Higher jobless rate might be good news
Economists say the slight uptick in Alabama’s unemployment rate in May actually signals good news for our economy.
Well, when it comes to calculating the unemployment rate for a state or for the country, the Bureau of Labor Statistics counts only individuals who are actively seeking jobs. That means people who have dropped out of the job market – often meaning they have become discouraged or given up hope of finding a job – aren’t counted as “unemployed.”
Critics have long said the formula is flawed and creates misleadingly lower statistics that governments can use to spin a message of a economic revival or growth, even when millions of Americans are without jobs and without the hope of finding jobs.
So when Gov. Robert Bentley announced on Friday’s that Alabama’s seasonally adjusted unemployment rate actually increased to 6.1 percent for May (up from 5.8 percent in April), we need to look beyond the surface for a better understanding of what’s happening in our state’s economy.
Data released on Friday also shows an additional 6,990 jobs added to Alabama’s economy in May, and an increase of 34,800 jobs since January. Bentley said he was “proud to say that only five months into 2015 … (we’re) already surpassing job growth predictions.”
Those jobs are encouraging a return of many job seekers who dropped out of the marketplace, and therefore dropped out of the unemployment rate counts. Moreover, more people are entering the workforce. May is traditionally the time when college and high school graduates transition into the job market, beginning job searches and in turn driving up the number of job seekers.
So yes, the unemployment numbers bumped up slightly to 6.1 percent, but we’re still down significantly below the 6.9 percent statewide unemployment rate reported in May 2014.
And with all factors considered, that can easily be interpreted as encouraging news for Alabama’s economic growth.