Despite the decrease in the unemployment rate, the state also lost an aggregate 2,600 private sector jobs last month.
The private education and health services sector accounted for most of the damage, losing approximately 4,100 jobs. These damages were offset mostly by the manufacturing sector, which added about 900 jobs.
The unemployment rate is the quotient of the state’s unemployed population and the total labor force, which may account for why Indiana experienced lower unemployment in August while also experiencing heavy job loss, said to IU economics ?professor Paul Graf.
The unemployed population is inclusive of those who are currently unemployed and are actively seeking a job, Graf said. It does not include people who don’t have a job and are not looking for one. The U.S. Bureau of Labor Statistics calls this population the marginally attached.
For example, if the labor force comprises 100 people, half of which are unemployed, then the unemployment rate is 50 percent.
But if 20 of these people stop searching for a job prior to the survey, they are a part of the marginally attached and not considered unemployed, thus dropping the unemployment rate to ?30 percent.
“It’s a basic algebra function,” Graf said. “The unemployment rate is consistent, but problematic.”
There is other evidence to suggest that not only is Indiana growing economically but that it also may be ahead of the curve.
On average, Indiana is adding nearly 4,000 jobs a month, Joe Frank, a spokesman with the Indiana Department of Workforce Development said.
“Indiana is one of the most manufacturing intensive states in the country, and when these jobs come back, they come to Indiana,” he said.
The positive tax climate of the state also incentives businesses to start-up in Indiana. Frank said the reduced corporate income taxes and property taxes aren’t as pricey here as some of the surrounding states, creating a favorable business ?environment.
When compared to the rest of the country, Indiana’s unemployment is lower than the federal rate of 7.2 percent and second in the Midwest.
“Indiana’s unemployment rate has decreased 1.7 percent over the past year, while the labor force has expanded by more than 51,000 workers, which is quite remarkable,” said Scott Sanders, commissioner of the Indiana Department of Workforce Development. “During the same period, the Hoosier State has also added more than 56,000 private sector jobs. Together, these figures stand in stark contrast to our Midwestern neighbors.”
