Alabama's economy is finally beginning to create jobs again, but there is a big problem, according to labor experts from Georgetown University and across the state.
It's simply creating the wrong kind of jobs, those that require relatively low levels of education and skill and earning low levels of pay.
"To some extent, there is also a mismatch between the skills set workers possess and the type of skills most firms are looking for," said Ahmad Ijaz, an economist at the University of Alabama's Center for Business and Economic Research. "It is a problem which cannot be fixed in the short term, and requires a long term solution of workforce development, education and training."
The misfirings of Alabama's jobs engine is examined at length in a new report from Georgetown University's Center on Education and the Workforce called, "A Decade Behind: Breaking out of the Low Skill Trap in the Southern Economy." It explores how Alabama has been caught in a vicious economic cycle that ensures it will continue to lag behind the nation in creating high-paying jobs and producing workers who can fill them.
Alabama, said report author Anthony Carnevale, is in the double trap of being a state with low educational levels and a "brain drain" of its best college graduates, who flee for other states that have more high-income job opportunities.
"Southern states like Alabama are victimized by having too many low-wage jobs and not enough highly educated residents to get companies paying better wages to come there," Carnevale, director of Georgetown's workforce center, said in an interview. "Alabama is an example of a state kind of stuck over the long-term, lagging further and further behind most of the nation."
Once an economy falls behind in producing high-wage, high-skill jobs, it can be difficult to catch up, and Alabama and the region need to invest in education and post-secondary training to break the cycle, he said.
"It means most of the jobs that require high skills and high education aren't there, giving people less of an incentive to get a higher education and companies less of an incentive to locate in Alabama," Carnevale said.
The Georgetown study highlights obstacles standing in the way of economic prosperity for Alabama, including:
A disproportionately high amount of jobs in Alabama require less than a high school diploma. Alabama ranks third among the 17 Southern states and D.C. in the number of jobs for high school dropouts (47 percent), 11th in the proportion requiring a graduate degree (8 percent), and 15th in the proportion of 2020 jobs requiring a bachelor's degree (15 percent).
In Alabama, 53 percent of jobs by 2020 will require post-secondary education. Across the South, post-secondary demand for jobs in 2020 would range from a high of 72 percent in Washington, D.C., to a low of 43 percent in West Virginia.
By 2020, 65 percent of all jobs in the United States will require some form of post-secondary education and training, while the South will require 57 percent.
What can state leaders do to help put Alabama on the right path when it comes to job creation?
Paul Johnson, managing partner of Next Step Executive Search in Mountain Brook, a firm that helps businesses recruit top managers, said Alabama needs to invest in a multi-dimensional strategy that mixes educational improvements with postsecondary training.
To break the cycle of low-wage/low-skill jobs, he said Alabama should continue to invest in recruiting industries, invest more in K-12 education, enact tax laws that encourage job creation, and "nurture an entrepreneurial eco-system in such a way that the mind-set seeps into not only our larger cities, but also into every rural area."
"There are so many examples of entrepreneurs, economic development organizations, and educators in our state who are working hard in their own communities and spheres of interest to build businesses and solve these problems," Johnson said. "The list is big. Let's stay with our knitting and build something to be proud of."
Making progress, though, won't happen overnight. The Georgetown study found that jobs in the South requiring high school or less were lost in the recession and are not coming back. The region is unlikely to see a full recovery in blue-collar construction jobs and in retail, largely because a tighter credit market mean that construction and other industries that depend on bank financing won't return to their former employment levels for another five years, the report says.
Alabama is being hurt because it has a concentration in old-line industries like manufacturing and natural resources, where productivity gains will continue to slow job creation.
Alabama has traditionally had lots of low-wage jobs, but the state has been successful in luring higher-paying industries in recent years, said Tom Surtees, director of the Alabama Department of Industrial Relations.
"Look at what we've lost and what we've gained," he said. "We lost a lot of textile operators that had low wages, but we've gained auto assembly plants and several suppliers, the ThyssenKrupp steel plant in Mobile, and other industries that pay high wages. Huntsville is an area known for high-income jobs. Things are looking up in Alabama."
Ijaz at the University of Alabama says creating enough high-wage jobs to keep up with demand is a crisis not just in Alabama but across the country.
"Most of the jobs being created are in health services and social assistance, food services, etc., the type of jobs that require relatively low skills and pay lower wages," Ijaz said. "One reason is the technological advances and changes, which in turn requires fewer workers to do the same jobs, Second is that most industries are now much more capital intensive which further erodes the need to hire additional workers."
One example: Last week, Dunkin' Donuts announced it had signed two franchise operators who plan to open 24 new restaurants in Birmingham and other parts of central Alabama over the next six years, creating potentially hundreds of new jobs. But most of those positions are in food services, which Ijaz said tend to be lower-paying positions.
John Norris, manager of wealth management at Oakworth Capital Bank in Birmingham, said Alabama "is and will be a victim of its past," because it has neglected to stress education.
"Educational attainment wasn't a top priority in an agricultural or even industrial economy. However, it is in today's global economy based increasingly on knowledge, technology, and training."
He said Alabama has to decide whether it wants to be a state that produces workers for the future economy or one stuck on the past.
"Alabama, like much of the United States, has been busy producing workers for yesterday's economy," Norris said. "Tomorrow's economy is going to be heavily focused on science, technology, engineering, and mathematics. That is how the United States can and will compete in the global economy."
The Georgetown report suggests that Alabama can muddle along over the next decade, lagging behind with states like Mississippi and South Carolina, or take steps to become a high achiever among Southern states.
"Currently, Alabama is busy trying to attract more highly skilled manufacturing and energy industries from outside," Norris said. "While that is a step in the right direction, we should also be trying to grow them, if you catch my drift. The only thing better than being known as the state that produces college football champions would be being known as the state that produces champions and engineers, mathematicians and scientists. Why not?"