Center for Business and Economic Research - Ball State University


CBER Data Center
Projects and PublicationsEconomic IndicatorsWeekly CommentaryCommunity Asset InventoryManufacturing Scorecard

About

Commentaries are published weekly and distributed through the Indianapolis Business Journal and many other print and online publications. Disclaimer

RSS Feed

Disclaimer

The views expressed in these commentaries do not reflect those of Ball State University or the Center for Business and Economic Research.

Recent

The Undersupply of College Graduates Is Clobbering Indiana’s EconomyNationwide, about 8 in 10 of all net new jobs go to 4-year college graduates.

Inflation Is a Policy and Political ProblemWe should all be humble in our criticism of the federal government in causing inflation.

The Lives of Mothers Through the Last CenturyThe women of the 20th century witnessed the most stunning technological and economic growth.

Lilly CEO Speaks to Indiana’s FutureIndiana must better educate a higher share of its young adults and make more communities into places they’d like to live.

View archives

Top Tags

jobs and employment 216
economics 168
education 134
economic development 131
taxes 120
finance 104
recession 96
state and local government 95
budget and spending 87
unemployment and the labor market 84
Browse all tags
Reporter / Admin Login

June 1, 2001

Is the Labor Shortage Over?

Five years ago, people reacted with ridicule if you suggested that low unemployment rates could be a problem for the economy. But in the time that has followed, employers in every industry from movie theaters to web page design have found themselves doing handstands to keep their positions staffed, and economic developers began to realize that a higher than average unemployment rate in their community could be a marketing advantage. Places like Hamilton County saw jobless rates tumble to just 1 percent, and scenes of families in bidding wars for babysitters and fast food restaurant managers paying bonuses to workers simply for showing up at the job became commonplace. 

At the national level, fast growing technology companies did more than simply complain about their difficulties in hiring qualified workers. They commissioned studies that purported to show exactly how much growth the shortage of workers was costing the economy, and used their influence to get politicians to change their positions on visas and other immigration policies that could help relieve the situation.

But, unhappily, the economy has served up a different form of relief, in the form of an economic slowdown that has put the brakes on hiring, especially in manufacturingand the technology sector. The trend of gradual attrition in factory jobs nationwide turned into something much more serious at the beginning of this year, with nearly half a million jobs eliminated since that time. 

Meanwhile the torrid pace of job creation by companies in the far-flung business services industries -- which had averaged about 600,000 new jobs per year prior to 2001 -- also pulled up short. Thanks to a nearly 350,000 job decline in temporary services jobs that began last fall, this sector has gone from leader to laggard, losing about 40,000 jobs per month since January. 

What has this abrupt turnabout in the pace of hiring done to the tightness of labor markets in Indiana and the nation as a whole? Not as much as you would think. The U.S. unemployment rate, even in the teeth of the slowdown, has risen by about half a percentage point. That's significant enough to make a difference, but its May value of 4.4 percent still is low by historical standards. 

But the behavior of unemployment rates in Indiana is something of an enigma. In the face of indicators such as tax receipts, unemployment claims, and manufacturing employment that portray a falloff in economic activity in most areas of the state, the Department of Workforce Development reports that jobless rates here are on the way down, not up. Every one of the state's twelve major cities had lower unemployment rates in April than the previous month, with some monthly declines in excess of a full percentage point. Statewide, the seasonally adjusted jobless rate for Indiana stood at just 2.9 percent in April, 0.7 percentage points lower than the 3.6 percent rate at this time last year. 

This is not the first time in recent memory that Indiana unemployment rates have gotten out of synch with other measures of economic activity, and the next few months of data may prove the April report to be an aberration. But data quibbles aside, it doesn't appear that employers are going to have any easier time finding workers this summer in Indiana.

Link to this commentary: https://commentaries.cberdata.org/472/is-the-labor-shortage-over

Tags: jobs and employment, unemployment and the labor market


About the Author

Pat Barkey none@example.com

Patrick Barkey is director of the University of Montana Bureau of Business and Economic Research. He has been involved with economic forecasting and health care policy research for over twenty-four years, both in the private and public sector. He served previously as Director of the Bureau of Business Research (now the Center for Business and Economic Research) at Ball State University, overseeing and participating in a wide variety of projects in labor market research and state and regional economic policy issues. He attended the University of Michigan, receiving a B.A. ('79) and Ph.D. ('86) in economics.

© Center for Business and Economic Research, Ball State University

About Ball State CBER Data Center

Ball State CBER Data Center is one-stop shop for economic data including demographics, education, health, and social capital. Our easy-to-use, visual web tools offer data collection and analysis for grant writers, economic developers, policy makers, and the general public.

Ball State CBER Data Center (cberdata.org) is a product of the Center for Business and Economic Research at Ball State University. CBER's mission is to conduct relevant and timely public policy research on a wide range of economic issues affecting the state and nation. Learn more.

Terms of Service

Center for Business and Economic Research

Ball State University • Whitinger Business Building, room 149
2000 W. University Ave.
Muncie, IN 47306-0360
Phone:
765-285-5926
Email:
cber@bsu.edu
Website:
www.bsu.edu/cber
Facebook:
www.facebook.com/BallStateCBER
Twitter:
www.twitter.com/BallStateCBER
Close