October’s unemployment rates in Lake and Porter counties were the lowest in almost two decades, which Indiana University Northwest associate economics professor Micah Pollak attributed to a combination of more available jobs, a smaller labor force and fewer people willing to work more than one job.
“As we come out of the recession caused by the pandemic, the increase in demand for workers is normal. However, what is unique to this recession is that many people are not returning to the labor force or are not returning in the same way they left,” Pollak said.
According to the U.S. Bureau of Labor Statistics’ monthly report, Porter County’s unemployment rate in October was 2.6% and Lake County’s was 4.2%.
Pollak said Porter County’s rate is the lowest reported since November 2000. With the exception of one month in 2019, Lake County’s unemployment rate of 4.2% is the lowest reported since January 2001, Pollak said.
Both are about half the rates in October 2020.
Shaun Sahlhoff, director, planning and fundraising for Center of Workforce Innovations, said October also had the second highest number of employed individuals of the year for Northwest Indiana after June, suggesting that there are more people working. He said this follows the Region’s usual trend of high summer employment, a dip in the early fall, then another increase before the holidays.
“With that being said, this increase in employment is not what is driving our unemployment rate down. It is by and large people leaving the workforce. If we look at 2019′s October numbers instead of 2020, it quickly becomes clear how far off we are from pre-pandemic levels,” Sahlhoff said.
A shrinking labor force
Pollak said the size of the labor force in Lake County has shrunk by more than 6,000 workers compared with before the pandemic and is at its lowest level in almost 30 years, since 1992. Likewise, the labor force in Porter County has shrunk by more than 2,000 workers.
In addition to there being fewer workers available, many of these workers are no longer working multiple jobs. Nationally, the number of Americans holding two or more jobs has shrunk by 1 million, from 7 million down to 6 million, he said.
While many have blamed the shrinking work force on the higher unemployment insurance benefits paid to workers laid off during the pandemic, Pollak and Sahlhoff both said the payments were never a significant factor in work-related decisions for most people.
“When these benefits ended, we did not see an increase in people returning to the labor force, which is consistent with how ending extended unemployment benefits in previous recessions have played out,” Pollak said.
Sahlhoff said the slight increase in the employed population during each of the last three months could instead be from the same seasonal movements in the labor market the Region has seen in the past.
Pollak said rising wages, which was a result of the rising demand for workers, is a more likely reason some workers have stayed home. He said the higher salaries provide families with more disposable income, which in turn, may allow a family to save more or enable one of the family members to delay their return to work.
“While jobs that pay well and have good benefits are likely the be the ones best able to find workers, I don’t think this will convince many of those who left the labor force during the pandemic to return,” Pollak added.
Whether retirements, early or otherwise, are a factor won’t be known for some time, Sahlhoff said. He said while there are likely some early retirements happening among Gen X workers, he thinks the far greater retirement impact is coming from baby boomers finally deciding to retire.
As of 2019, 38% of the workforce was 55 and older according to the Census Bureau. That same year, the youngest baby boomers were 56 years old, Sahlhoff said.
Wading through the Great Resignation
Sahlhoff said this has been dubbed the Great Resignation for a reason.
“As we have seen with housing as well, this is a sellers’ market. Job seekers currently hold most of the power and we are seeing them use that power to choose where or even if they work,” Sahlhoff said.
“The result is that the industries and companies that are able to put together the right secret sauce of wages, benefits and flexibility will be the ones to attract job seekers,” Sahlhoff said.
Pollak said to attract quality workers, employers need to understand how the pandemic has shifted what workers are looking for in a job. While raising wages may help attract quality workers, non-wage concerns have now become more important.
“Many workers are now looking for jobs that allow greater flexibility in when and how they work, such as more flexible schedules, shorter working hours, or the ability to work remotely,” Pollak said.
“Workers are also more concerned about their personal safety. For example, if a job requires face-to-face interaction with customers, workers want assurances their health will be protected, such as with mask/distancing requirements enforced or stricter policies on dealing with unruly or aggressive customers. Benefits like quality health care, paid sick time or paid time off, and child care are also more likely to attract applicants than higher wages.”
Finally, workers are more focused on job stability and longer-term careers than pre-pandemic and jobs that offer stronger careers with clear paths to promotion are more likely to attract workers,” Pollak said.