However, Alabama continues to fall behind the national average for unemployment with an unemployment rate of 4.9 percent, as of May 2017. The reasons for the continued rise in unemployment is both simple and complex.
The simple explanation is that people are entering Alabama’s workforce much faster than available employment. On a more complex note, however, the business incentives that the state of Alabama has used to draw new businesses to the state haven’t done enough to rejuvenate the economy in terms of creating more jobs.
A Job Market Bursting at the Seams
Despite new manufacturing jobs Alabama is struggling economically. Unfortunately, there are more people looking for jobs than available jobs in Alabama. This simple truth is due to the high unemployment rate.
Alabama has the third worst jobless rate in the country and in spite of new manufacturing jobs, Alabama is still struggling economically.
For example, 10,000 people entered Alabama’s workforce in February 2017 but only 6,500 people were able to find jobs. In fact, Alabama was the only state in the country to show a continued increase in sustained unemployment during a 12-month period in 2014.
The Texas Florida Solution
Perhaps Alabama needs to take a few notes from its neighboring states. Both are experiencing growth in many areas from employment to business growth and economic prosperity.
Alabama has unsuccessfully tried to grow its economy by offering to subsidize businesses if they come to Alabama. ThyssenKrupp, Hyundai, and Mercedes seemed to show promise in terms of job growth. However, from 2003 to 2013, Alabama spent almost $3.5 billion in subsidies to entice companies to relocate to Alabama. Without any real economic growth to support these subsidies.
Neighboring states have proven that there are other avenues and pathways to economic growth. Alabama could take a few hints from Florida by cutting taxes and reducing government regulations in order to make it easier for its residents financially.
Furthermore, Florida recently not to participate in a publicly subsidized program for $250 million with Enterprise Florida, another program put in place to draw businesses to Florida. The results are in. These measures have helped to reduce Florida’s unemployment rate and heavily bolster the economy.
Texas can tell a similar story. Texans have seen over $5 billion in tax cuts in the last few years. The Lone Star State has also decided to limit government spending substantially. As a result of these measures, Texas and Florida rank in the top 10 for the Tax Foundation’s 2016 State Business Tax Climate Index.
Alabama’s economy is proof positive that spending tax dollars on subsidies for a handful of firms does not equal economic prosperity.
Instead, Texas and Florida represent healthier alternatives for stimulating economic growth by reducing taxes and unnecessary government regulations, as well as cultivating a business-friendly environment. In fact, the results tell a better story.
When it comes to job creation, Texas still leads the nation.
Perhaps the reasons for Alabama’s high unemployment and floundering economy aren’t so complex at all. Maybe the influx of newcomers in the workforce and the limited number of jobs paint a clear picture.
Alabama has made efforts to reduce unemployment unsuccessfully throughout the years by spending tax dollars on subsidies for a handful of businesses. This may be where the real growth opportunity was missed.
Perhaps less dependence on a handful of business subsidies and more of a focus on reducing the burden that government places on taxpayers with needless government regulations are part of the keys to success. Lower unemployment and a healthier economy seem to be stimulated by tax cuts and fewer government regulations.
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