Ken Hare In Depth: Unemployment rates don't tell full story - WSFA.com Montgomery Alabama news.

Ken Hare In Depth: Unemployment rates don't tell full story

MONTGOMERY, AL (WSFA) -

Veteran Alabama journalists don't have to read very deeply into news releases about Alabama's up-and-down monthly unemployment numbers to know whether the news is good or bad. They know that if the new rate is being announced by the governor, chances are that month's  jobless rate has gone down. But if the labor commissioner is doing the announcing, the news is not likely to be good.

Getting to announce good news is the prerogative of the boss, and it's not surprising that Gov. Robert Bentley, like most of his predecessors, takes advantage of that perk. After all, Bentley has made jobs the watchword of his administration, even vowing not to take a salary until the jobless rate drops to 5.2 percent.

So when the September unemployment rate was announced Friday, it was Bentley who was quoted as announcing that the rate had dropped to 8.1 percent. The news release pointed out that the rate was down from a month earlier and from the same month a year ago.

But what the news release didn't point out was that the 8.1 percent rate in October was still up sharply from the low of 7.2 percent in April. 

The sad fact is that unemployment in Alabama, although down from the 10-plus percent rates of 2010,  is still uncomfortably high. And the monthly variations up and down probably have as much to do with who is applying for benefits than with actual job creation.

"The changes are coming from discouraged workers," said Keivan Deravi, a respected economist and professor at Auburn University Montgomery. "These are people who drop out of the labor force but they don't get back in until the job market starts getting better."

Instead of just looking at unemployment numbers, another way of looking at the jobs picture is to actually consider how many Alabamians are employed.  And that picture is not improving very quickly.

For instance, a November snapshot of the Southeast's economy from the Federal Reserve Bank of Atlanta states: "Total employment in Alabama has stabilized near recession lows. Job gains have been minimal during the recovery."

Another recent report by the Bureau of Labor Statistics ranks Alabama second to last in the Southeast in job growth in the past year and 39th in the nation. The bureau estimates that Alabama added 12,600 jobs in the past year -- less than seven-tenths of 1 percent growth in jobs.

"We're in the bottom one-third of the states in job growth," said Deravi. "It has nothing to do with what we did or didn't do. It's our one dimensional economy."

He said that a strength in Alabama's economy is its automobile industries, but also noted that auto manufacturers such as Hyundai and Honda are not helping the job picture improve as much as it would seem at first glance. He said that Alabama's car manufacturers are, first, heavily reliant on technology that reduces the need for manpower. And, he noted, during the depths of the economic downturn, Alabama auto manufacturers typically reduced worker hours instead of resorting to layoffs. Now that production has rebounded, existing workers are seeing their hours increase instead of seeing new workers hired.

We are not a diversified economy in Alabama," he said, "so we are having a hard time catching up."

Deravi said that much of the job creation in Alabama in the years leading up to the economic downturn were related to "net foreign investment" -- companies such as Mercedes, Honda, Hyundai and ThyssenKrupp locating and investing here.

"That is going to dry up, because Europe and Asia have their own problems to attend to," he said.         

There is still potential for the state in such areas as pharmaceuticals, he said, but he suggested that Alabama needs better school systems to maximize that potential.

In position papers released during his campaign for governor, Bentley said his goal was  to create 250,000 jobs if elected. Frankly, public officials -- even governors -- don't have that much control over job growth, especially in the short term. That's especially true in the sort of wishy-washy economy the nation faces. And I believe that Bentley is doing everything within his power to create jobs.

But the numbers are still disappointing. According to the Alabama Department of Labor's website, Alabama's employment in January 2011 -- the month Bentley took office -- was  1,998,201. In October 2012, it was 1,985,614.

If the governor is going to meet his goal for job growth, he faces an uphill battle in the second half of his term in office.

(For Alabama employment statistics, go to: http://www2.labor.alabama.gov)

Ken Hare was a longtime Alabama newspaper editorial writer and editorial page editor who now writes a regular column for WSFA's web site.

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