Ken Hare In Depth: Employment pulse in Alabama remains unsteady - WSFA.com: News Weather and Sports for Montgomery, AL.

Ken Hare In Depth: Employment pulse in Alabama remains unsteady

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MONTGOMERY, AL (WSFA) -

When Gov. Robert Bentley took office in January 2011, he promised to create 250,000 new jobs in Alabama. So now, three years later when he is running for re-election, how's that going?

Not so well. Based on January seasonally adjusted job numbers, Alabama actually has almost  5,000 fewer people employed than it did three years ago. Based on "not seasonally adjusted" numbers, the state has about 5,000 more jobs. But that's still a far cry from the growth promised by Bentley.

Regular readers know that I don't put much stock in the "unemployment rate" for judging how well the state is doing on job creation. (I'll explain why later.) I believe that the best way to measure the health of the state's job market is to track several trends, but if you're going to rely on just one factor it should be the actual number of people employed.

Back in July, I wrote a column that said "perhaps, just perhaps," Alabama had turned a corner toward achieving sustained job growth for the first time since the Great Recession ended in mid-2009.

There were reasons to be hopeful. At the time I wrote that column, the state had seen month-to-month increases in employment from January through May.  It wasn't close to approaching Bentley's promised numbers, but at least they were heading in the right direction.

Since then, employment growth has leveled off.

According to seasonally adjusted numbers on the Alabama Department of Labor web site, Alabama had 1,990,637 employed persons in January 2014, down from 2,011,182 in January 2013. (That compares to 1,995,148 in January 2011.)

If you look at just the more popular measure of job health -- the unemployment rate -- Alabama's job picture has improved. The state's unemployment rate was 6.1 percent in January, down from 6.7 percent a year earlier.

But I believe that to get a true measure of job health, three factors must be looked at. They are:

1. The labor force, or the number of people who are working plus those who are actively seeking work.  

2. Employment -- the number of  people who have jobs.

3. Unemployment -- the number of people actively seeking work but who cannot find it.

Divide No. 3 by No. 1 and you get the unemployment rate.

As I have noted before,  the unemployment rate can drop for two reasons -- the unemployed can find work, or they can get discouraged and give up on finding work.  The latter reason may decrease the unemployment rate, but it doesn't help the economy.

There's another factor in measuring job health that should be considered -- underemployment. That is the essentially people who have part-time jobs but who want full-time work. According to Bureau of Labor Statistics data, including these "involuntary part-time workers" in Alabama's unemployment figures would push the state's rate up by 3 percent or more.

(A little jobs trivia: The federal government actually has six different ways to measure unemployment -- called U1 through U6. U3 is what we commonly refer to as the "unemployment rate." U6 is the most broadly defined rate, including not just the unemployed but discouraged workers and "involuntary part-time workers." Alabama's average U6 rate in 2013 was 12.2 percent.)  

Bentley has supported an aggressive economic development program that has attracted new industries to the state.  But despite his campaign promises, and despite my rosy prognostication in mid-2013, the state still does not appear to have turned the corner on job growth.

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Despite what you think, state's taxes not high

I dreaded getting my hair cut this week, despite the bracing and welcomed head massage that Reiko delivers along with a trim at Shearkropper. After a news story broke last week, I feared having to sit through a barrage of complaints from some of my fellow customers about how high Alabama's sales taxes are.

The news story focused on a report by the Tax Foundation found that Alabama has the sixth-highest sales tax burden in the country.

The average state and local sales tax rate in Alabama is 8.51 percent, placing the state behind only Tennessee, Arkansas, Louisiana, Washington and Oklahoma.

But I was able to enjoy my tonsorial visit without listening to such tirades -- perhaps because I went at a time when there were only a few other customers, and perhaps because another story broke pointing out that once again, overall state and local tax collections in Alabama are the lowest in the nation.

The same national group, the Tax Foundation, reported that the national average for all taxes collected by state and local governments in 2011 was $4,320 per person. In Alabama it was $2,895.

 
After years of writing about the subject, I am convinced that many Alabamians truly feel they are taxed at a high rate because of the state's heavy reliance on sales taxes, which unlike most taxes are highly visible. Every time they pull out their wallet at the grocery store or to buy clothing or tires or whatever, Alabamians are reminded of that high sales tax.

But Alabamians aren't constantly reminded of their taxes that are among the lowest in the nation -- the income tax and especially property taxes. Most people have to deal with those taxes just once a year, not every day.

The result is that many people have a false impression of how much they are taxed.

However, there is one group that is overtaxed in the state when compared with their counterparts in other states -- the working poor. Partly because the sales tax takes a larger percentage of the working poor's income than it does of a well-to-do taxpayer, the working poor in Alabama truly can claim to be overtaxed.

But the rest of us need to stop grousing about taxes and realize that there is a connection between that lowest-in-the-nation tax load and the quality of our schools, our roads, and our governmental services -- something else we grouse about a lot.

ON THE WEB: IRS definitions of unemployment. http://www.bls.gov/lau/stalt.htm

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Ken Hare was a longtime Alabama newspaper editorial writer and editorial page editor who now writes a regular column for WSFA's web site. Email him at khare@wsfa.com.

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