the very tight labor market in Indiana has the potential to see some major changes soon. But numbers do not capture the full story. Does this affect you, your family or your business? Share your story with reporter Adam at [email protected] or on Twitter at @arayesIPB.

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