Despite a low unemployment rate, the state’s economy is suffering from a decline in labor force participation


By CAROLINE BECK, Alabama Daily News

MONTGOMERY, Ala. – Alabama’s unemployment rate of 3.1% is the lowest in the Southeast and one of the lowest in the country. Heads of state have repeatedly pointed to the impressive mark as a sign of the state’s economic recovery from the throes of the COVID-19 pandemic, which saw unemployment soar to nearly 14% last year. .

Still, employers across the state are struggling to find enough workers to fill the jobs, forcing some to cut hours or cut production.

Why the economic disparity? It might have to do with the number of Alabamians actually participating in the labor force, a figure that has been declining during the COVID-19 pandemic.

According to the Alabama Department of Labor. This represents approximately 31,490 people leaving the state workforce over a two-year period.

State lawmakers like Rep. Danny Garrett, R-Trussville, are digging into the numbers to determine why there are so many unfilled jobs in the state. He says that while the unemployment rate is low, it doesn’t tell the whole story because it doesn’t reflect the number of able-bodied residents who, for whatever reason, have chosen not to participate in the labor market.

“My concern is that the Department of Labor is really focused on managing the unemployment aspect, and the Department of Commerce is focused on creating new jobs in the state, but who looks at that labor participation,” said Garrett told the Alabama Daily News. “There really isn’t a champion for that right now.”

Tara Hutchison, communications director for the Alabama Department of Labor, said the labor shortage is nothing new for Alabama.

“People need to remember that despite the pandemic, this problem never really went away and it was exacerbated by the pandemic,” Hutchison said. “Alabama’s turnout fluctuates only one or two percentage points over an entire year, and the best turnout in years was seen in 2010, where it stayed around 59 percent.”

Alabama’s 56.6% labor force participation rate represents 2,138,688 residents who are currently employed or unemployed and seeking employment. Neighboring states have similar turnouts: Mississippi at 55.9%; Florida at 59%; Tennessee at 60.6%; and Georgia at 61.6%.

Labor shortages are also a national trend with the U.S. labor force participation rate declining for more than a decade, according to the U.S. Bureau of Labor Statistics.

Competing measures

Hutchison and ADOL push back against the idea that the labor force participation rate is the dominant economic indicator, saying it doesn’t really show who isn’t working or why they aren’t working.

“You can’t really access the demographics of this one,” Hutchinson said. “It’s really hard to determine what’s really going on and the number fluctuates by less than a percentage point over the decades.”

The turnout doesn’t take into account the population of Alabama who have never been labeled as “working” and yet do work such as stay-at-home parenting or caregiving, she said. .

Instead, ADOL argues that the state’s unemployment rate and monthly jobs report paint a more accurate picture of how many people are working in the state.

The number of unemployed Alabamians in August was 69,005, meaning they don’t have a job and are looking for one. The rate is calculated with data from the Current Population Survey conducted by the US Census Bureau and the US Bureau of Labor Statistics each month.

Another survey conducted by ADOL each month asks 20,000 employers across the state how many positions their company currently supports. The most recent figures showed 2,024,400 jobs supported in August 2021, down nearly 74,000 from the pre-pandemic peak of 2,098,300 in November 2019.

Why have so many people left the labor market?

Hutchison cited several reasons for a decline in labor force participation, including lingering fears of COVID-19, people turning to other industries, the many COVID-related deaths seen in the past two years, retirements anticipated due to the pandemic and the inability to access care for children or aging parents.

“Additionally, some workers are unwilling to move to areas of the state with more available jobs due to family issues, salary issues, or a number of other reasons,” Hutchison said. .

Impact on small businesses

Rosemary Elebash, state director of the National Federation of Independent Businesses, says small businesses across all sectors in the state are facing labor shortages.

A recent survey of companies with 50 or fewer employees showed that 91% had a job offer and 93% could not find a qualified candidate for the vacancy.

She said disruptions to schooling and childcare are among the reasons skilled workers are not applying.

“We’re at a point now where people have to decide if they’re going to work or if they have childcare issues,” Elebash said. “It will depend on whether school is open this week or closed for 10 days, and so this back and forth has created difficulties for working parents.”

Elebash said throughout the pandemic, companies have been willing to adapt or change to the needs of workers.

In a survey conducted in June, 83% of respondents said they had increased their salary, benefits, including paid vacation, increased health insurance, vacation and signing bonuses this year.

Elebash noted that the labor shortage could also be a sign that more workers are going back to school to obtain more advanced degrees or skills in order to access better-paying jobs.

She pointed to the Alabama Community College System’s recent rollout of its Regional Rapid Training Centers that provide short-term, personalized, non-credit training for businesses and industries based on their specific training needs.

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