January 28, 2022

Indiana has historic low unemployment, but is that always a good thing?

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A poster board for a Starbucks in Indianapolis advertising a job opening. - Justin Hicks/IPB News

A poster board for a Starbucks in Indianapolis advertising a job opening.

Justin Hicks/IPB News

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Low unemployment rates are generally a good thing. It means almost anyone looking for work can find a job. But with 38 counties at 1 percent or less unemployment rates (not factoring in seasonal adjustment), the state may be entering unusual territory where unemployment is so low it can have some unintended consequences.

We talk a lot about it being a tight labor market, these rates mean it’s super-duper tight. Basically, most anyone applying for a new job right now already has one. That means employers are having a harder time fillings jobs to grow their businesses, or even just run them at their usual capacity. 

Rachel Blakeman is the director of the Community Research Institute at Purdue University Fort Wayne. She said she’s never seen unemployment this “absurdly low” in the years she’s studied these numbers. For consumers, she preaches patience.

“If you’re planning to go out to your favorite restaurant on a Tuesday night, you might want to call ahead and make sure that they are open,” she said. 

READ MORE: Indiana unemployment rate hits historic low amid increasingly tight labor market


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Just because there’s less people in the labor force doesn’t mean less people want to work – a common refrain. It simply means they aren't able and available for jobs right now. That could be due to a variety of things like child care issues or COVID-19 health safety concerns.

She recommends companies start finding ways to hire candidates with traditional barriers – like those who are formerly-incarcerated or people with disabilities. But employers offering lucrative sign-on bonuses to attract talent should remember raises for existing employees too. Because Blakeman said, there are consequences if they don't.

“Guess what? You’re going to get to fill that job because they’re going to find some other employer who’s offering a sign-on bonus,” she said. 

Traditional economics teaches that when the unemployment rate goes very low, wages will go up. But so too, does inflation. And those higher prices at the grocery store can cancel out the effects of raises.

Contact reporter Justin at jhicks@wvpe.org or follow him on Twitter at @Hicks_JustinM.

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