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Increasing the Labor Force Participation Rate is Central to Alabama’s Talent Development Strategy

A message from AlabamaWorks!

By Tim McCartney

There is good reason to be pleased with Alabama’s 2.6 percent July 2022 unemployment rate, which is the lowest in the Southeastern United States and the lowest in Alabama’s history. 

With labor market conditions nearing full employment in Alabama, meeting Governor Ivey’s Success Plus postsecondary education attainment goal of adding 500,000 credentialed workers to the workforce by 2025 requires increasing Alabama’s labor force participation rate (LFPR), which includes all persons between 16 and over 64 who are employed or who are seeking employment.

A vital part of Governor Ivey’s economic development plan is to have a well-educated workforce that is ready to fill the thousands of new jobs Alabama is recruiting each year. 

The work is paying off, as Alabama’s rural counties attracted $2.3 billion in new investment and over 3,600 jobs during 2020 and 2021. Due to Governor Ivey’s strategic leadership, Site Selection Magazine ranked Alabama as the best state among the South Central States for workforce development in 2022.

Area Development magazine presented Alabama with its Gold Shovel Award for economic development success in manufacturing during 2020. And Alabama’s ability to overcome the complex economic development challenges posed by the COVID-19 pandemic earned the state a Top 10 ranking in the Governor’s Cups analysis from Site Selection magazine, as well. 

The Alabama Department of Labor’s data shows that as of July 2022, the yearly total of online job ads is 108,608 and there are 59,419 unemployed Alabamians, which is almost two open jobs per unemployed Alabamian and a 23.1 percent increase in open jobs since July 2021.  

Alabama’s employment-to-population ratio, which means the percentage of the population that is currently working, has rebounded from the pre-pandemic level of 55.2 percent in March 2020 to 55.7 percent in July 2022. 

Alabama’s labor force participation high-water mark was 65.1 percent in July 1997. Alabama’s LFPR was 56.7 percent in April 2017 when Governor Ivey assumed office. Due to Governor Ivey’s focus on developing a no-wrong-door approach to the public workforce system, Alabama’s LFPR increased a percentage point from 56.2 percent in November 2021 to 57.7 percent in July 2022.

In the post-COVID-19 environment, Alabama must pursue a workforce development strategy designed to engage those Alabamians who have decided to remain on the sidelines by not entering the labor force. 

Alabamians who are not in the labor force are not avoiding work intentionally. Many people face benefits cliffs when entering the workforce, which are caused when means-tested benefits taper off more quickly than an individual can compensate for their loss through paid employment.

Providing access to education and training, coupled with human services, is a method for meeting the complex needs of Alabamians who are facing barriers to entering the workforce. 

Nationally, and in Alabama, many young men are missing from the labor force. In January 1960, 97.1 percent of prime age men (25-54) were participating in the labor force and 42.1 percent of prime age women (25-54) were participating in the labor force. In September 2021, only 88.1 percent of prime age males were participating in the labor force.

A 2015 report by Alan Krueger, former Chairman of the White House Council of Economic Advisers, found that opioids are likely pulling prime-age workers out of the labor force. 

Alabama’s labor force and economy are among the hardest hit by the opioid crisis. This rise in opioid use in Alabama was associated with a 2.6 percentage point decline in the state’s labor force participation rate of prime-age workers.

Governor Ivey created a committee of the Alabama Opioid Overdose and Addiction Council, entitled the Subcommittee on Abating the Effects of the Opioid Crisis on the Workforce, to develop workforce strategies and for reducing the effects of the opioid crisis on Alabama’s labor force participation rate. 

Since the onset of the COVID-10 pandemic, the Alabama Workforce Council has conducted a recurring Alabama Survey of the Unemployed and Underemployed, which focuses on the barriers Alabamians face when reentering the workforce in wake of the pandemic. The survey results continue to underscore the need to provide access to wrap-around and support services, such as transportation, childcare, and housing assistance. 

According to the survey results, a lack of childcare causes more than 20 percent of parents to be late or absent from work four or more days a month. Furthermore, just over half of the respondents have lost a job or opportunity because they lack reliable transportation. More than one-third of respondents have declined or delayed a job opportunity because they were afraid that they would lose a government benefit. 

Alabama’s strategy to increase the labor force participation rate centers on providing new modalities of training, including short-term programs that are aligned to traditional degrees and supportive services, such as transportation and childcare, that Alabamians needs to persist in the workforce. 

The Federal Reserve Bank of Atlanta and Governor Ivey’s Human Capital Development Committee, Chaired by Department of Human Resources Commissioner Nancy Buckner, have partnered to develop a benefits cliff and self-sufficiency tool called the Dashboard for Alabama to Visualize Income Development (DAVID) for Alabama. This dashboard is designed to help individuals understand when they will reach self-sufficiency, based on income, region, occupation, and family dynamics. 

Over the next year, Governor Ivey will launch a series of technology solutions to operationalize Alabama’s Talent Development Strategic Plan. This Alabama Talent Triad consists of the Alabama Credential Registry, which will be used to provide full transparency for each credential awarded to Alabamians and will tag credentials to the competencies that compose Alabama’s in-demand jobs. 

The Alabama Skills-Based Job Description Generator will allow employers to create customized job descriptions based on the “DNA” of the jobs in their firms. 

The Alabama College and Career Exploration Tool learning and employment record will allow job seekers to develop verified resumes and to link directly to skills-based job descriptions generated by employers. 

As we move into the fall and begin planning for 2023, we are not resting on our laurels. 

The AWC will continue to remain singularly focused on developing the relationships, technologies, and programs needed to increase Alabama’s LFPR. 

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Tim McCartney, formerly of McCartney Construction in Gadsden, is the Chairman of the Alabama Workforce Council. To learn more about the Alabama Workforce Council, visit www.alabamaworks.com.



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