Birmingham--The latest monthly unemployment numbers for Alabama are due out Friday. The stateâs unemployment rate is down about 2% over the last year. While that seems like good news, there was something in the numbers which caught the attention of WBHMâs Andrew Yeager. And he went looking for an explanation.
We know that Alabamaâs unemployment rate has been dropping. But thereâs another number that part of calculating the unemployment rate. itâs called the labor force. Officially itâs the number of people with jobs plus the number of unemployed people who looked for work in the last month. Itâs as if the labor force is the entire statewide team employers can draw on to build cars, teach in schools or build buildings. But people are leaving the team.
Itâs been happening over the last two years. Slowly at first and then it started picking up a year ago. So even though the unemployment rate is getting better in Alabama, almost 70,000 people stopped working or stopped looking for work in the last two years.
However, if you look at surrounding states over that same time period, you donât see that drop. So where are these people going? Sounds like a question for your friendly neighborhood labor economist. This is Sara Helms, an economist at Samford University.
âThereâs something there thatâs a little bit disturbing. Thatâs not how you want to lower your unemployment rate.â
She says we know recessions can cause people to retire or go back to school. Also unemployed workers become discouraged and just stop looking for work. But we don't really have good data to figure out specifically whatâs driving Alabama.
"All these numbers are calculated on different calendars and by different agencies. We can look at these raw numbers and we can hypothesize about whatâs going on [but] itâs actually incredibly difficult to get to the heart of the matter in real time. Thatâs frustrating as an economist and Iâm sure as a reporter."
Helms hesistates to prvide a specific explanation to the fact Alabama is behaving differently from the other southeastern states. She says though itâs important to note the country as a whole saw its labor force plummet in the recession and all the southeast states are in this kind of historically low range. So for Alabama, maybe it has something to do with the stateâs immigration law. Although thatâs a big maybe. Maybe having the stateâs largest county in municipal bankruptcy is dragging things down. But thatâs a big maybe.
âIâm a good economist. I have six hands and on the one hand and on the other and on the other.â
So for another hand here's Ahmad Ijaz, an economist at the University of Alabama.
"Itâs because of a combination of different factors."
He points to the same ideas â retirees, people going back to school and discouraged workers. But again this is from the national picture. Ijaz says maybe people are relocating to other southeastern states and thatâs why their labor forces are trending upward, but we wonât know for sure for a couple of years. He does point out statesâ economies are structured differently and that affects how the numbers move.
âFor example, Florida is very heavy into services type jobs. And services is one of the sectors which is adding jobs. Whereas Alabama has a lot more manufacturing jobs.â
So weâre kind of in a situation where we can see the forest but we canât see the trees very clearly. What do the people in state government think -- the people who talk about bringing jobs to Alabama?
Tom Surtees is director of the Alabama Department of Industrial Relations. He says the shrinking labor force is concerning, but not unexpected. Still he says every Alabamian should have the chance to get a job. And the state is trying to create the opportunity.
âWeâre working every day brining in, working with employers possible employers, existing employers to bring jobs to Alabama. And as jobs come in people will come into the state with them, so we will see a growth in our workforce.â
Surtees says Alabama is coming out of the recession faster than surrounding states and thatâs true if you look at the unemployment rate. But he acknowledges thatâs not the case if you look at the actual number of people employed or looking for work. So this whole fixation on labor force, does it even matter then if the unemployment rate is dropping.
âWell, you could have an unemployment rate of zero if no one is looking for a job.â
Oakworth Capital Bank economist John Norris says a shrinking labor force generally means fewer people earning paychecks.
âThatâs ordinarily not in the recipe for vibrant economic growth. [And] Thatâs a real problem. Yes, itâs great the unemployment rate has fallen but at the same time we want to make sure the number of employed keeps on going up and right now weâre not really seeing that."
The number of employedâ¦a new number to puzzle over.
~ Andrew Yeager, May 17, 2012