Brightness before the dark: Alabama's economic reality
To the surprise of many — and while most states were watching their economies slow and unemployment rates rise — Alabama was one of only five states last month to experience a decline in its jobless rate.
According to the Department of Industrial Relations, Alabama's unemployment rate was 4.9 percent, down from 5.1 percent in July, which was a four-year high. To put this in perspective, the national unemployment rate for August was 6.1 percent — an increase from 5.7 percent in July.
Congratulations, Alabama.
Even though the state's jobless rate a year ago was 3.6 percent, the job market has remained strong, or, at least, it's holding its own — except in manufacturing jobs.
And therein lies the problem.
One of the main components of Alabama's impressive economic growth and active job market has been the automotive industry. But now, as the economy slows and gas prices soar as demand outpaces supply, what was making the state grow may well turn this progress around — at least for a while.
Even before the August figures were revealed, Mercedes announced that it planned to eliminate Friday shifts at its Vance facility and reduce the labor force to a four-day week. Why? Sagging sales.
In these uncertain times, people are not buying upscale automobiles. For a while, Mercedes workers can use accrued vacation days to maintain salary and benefits, but when those are gone, they will become an unemployment statistic.
Mercedes is not alone. Honda in Lincoln is cutting back on production of SUVs and minivans by 10,000 vehicles this year, while Toyota in Huntsville has suspended production of V-8 engines for four months. And when the big companies cut back, their suppliers, many of them little companies, have to make "downward production adjustments" — which can include layoffs.
So let's enjoy the August figures while we can. September is shaping up to be the first of many difficult months for Alabama. Already retailers are scaling back orders in anticipation of a lean Christmas season.
It could be a long, cold winter.
