Last week, Gov. Kay Ivey's administration announced a low 2.6% unemployment rate, with the Governor touting her administration's efforts to keep the rate low.
However, one of the factors that has led to a low unemployment rate is a low labor participation rate, meaning those out of work but not seeking a job are not counted as unemployed.
During an interview with Mobile radio FM Talk 106.5's "The Jeff Poor Show," State Rep. Danny Garrett (R-Trussville), the House Education Trust Fund Budget Committee chairman, discussed the issue and what could be done to correct it.
Garrett partially attributed the low labor participation number to the influx of government assistance due to the pandemic.
"That's one thing that's changed that's just so really hard to understand," Garrett said. "I've almost gotten to the point where I ignore the unemployment rate. We have a low unemployment rate, and that's great. Back when I was in college, I learned that 4% unemployment was full employment. In Alabama, unemployment is like 2.6%. Like you say, we can't get enough workers. And so, the issue is the labor participation because unemployment is a function of people who are out of work who are looking for work. In Alabama today, that's only about 60,000 people. But the big problem is labor participation. Nationally, I think the average is about 62%. In Alabama, labor participation is 57%.
"At the peak, I think, at one point, we were at 67%. But what that is is able-bodied people who are out of work and are not looking for work. I don't totally understand what happened, but I think part of what happened was when the pandemic hit and businesses shut down, and the economy came to a halt. And the government assistance came pouring in. A lot of 'boomers,' which I am one, just have left the workforce and have not gone back and are not going back. That ultimately, I think, was going to happen naturally, but it would have happened over a progression as opposed to just happening overnight. So, that's part of it. Then I think there are a lot of people who are still receiving this federal assistance in a number of ways."
The Jefferson County Republican lawmaker said increasing job offerings was part of the solution but suggested emphasizing jobs for four-year college graduates.
"How do you fix it? I think, one, you've got to grow the jobs," Garrett said. "One thing you've got to do, I think, the jobs that community colleges can help us with, with credentialling, the trade programs and things like that – there's certainly a need for that. But if you really want to grow the economy, we've got to grow the four-year people. A lot of those leave the state. We need people like that to come to the state, people like that to be educated here to stay in the state and build those businesses and help us grow the economy that way.
"So, I think there's a lot of approaches to it. It's not just one or the other. There are a lot of people who would put the emphasis on the trade schooling, and I agree with that, but that's not going to solve the problem. We also have to have more retention of college graduates. We need these knowledge-based jobs to come to the state. That will help."
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