In a healthy economy, there should be profitable work for everyone and enough workers to meet the employers’ needs. When a significant number of workers cannot find any job at all, the labor market is dysfunctional.

Source: STATS Indiana; Bureau of Labor Statistics/Local Area Unemployment Statistics

But there is always some unemployment. Even in the wealthiest nations and during periods of strongest economic expansion, the unemployment rate rarely dips below 2 percent. A rate of between 4 percent and 5 percent is much more common.

The chart shows several things about unemployment. First, it is very volatile. The rates always are higher in winter and lower in summer. Many of the news reports we read about month-to-month changes in unemployment are predictable based simply on the seasonal pattern. Second, in addition to the seasonal cycle, there is another, longer cycle. Unemployment peaked in 1992, waned during the expansion of the later 1990s and then increased again during and since the recession of 2001-02.

Residents of Indianapolis will make a third major observation. Indianapolis used to be well below the state and nation in unemployment. That has changed. Since the recession of 2001-02, the unemployment levels for our city are only slightly lower than, or very similar to, the unemployment levels for the U.S. and state of Indiana. The rate today is well below the recessionary high of 6.3 percent in February 2004. But Indianapolis no longer seems to enjoy an advantage.