It is the first month to reach the 3% threshold since September 2021. However, the rate is still low compared to the nation and historic Indiana rates.
“Historically, labor markets are surprisingly healthy now,” said Ball State University economist Michael Hicks, noting that wages have risen in many industries. “Which is a really good place for low-wage workers, especially, right now.”
For example, the median 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 should anticipate some slowdown in the months ahead, we’re coming from a really good place,” he said.
The reason he and other economists predict the “slowdown” in the labor market boils down to inflation and the efforts of the Federal Reserve fight 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 demand on the global supply chain and cause it to crash the very high prices now seen for things like turkey.
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But the Federal Reserve itself acknowledges that this reduction in output will also likely lead to layoffs and lower wages, hurting workers. The belief is that the current inflation it hurts more people, more significantly.
Hicks e other economists strongly emphasize the value of higher education in times like these. They say higher education levels can help insulate workers from the impact of a recession or get them back on their feet faster.
But Indiana’s workforce is generally uncredentialed and, he said, it may already be too late for many workers to get one before a recession hits.
“If I can just put it in historical context,” Hicks said. “The last time we really went into a recession, because the Federal Reserve was raising rates to reduce inflation, was in 1981 or 1982. So if you were alive and remember that time period, and particularly here in the Midwest, it’s been a surprisingly painful recession.
The difference, he said, is that unemployment and inflation rates were much higher during that recession than they are now.
“So just the level of lost demand that we have to do to set the inflation expectation is much lower. And then, thirdly, the industries affected are likely to be manufacturing and construction, which today represent a much smaller share of the overall economy,” he said. “Looking back to 1981-82, the same dynamic is at play. But today the conditions are much more favorable for a soft landing or a modest dip”.
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But manufacturing and construction tend to play a bigger role in Indiana than in the nation as a whole. By itself, the production has the largest number of workers of the large industrial categories of the state.
While the total number of employees at Hoosier manufacturing grew in preliminary estimates for October, several major layoffs they’ve already hit parts of that industry in the last few months.
“So even if it’s a soft landing nationwide, or a very minor downturn, the effect can be pretty significant in those high-production, high-production places in Indiana,” Hicks said.
Across all Indiana industries, the total number of layoffs and other layoffs remained flat, with a preliminary estimate of 31,000 in September 2022. This is the latest month available as of BLS Job Openings and Labor Turnover Survey (JOLTS) data. From January to July, that number had remained at or below 26,000, with an all-time low of 11,000 in May.
“When livelihoods are in jeopardy and you feel that unemployment has risen or more people are being made redundant. It’s 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.”
It indicates the number of people who have left their jobs in the state, which according to preliminary estimates by JOLTS grew to 96,000 in September.
“Higher unemployment could also be just a portion of people leaving their jobs to look for another job to try and get a pay rise,” Prowse said.
Over the summer, it appeared that the number of resignations would begin to taper off, falling below 90,000 after months of being near or above 100,000.
Bow And initially other economists he saw the decline in resignations between May and July as a sign that the “big waiver” may soon come to an end. Now, she’s not so sure.
“It doesn’t look like it’s screaming that we’re heading into a recession, it looks more like there’s a very tight job market,” he said. “The direction it goes in the future, I think, will be a bit unstable due to the trend of inflation. This is uncharted water, at least as of late, but I don’t think it’s alarming in any sense.
The total number of job postings in the state for August and September was well below most for the past two years, JOLTS estimates show. The number of new hires also decreased slightly in September.
“Openings are down a 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, perhaps not in terms of wages or living conditions, and it is the companies that struggle to hire and fill their jobs”.
Preliminary estimates for September had even fewer job seekers than job postings, about five to 10. This is a slight shift from previous months which had about three or four finders for every 10 apertures.
READ MORE: Some companies still planning big hiring efforts despite tight job market, economic warning signs
“We often take [job openings] as a leading indicator, maybe it’s giving us a glimpse into the future,” Prowse said. “Openings are down a bit, but are still high in the broader context.”
In the years before 2021, it was much more typical for monthly estimates to have fewer openings than finders.
Ball State economist Hicks notes that the tight job market isn’t necessarily a great indicator of the quality of jobs people are getting or their ability to weather an economic downturn.
“It’s just people who jump from one business to another to get a signup bonus, because those companies will give you a signup bonus, but they’re very hesitant to raise wages,” he said. “And so that kind of churn at the bottom end of wages gives the impression of a very dynamic economy when there really isn’t a lot of underlying economic growth here in Indiana.”
The data tells us that Indiana’s very tight job market could potentially see some major changes soon. But the numbers don’t capture the whole story. Is this affecting you, your family or your business? Share your story with reporter Adam at firstname.lastname@example.org or on Twitter at @arayesIPB.