State and county unemployment rates riseBy Benjamin Smith | 06/27/2012 12:58am
A new report by the Alabama Department of Industrial Relations shows that, for the first time this year, unemployment both on a state level and in Tuscaloosa County has increased.
The seasonally adjusted data, which takes into account different economic phenomena, shows that unemployment for May 2012 is at 7.4 percent, up from 7.2 percent in April 2012. This rate is the highest since March.
One seasonal component that has contributed to this new rise in unemployment is the increase in the civilian labor force. According to the same report, the size of the labor force jumped from 2,137,043 in April to 2,143,105 in May.
According to Ahmad Ijaz, the director of economic forecasting at the University of Alabama, one contributing factor to this increase in May – a common one, he asserts – is the introduction of high school and college students into the work force, seeking either summer or permanent employment.
State and local economic trends, however, are reflective of those both national and abroad. Bob Brooks, the chair of financial management at UA, highlighted the many causes of the current financial state of the state and country.
“The trauma in Europe and regulatory ambiguity coming out of Washington are contributing to unemployment problems in Tuscaloosa County and Alabama,” Brooks said. “For example, there’s a lot of regulatory uncertainty in the banking industry, particularly in the form of the Dodd-Frank Bill.”
Named for Congressman Barney Frank and Senator Chris Dodd, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 by President Barack Obama. Signed in the wake of the financial disasters of the late 2000s, the purpose of the bill was to increase transparency and accountability in the financial system and to end bailouts for big banks.
“The best comparison I can think of is driving down the Interstate,” Brooks said, explaining his criticism of the law. “You see a speed limit sign that says ‘drive at a reasonable speed.’ Basically, you’re putting tyrannical power in the hands of bureaucrats and junior regulators.”
Brooks likened Dodd-Frank to other legislation championed by the current administration, such as the Health Care and Education Reconciliation Act of 2010, popularly known as Obamacare. Brooks’ chief criticism of these laws is their “ambiguity,” which he feels grants the government unlimited power. However, he does not find politics to blame.
“I think regardless of the election outcome, the ambiguity will be improved,” he said. “There’s always been division in Washington. Regardless of political preference, though, people want clarity.”
However, there are those who see the rise in unemployment as a natural part of the economic cycle.
“I don’t think Washington has a direct impact on unemployment,” said Zach Smithson, a junior electrical engineering major. “They do have an effect on the economy and other factors, but unemployment will always fluctuate with the times.”
There seems to be a consensus, though, that Tuscaloosa will bounce back from this setback.
“University towns are a preferred location for start ups,” Brooks said. “Tuscaloosa is a marvelous place to run a business.”
“I think the uptick in unemployment is temporary,” he added. “When [the ambiguity in Washington] is resolved I predict that the unemployment rate will drop.”