Unemployment only indicator that matters
While many leading indicators show the economy has stopped its years long slide of recession, the only number that matters to working families has not: unemployment.
Not since the tough days of the 1980s have we seen unemployment this high in Alabama. It was 10.7 percent in September. State officials estimate the unemployment rate represents almost 225,000 people who are jobless. The rate is a climb from August’s rate of 10.3 percent, and it is hard to believe but that is double of what it was just a year ago. Never in history have we seen such climb in such a short period of time, and never has it been as tough since back in early 1982 when it hit 14.4 percent.
We can remember what the early 1980s were like, and they were plenty hard. It was a time when Alabama found itself out of step with the economics of the time. The needle-trades and textiles that had dominated the state for almost a century were shutting down, agriculture was shifting, and the steel market was changing. This recession has a similar feel, and we certainly hope it doesn’t have a similar outcome.
In some parts of Alabama, the unemployment rate has reached catastrophic levels because of shifts in local industries.
According to the Alabama Department of Industrial Relations Labor Market Division, the Wilcox County unemployment rate is 26 percent. In neighboring Dallas County, it’s 21 percent. The Black Belt has certainly seen its share of hard times, but the restructuring that has happened in its base industries of the area like plywood and paper has made these tough times some of the worst ever recorded.
Yet, even in the high growth areas of Alabama, places often untouched by economic hardship are being hit by this recession and folks are seeing the jobless rate go up. In Baldwin County on the Gulf Coast, unemployment has hit a record 9.1 percent. That’s due in part to the shakeout in the construction industry and the burst of the housing bubble.
Even in Madison County, the home of the aerospace industry and recipient of new jobs via the national realignment of military bases known as BRAC, the unemployment rate is still 7.5 percent.
What we have seen however, is that Alabama’s industries are holding up better than what they did decades ago. While the automotive sector has certainly taken a hit, Alabama’s manufacturers have fared better than most. Montgomery’s Hyundai is running almost to capacity again with an increase in sales, Honda in Lincoln is holding its own, and Mercedes has brought shifts back and is thinking about bringing another line to Vance. The investments we made in new industries have certainly paid dividends.
The federal stimulus package passed back in March is also beginning to work on the unemployment rate, although for some folks it still seems like a mixed bag. State government figures show stimulus funds have created or retained approximately 4,500 jobs, with $530 million of the $2.4 billion slated to come to the state in the next two years. Back of the envelope calculations make the number of jobs sound pretty low, but these figures on the face of it don’t paint the whole picture.
When the Legislature was working on the state education budget back before the stimulus passed, we were looking at cutting up to 9,000 teacher positions and thousands more support personnel jobs in order to balance the budget. Along with rising unemployment, a recession like the one we’re in also devastates school revenue, which is heavily based on income and sales taxes.
One of the most important parts of the stimulus was more than $500 million in state education stabilization funds for Alabama, money that went into filling the huge budget shortfall and thus saved thousands of teacher jobs. These teachers and education employees would have been let go at the beginning of the school year in August, or more likely May, and would have added thousands to the unemployment rolls. Those thousands could have pushed the state over the 11 percent mark, something we all hope doesn’t happen.
Now teachers, just like anyone else, have suffered layoffs. However, the severity of those layoffs are not even remotely close to what they would have been had the federal dollars not been there.
Though, tell that to anyone who has lost a job. All they care about, and rightly so, is finding a way to put food on the table and a roof over their children’s head. Let’s hope the economy, and the efforts to get it moving again, are successful in getting Alabama back to work. For the jobless, employment is the only economic indicator that matters.
Jimmy Martin serves as Chilton County’s representative in the Alabama Legislature.