Alabama Department of Labor Secretary Fitzgerald Washington announced on Friday that state unemployment set a new all-time record low of just 2.1% in July. More troubling for state leaders is that Alabama’s Labor Force Participation Rate (LFPR) remained unchanged in July 2023 at 57.0%. This rate is also unchanged from July 2022. There has been no improvement in the labor force participation rate in the last year.
“Alabama continues to set economic records,” said Alabama Department of Labor Secretary Fitzgerald Washington. “Not only did we maintain our streak of setting new employment records, we also saw yet another decrease in our unemployment rate, bringing us to a new record low of 2.1%.”
The “prime-age” participation rate, which measures the labor force participation for individuals aged 25-54, is 77.8% in Alabama. By age 25, most college education should be complete. 54 is really too young to be retired. Some of that 22.2% of prime-age non-workers are mothers staying at home to take care of their children or a chronically ill parent. A few are disabled and can’t work, and a few are independently wealthy and living off of their investments. A large number, however, are apparently making the decision to not participate in the economy.
The White House Council of Economic Advisers (CEA) released a report examining the declining workforce participation rate. The CEA reported several possible explanations, including “increasing rates of women in the workforce, rising disability insurance claims, falling demand for less-skilled workers, and barriers to employment for those with criminal records.”
Governor Kay Ivey and state officials are concerned because businesses can’t recruit workers if they come to the state or try to expand unless they get into a bidding war with existing workers. The state’s unemployment rate keeps dropping, but businesses are increasingly troubled by the lack of prime-age workers in the state, and the state’s inability to raise that labor participation rate (which trails the national average) means that employers who the state would like to recruit here can’t find workers – even with competitive pay.
There were only 48,834 unemployed people, a new record low, compared to 50,377 in June and 59,409 in July 2022.
The number of people counted as employed increased by 28,382 over the year to a new record high of 2,258,166. The civilian labor force also reached a new record high of 2,307,000, with 17,807 more people joining the labor force over the year.
Over the year, wage and salary employment increased by 38,600 to 2,151,200, with gains in the leisure and hospitality sector (+9,800), the private education and health services sector (+7,800), and the government sector (+6,700), among others.
“Another bright spot to note this month is the recovery of the leisure and hospitality sector, which was hit especially hard by the pandemic,” continued Washington. “In July, this sector came within 300 workers of reaching its previous (and pre-pandemic) record high of 213,700 workers. That’s certainly an amazing turnaround in that industry!”
The leisure and hospitality industry recorded 213,400 workers in July 2023, which is very near its all-time record high was 213,700 in June 2019 – before the global pandemic.
All 67 counties experienced a stable or decrease in their unemployment rate both over the month and over the year.
The Counties with the lowest unemployment rates are Shelby County at 1.7%, Morgan County at 1.8%, and Madison, Limestone, and Cullman Counties at 1.9%. The Alabama Counties with the highest unemployment rates are Wilcox County at 6.7%, Dallas County at 5.5%, and Perry County at 5.4%.
The major cities with the lowest unemployment rates are Trussville and Vestavia Hills at 1.5%, Homewood and Madison at 1.6%, and Alabaster and Hoover at 1.7%. The major cities with the highest unemployment rates are Selma at 6.4%, Prichard at 4.6%, and Bessemer at 3.5%.
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