According to new statistics from the Federal Reserve Economic Data (FRED) for July 2022, Alabama had the sixth-lowest labor participation rate in the country, despite recently announcing record unemployment.
FRED reported Alabama’s labor force participation rate was 57.7% in July 2022. This was up from 57.5% in June and up from 56.7% in July 2021.
Communications director for the Alabama Department of Labor Tara Hutchison told 1819 News that Alabama always had a relatively low labor force participation rate.
“It’s been a problem that everyone has been trying to address for some time,” Hutchison advised. “... There are a lot of factors that come into how that labor force participation rate is affected.”
The only states with lower labor force participation rates than Alabama were West Virginia at 55.6%, Mississippi at 56%, New Mexico at 56.3%, South Carolina at 57% and Arkansas at 57.4%.
The national labor force participation rate for July 2022 was 62.1%, which was actually down from 62.2% in June and 62.3% in May.
FRED’s labor force participation rate measures “the number of people in the labor force as a percentage of the civilian noninstitutional population.”
According to Investopedia, the labor force participation rate predicts the size of an economy’s active workforce. The labor force participation rate is calculated by dividing the number of individuals above the age of 16 in a given population by the total number of working-age individuals who are not institutionalized or in the military.
Unlike the unemployment rate, the labor force participation rate takes into account individuals who have stopped looking for work but still are capable of working. It also is a measure of the percentage of people who are working rather than the percentage of people who are not.
Hutchison said that Alabama had a significant boomer population, which could contribute to low labor participation. However, Alabama’s boomer population is smaller than states like Florida, which has a higher labor force participation rate.
According to Hutchison, other factors contributing to such a low labor force participation rate include a large population of people who are disabled, issues with child care and a lack of infrastructure.
Hutchison also blamed spatial disparities — the severe lack of employment opportunities in select areas in Alabama as opposed to others.
Despite such a low labor force participation rate, Alabama touted low unemployment rates this summer.
Governor Kay Ivey released a press release in July to commemorate June’s 2.6% unemployment rate. She said there were 2,229,231 people employed in Alabama that month, which was 59,902 more than the same time the year before.
Per the Alabama Department of Labor, Alabama’s unemployment in July 2022 did not change from June.
Compared to other states, Alabama tied for 10th lowest in unemployment alongside Idaho and Indiana.
According to the United States Bureau of Labor Statistics, the national unemployment rate in July was 3.5%, which is relatively in line with the unemployment rate in the months leading up to COVID-19.
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