To some economists, the decrease could be attributed to people not filing unemployment claims and no longer actively searching for work.
“It could be people dropping out of the labor force,” said James Cover, professor of economics at the University of Alabama. “That is not a good sign.”
People must show they are actively searching for work to receive unemployment benefits. Such factors are included in unemployment statistics, said Tara Hutchison, spokesman for the Alabama Department of Industrial Relations.
According to the department’s statistics, Alabama’s unemployment rate was 9.4 percent in July. The last time the state’s unemployment rate was that low was in April 2009.
The county’s unemployment rate decreased from 10.2 percent in June to 9.3 percent in July. The county’s rate was at 10.9 percent in July last year.
To Auburn University-Montgomery economist Keivan Deravi, the lower unemployment rates could be misleading. He agrees with Cover that the numbers could be an indication of fewer unemployed persons being counted.
“The movement in unemployment rates comes from two sides: the number of jobs created and the numbers in the labor force,” Deravi said. “If the size of the labor force goes down from last month, that means people are just quit-ting … they are discouraged and not looking for jobs anymore.”
Between June and July, Alabama’s civilian labor force decreased by 2,858 people. Since July of last year, the state’s labor force has decreased by about 19,000 people.
Hutchison only partially agreed with Deravi and Cover’s explanation about the unemployment decrease.
“The statistics are not based on who filed claims, not entirely,” she said. “We are getting people filing claims, but we are also getting people who don’t.”
Hutchison added that the drop in the labor force could partially be attributed to teachers and college students leaving part-time summer jobs to go back to school.
The state unemployment statistics are gathered each month by the U.S. Bureau of Labor Statistics. In addition to counting unemployment claims, the bureau performs household surveys by phone to find people who are and are not actively searching for work, said Ken LeVasseur, senior economist for the bureau. He said those numbers are then put into a statistical model to estimate the number of unemployed persons during any given month.
“We are seeing some places where the labor force is shrinking, but we are also showing employment increases in other places,” LeVasseur said.
Alabama’s statistics show total private non-agricultural industry employment in Alabama increased by .16 percent between June and July.
However, Cover noted, the bureau’s unemployment model was not always accurate.
“The unemployment numbers are based on a model that is based on too small a sample from households,” Cover said. “I’m not really sure how accurate it is right now. There could be a lot more volatility in the numbers.”
Contact staff writer Patrick McCreless at 256-235-3561.
