Why is Alabama’s workforce participation rate so low? And what’s being done to improve it?

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By Olivia McMurrey

Sitting in a cubicle inside the Birmingham Career Center, employment security representative Chancellor Maryland asked Margaret Jenkins to confirm her most recent employers: Walmart, Dollar Tree, Jack’s, Bojangles and Arby’s.

“The reason why it’s so much is, many times, I’ve been working two jobs at one time, trying to get myself back up, while I could,” Jenkins said.

She said she came to the center, one of 56 across Alabama run by the state’s Workforce Department, because she wants to transition to a different type of work.

“I’m 48, and I want a new career, training and education all at the same time.”

Alabama’s rate, historically and today 

But for now, Jenkins is not part of Alabama’s workforce. The state’s workforce participation rate – 57.6% – is tied with South Carolina for third worst in the nation, following West Virginia and Mississippi. The U.S. labor force participation rate is 62.6%.

While Alabama boasts an unemployment rate that is among the lowest in the country, its workforce participation rate consistently lags the national average, meaning a large portion of Alabamians are neither employed nor actively seeking work. This has raised concerns both about barriers to employment for individuals and about the state’s economic future.

Those worries led to the Working for Alabama package of bills Gov. Kay Ivey signed into law last year. One law in the package renamed the state’s labor department – now the Workforce Department – and reorganized it, bringing all workforce-related efforts in other agencies under its roof.

For the vast majority of the past 50 years, Alabama’s rate has trailed the nation’s by 4 to 6 percentage points – just like today. But the low rate has gained a lot of attention in recent years.

Not enough workers

That’s because companies are starting to feel the pinch through worker shortages, said Ed Castile, deputy secretary of the Alabama Commerce Department.

“We knew there were issues, but there’s always been enough people,” Castile said. “Well, now there’s not.”

Greg Reed, a former state senator and secretary of the Workforce Department, said that situation could jeopardize the tremendous strides Alabama has made over the past decade to position itself for economic growth. The state offers incentives to industrial and manufacturing investors and has upgraded its infrastructure, expanded broadband Internet access and prepared itself for the knowledge-based economy, Reed said.

“You do all of that, and you cannot answer this question, you’re in trouble in growing your economy,” Reed said. “And that is when the investor asks, ‘If I’m going to invest $100 million in building a facility in the state of Alabama rather than going to another state or another country, how are you going to guarantee me that I will have a ready workforce, and not only today, but years to come?’”

Barriers to workforce participation

Because it’s difficult to collect information about people who are not participating in something, there is no direct data to explain why a significant portion of Alabamians have opted out of the workforce. So economists and those charged with collecting labor statistics turn to indirect data.

It points to a host of factors, including high child and elder care costs, lack of transportation and affordable housing, low educational attainment and skills mismatches. Other contributors are poor health, disability, criminal backgrounds, low wages and a lack of opportunity in rural areas.

Margaret Jenkins exemplifies many of these factors.

Without a high-school degree, she spent decades working on and off in low-wage jobs while caring for her sick mother and child, neither of whom can walk. Her daughter, now 28, has suffered from serious health problems since birth. Jenkins’ mother got sick in 2002. 

Jenkins said her caregiving responsibilities impacted her ability to work consistently.

“When I’m going out dealing with other people, I bring back germs and stuff to them that they wasn’t able to tolerate,” she said. “They wind up in the hospital, so I have to leave the job. Sometimes I could go back. Sometimes they wouldn’t allow me to come back.”

The years of caregiving took a toll on Jenkins’ own health, and she recently moved both her mother and daughter to facilities where they can receive better care. She experienced homelessness and left the Anniston area for Birmingham, hoping to find more job opportunities and to use public transportation since she doesn’t have a car.

Three factors

Economists classify the challenges Jenkins faces – and other factors affecting workforce participation – into three categories, said Samuel Addy, senior research economist and associate dean for economic development outreach at the University of Alabama’s Center for Business and Economic Research.

“One that’s most common that people think about is the economic factors,” Addy said. “But actually that’s not the biggest factor. The next factor is social and cultural factors, and the third is demographics. That is the most controlling factor, because labor is provided by people.”

Alabama has larger-than-average populations who tend to face employment barriers. In addition, many groups of people who struggle with those challenges – including older workers, veterans, disabled people and those without a high school degree – are less likely to work in Alabama than in other states.

Addy said a social and cultural factor also plays a big role in Alabama’s workforce participation.

 “In the South, for the longest time, we like to think that when one person can produce enough income for the family, we basically, quote-unquote, have arrived,” he said.

Recent efforts to improve the rate 

The economic category is where the state has concentrated most efforts to improve the workforce participation rate. In addition to renaming and reshaping the Labor Department, the Working for Alabama package of bills provides tax credits for companies to build and operate childcare facilities or make payments to such facilities for the care of employees’ children.

Developers who build low-income housing can receive credits as well. An education bill creates a Workforce Pathways diploma that allows students to count career and technical education courses toward graduation requirements and grants scholarships to students seeking in-demand training at community colleges. Two other laws in the package establish a public-private corporation to support economic development and allow municipalities to create research and development corridors exempt from certain taxes.

The Working for Alabama legislation represents progress, said Dev Wakeley, worker policy advocate at Alabama Arise, but he adds that tax credits for corporations aren’t enough, and the bills don’t address many root causes of employment barriers. 

“We need a lot more out of the state if we’re going to really address these problems,” he said.

Wakeley said meaningfully improving workforce participation will require investing in people and adopting worker-friendly policies.

He cites Alabama’s low wages and the need for paid parental leave, substantial support for public transit, affordable health care for everyone and an end to the state’s antagonistic stance toward labor unions.

“When you’re really trying to build an economy, you focus on the workers,” Wakeley said. “The tension between trying to build a modern economy through modern business practices and Alabama’s economic structure, which is reliant upon cheap, exploitable labor – those tensions are real, and until we move past that mentality, there’s always going to be a problem when we’re talking about real best practices.”

Reed said the Legislature and the governor are willing to do more as it becomes clear which strategies are working.

“If you can impact opportunity for job growth by benefiting the business – great, we’re interested,” Reed said. “If the best impact is going to be direct benefit to the employee as an individual taxpayer, then we’re going to look to do that. And there may be a window of time where we try some different options and see what the outcomes are going to be.”

Realistic expectations

Addy cautions that even the best tactics won’t rapidly alter the workforce participation rate. His office has been projecting the current workforce shortage since the early 2000s and sees it continuing through 2045.

“We shouldn’t expect the changes to be very fast because of the various factors that influence the labor force participation rate. We have to have a realistic expectation of how we can improve it and also the resources it will take to improve it.” 

Jenkins is happy with the existing resources she found at the Birmingham Career Center, which provides free education and training. She left the center with plans to get her GED and possibly a commercial driver’s license.

“I would be very interested in truck driving,” she said. “Because that is a very growing industry, and they make a lot of money.”

This story is part of the Working in Alabama series, which explores what’s working and what’s not in Alabama’s economy.

Editor’s note: updated to with the correct spelling of Dev Wakeley‘s name