By Emily Jerkins, BBA Director of Research
The Birmingham metro’s jobless rate fell to 8.7 percent in May, the strongest sign of recovery since coronavirus hit the economy in early March. The worst of joblessness may be behind us, though over 48,000 people remain out of work in the Birmingham region, and both uncertainty and economic opportunity lie ahead.
The region’s economy gained over 28,500 jobs in May as thousands of workers returned to work in restaurants, stores and health care facilities following Alabama’s reopening in early May.
The bulk of May’s job gains were in industries hardest hit by layoffs in prior months. The region’s leisure and hospitality employers, which contributed to half of April’s job loss, added over 6,100 jobs in May. As outpatient offices reopened and elective procedures restarted in early May, the health care sector gained 2,600 jobs.
This month’s positive news was further complicated by the BLS’s miscalculation error* and the Paycheck Protection Program (PPP), which stimulated the economy, at least temporarily, by incentivizing employers to rehire or retain employees. Without the miscalculation error, the national jobless rate (13.3 percent) would have been an estimated three percentage points higher.
Wholesalers lost 1,000 net jobs in May, but rising consumer demand for home products softened the decline and fueled hiring among local distribution centers, like Home Depot and Amazon. In the coming months, Amazon’s hiring ramp up at its Bessemer fulfillment center should positively impact jobs in wholesale trade. This facility, which received project management support from the Birmingham Business Alliance (BBA), is expected to employ at least 1,500 workers at full operation.
May’s jobless rate dropped over three percentage points from 11.9 percent in April. There were over 37,000 jobless claims as of the third week of June, a 32 percent decline since peaking right before Alabama’s reopening two months ago.
While workers are gradually getting back to work, the economic downturn and recovery has not been felt evenly across the region. Black workers and workers without a college degree remain disproportionately out of work as evidenced by national trends and disparities across the region – a high of 15 percent in Bessemer to a low of 5.2 percent in Vestavia Hills.
Uptick in distribution activity
Overall, the region is performing better than most metro economies though, with a jobless rate better than 85 percent of U.S. metros, according to a BBA analysis of May 2020 U.S. Bureau of Labor Statistics data. And some industries now employ more workers than they did one year ago. Known as a steady industry, jobs in the insurance industry are also up compared to last May. With more consumers buying groceries and cooking at home, the supply chain is working to keep up with demand by adding more positions and opening new facilities, as reflected by BBA’s current project activity.
“Since COVID-19, the BBA has experienced an uptick in out-of-market companies, specifically in distribution and food-related industries, considering operations in the region,” said Brian Jennings, vice president of economic development at the BBA. “Birmingham’s central location, infrastructure, and existing industry strengths are some of the reasons we are being considered.”
The BBA’s team and its economic development partners are actively managing these opportunities while simultaneously working to build, fund and implement a strategy that creates a more resilient and inclusive economy for the future – one with diverse industries, supply chains and talent.
“Birmingham businesses serve a mix of industries,” said Mark Brown, vice president of business retention and expansion at the BBA. “As you would expect, businesses with a more diverse customer base are more resilient. Some businesses more reliant on specific, hard hit industries, such as oil and gas, have been forced to lay off employees, while others serving a diverse and faster growing set of industries, like medical devices, are adding employees.”
Diverse industry, talent equal resilience
Recognizing the need to better understand and pursue these diversification opportunities, BBA partnered with 58 Inc. and Jefferson County Commission to submit a $450,000 investment request to the Economic Development Administration (EDA) to fund a healthcare market intelligence study, strategy and implementation plan.
And it is not just diverse customer bases and industries that drive regional resilience – it is also the inclusion and diversity of talent within companies, according to a recent McKinsey report about inclusion and diversity efforts amid COVID-19.
“Companies pulling back on I&D now may be placing themselves at a disadvantage: They could not only face a backlash from customers and talent now but also, down the line, fail to better position themselves for growth and renewal,” the report said. “Some of the qualities that characterize diverse and inclusive companies — notably innovation and resilience — will be much in need as companies recover from the crisis. Indeed, it could help companies to unlock the power of I&D as an enabler of business performance and organizational health and contribute to the wider effort to revive economies and safeguard social cohesion.”
Interested in learning more about Birmingham’s economic recovery? Join the BBA and Economist Abbey Omodunbi of PNC Financial Services Group at 10 a.m. on Thursday, July 16 as he provides key insights on market activity in the Birmingham region and what it means within the context of global and national trends. Omodunbi will also share how the impact of COVID-19 on our local economy compares to other metros across the nation as well as his predictions on our recovery efforts. Click here to register.
*The May 2020 unemployment numbers are lower than expected due to a misclassification error during BLS’s surveying. As a result, some furloughed, or temporary laid off workers, were accidentally classified as employed when they should have been classified as unemployed. For further information, please see page six of the U.S. BLS May 2020 Employment Situation report.