Alabama: Did HB 56 affect unemployment rate drop?
Did HB 56 affect unemployment rate drop?
Economists doubt immigration law driving falling jobless numbers
9:01 AM, Apr. 30, 2012 |
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Rep. Micky Hammon, R-Decatur, left, talks with Sen. Scott Beason, R-Gardendale during the House session at the Alabama Statehouse in Montgomery, Ala., Tuesday, April 17, 2012. A bill making some changes to Alabama's immigration law has been approved by a House committee, but Democrats complained it does not go far enough alleviate concerns that the law allows police to engage in racial profiling. The original bill was penned by Hammon and Beason. (AP Photo/Dave Martin) / ASSOCIATED PRESS
http://cmsimg.montgomeryadvertiser.c...axH=34&maxW=34 Written by
Brian Lyman
Proponents of Alabama’s controversial immigration law often cite the state’s falling unemployment rate as a sign the statute, known as HB 56, is doing its job.
During debate in the House of Representatives over changes to the measure April 19, Rep. Jim Patterson, R-Meridianville, said HB 56 prevented businesses from undercutting competitors with cheaper labor.
“The businesses that underpay (immigrants) drive legitimate people out of business,” he said. “I’m not against (immigrants), but they’ve taken jobs our citizens can hold.”
Sen. Scott Beason, R-Gardendale, a sponsor of last year’s law, echoed that argument in an interview Thursday, noting the state’s unemployment rate had fallen from 8.5 percent last October — the first full month of HB 56 being in effect — to 7.3 percent this March. The decline outpaced the South’s decline from 8.7 percent to 7.8 percent.
“If you compare our unemployment rate drop to the region, our drop was much more quick,” he said. “I have been asking for months for the people who say (the law) had nothing to do with it, to explain to me what did it. Why are we so much faster, and why did it start in October?”
Interviews with economists and a review of job data suggest the decline — which has not been accompanied by a significant increase in employment — is due to a sharp contraction in the state’s workforce over the past year. With job creation more or less flat in the state, and industries such as construction still shedding jobs, the drop in the unemployment rate might be because more are dropping out of the workforce.
Keivan Deravi, a professor of economics at Auburn Montgomery, said it was extremely difficult to link the state’s falling unemployment rate with HB 56.
“The proponents of the immigration law really have no solid, defendable, reasonable evidence other than the desire to link those two together,” said Keivan Deravi, an economics professor at Auburn University Montgomery.
The House of Representatives approved changes to the law on April 19. A Senate committee approved the measure last Wednesday, and the full Senate is expected to vote on the bill Tuesday.
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Unemployment falls; but so does workforce
The state’s unemployment rate has fallen about 1.2 percent since a federal judge allowed the immigration law to go into effect in late September, according to the U.S. Labor Department. However, total nonfarm employment in the state in March was 1,869,700, exactly where it was in March 2011. Since October, the state only has added a net total of 1,700 nonfarm jobs.
The main driver of the unemployment rate drop appears to be a significant contraction in the state’s workforce. Between March 2011 and March 2012, the civilian workforce in Alabama declined by 2.8 percent, a drop of 60,683 people. By contrast, the nation’s workforce grew eight-tenths of a percent in that time period. Neighboring states, with the exception of Georgia, saw their workforces shrink as well, though not to the extent of Alabama’s.
Deravi and Ahmad Ijaz, an economist with the University of Alabama’s Center for Business and Economic Research, said the contraction likely was because of people leaving the workforce, either through retirement or by giving up the search for work.
“It’s mostly because as the jobs are hard to get during the recession, a lot of people give up on looking for a job,” Ijaz said.
Deravi said the state’s recovery remains uneven. The state’s skilled workforce, he said, has rebounded much more quickly than the unskilled sector, which remains “depressed.”
Pro and con, 'almost always exaggerated'
Beason said he has been contacted by many people who credit the legislation with helping them find work, including brickmasons and framers.
“People are saying, ‘Look, I’m out of work now because I can’t compete with the guy who uses illegal labor because I’m paying an American crew, I’m paying insurance, (and) they have families,’” he said. “When you see those real-world examples and people who have to go back, you see the real-world correlation.”
Individual sectors of the state economy, including tourism, did see some significant employment growth, but others report stagnation. The state’s construction industry, which was shedding jobs before the recession began in December 2007, lost nearly 8,000 jobs between March 2011 and March 2012, and a little over 3,000 since October.
“We are benefiting from a manufacturing rebound, a leisure rebound, but it’s very regionally located,” Deravi said. “If you look at Georgia, it’s a much more diverse economy than we have.”
Frank Sharry, executive director of America’s Voice, an immigration reform group that opposes HB 56, said immigrants complement existing workforces, either by bringing skills into a labor pool that are not there, or by filling jobs that “have been vacated by the existing labor supply.”
“Claims regarding the economic effects of immigration are almost always exaggerated and dangerously simplistic,” he said. “There are people who say immigrants create so much growth, it triples employment rates. Others say that if you get rid of immigrants, it will cripple unemployment. Neither is true.”
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