Metro Birmingham is falling behind economically, compared to other large Southern cities and the nation in general, and needs a major effort to refocus industrial recruiting and workforce training.
That’s the essence of findings by a report from a Boston consulting and analysis company, which was commissioned by Bold Goals Coalition of Central Alabama. The study indicates that the metro area is considerably behind booming Southern cities such as Nashville, Charlotte and Atlanta and has yet to fully recover from the Great Recession of the previous decade.
Birmingham-area industries are too heavily reliant on workers without a college education or higher, and those workers are vulnerable to losing their jobs to automation, according to the 40-page report. Meanwhile, there’s a shortfall in industries specializing in high technology, especially life sciences, and local workers who are trained for such employment often leave the area to find work.
The numbers were a bit of a surprise for Bill Jones, the co-chair of the Bold Goals education steering committee, who presided over the public release of the report Tuesday morning.
“It was eye-opening to see how much we trail other cities that are not far away from us,” Jones said.
“Building It Together: A Framework for Aligning Education and Jobs in Greater Birmingham” was released during an event at the Alabama Workforce Development Center in Avondale. It was created by Burning Glass Technologies, based in Boston. Additional research was provided by the Council for Adult and Experiential Learning.
According to the report, the seven counties that make up metro Birmingham had an increase of 8 percent in their gross domestic product — the combined value of all goods and services produced — from 2010 to 2016, largely because the existing industrial base has taken precedence over higher-growth sectors. By comparison, the entire nation had a GDP increase of 13 percent during that period. Of the four other major cities Burning Glass cited, only New Orleans fared worse than Birmingham, with a 5 percent increase. Nashville, which has experienced a boom since the end of the Great Recession, saw its GDP rise by 33 percent, with Charlotte increasing by 22 percent.
Similarly, metro Birmingham’s 6 percent rise in employment fell behind all the other cities, including New Orleans, with 9 percent, and the entire nation at 10 percent. Again, Nashville led the way with a 25 percent gain in employed workers.
National, International Firms Needed
The study divides Birmingham’s companies into two categories, “traded” and “non-traded.” Traded companies have a national or international presence; a higher proportion of such firms is preferred because they bring recurring income streams into the local economy, and workers in such companies typically have paychecks that are 50 percent larger, according to the study.
Non-traded companies are more local in nature. Their revenues tend to be passed around from company to worker to another company. For example, a small business pays its employees, who then spend their money at other such businesses or send it to businesses based elsewhere, which drains the local economy. Health care and retail, two industries with large presences in the Birmingham region, are two primary examples of non-traded sectors, the study said.
The Burning Glass team reported that Birmingham in particular and Alabama in general have not recovered from the Great Recession as quickly as other parts of the South, partly because the mix of industries doesn’t have enough in the traded category.
“Greater Birmingham’s industry mix is disproportionally local in a globalized world,” the team summarized, adding that locally based traded companies also tend to have flat or declining employment because they employ more lower- or middle-skilled workers, counter to trends with such companies in other areas. Those workers are more susceptible to replacement by automation. Birmingham has just less than 29 percent of its workforce in traded companies, compared to 38 percent in Atlanta and 36 across the country.
In addition, the report says that there aren’t enough qualified applicants for many desirable, high-paying jobs in skilled positions.
“Local educational achievement is out of alignment with many local employer demands. This includes some areas without enough technical expertise, such as IT and engineering, where there are not enough recent graduates to fulfill employer demand for talent,” the report stated.
Jones said he was surprised specifically by “the inequity and the difference between the numbers in African-American communities and (mostly) white communities. Some are thriving, some aren’t, and we know that and you can see that. But numbers really opened our eyes. If we can fix that … if we can change this inequity by bringing the lower half up with a concerted effort of education and training, it’ll have a huge impact.”
The study showed that in 2016, the most recent year for which data was reported, the unemployment rate among African Americans stood at 11.9 percent. That’s more than double the 5.6 percent rate for whites.
Some industries, such as nursing, are seeing recent graduates with multiple college degrees but insufficient real-world experience. That’s a finding that University of Alabama at Birmingham President Ray Watts did not agree with, at least when it came to his university’s school of nursing.
“That is where you can’t generalize,” Watts said. “The output of what we’re producing are ready to go into jobs right now. So you can’t assume that about all institutions. Some may be doing that, but we’re not. Our nurse practitioner programs, our nurse anesthetists, our RN and BSN programs produce nurses who are ready to work today.”
Across many sectors, focus groups indicated, there’s a lack of qualified workers to fill middle-management positions. “We find supervisory roles in Sales, Production, Nursing, and Operations to take longer to fill in Birmingham than is typical across the country,” the study said.
Bio-Tech, Other ‘Strong Bets’
Burning Glass takes its name from an ancient device that uses glass lenses to focus the sun’s rays and ignite a fire. In that respect, the firm implored metro leaders to improve the area’s business mix and to make “strong bets” in economic and workforce development, which it said would ignite growth. In particular, the study recommends focusing on three sectors: advanced manufacturing, such as automobiles, biotech/life sciences and information technology.
Entrepreneurial efforts in the metro area have also been hindered by a lack of senior business leaders to help guide the new businesses and expand them as they grow.
“The region struggles to attract leaders to drive these important entrepreneurial efforts, which has ramifications for the future economy as well as today,” the report said, adding that such new businesses account for 20 percent of new jobs.
Burning Glass arrived at its conclusions in part by applying its proprietary software to analyze economic statistics, including employment and job-posting data. With the Council for Adult and Experiential Learning, the firm also conducted focus groups with more than 150 employers in greater Birmingham.
The Burning Glass Report was commissioned by members of the Bold Goals Coalition. Among the members who provided direct funding for the study are the Community Foundation of Greater Birmingham, Birmingham Business Alliance, Central Six AlabamaWorks, United Way of Central Alabama and UAB. The coalition also includes Alabama Possible and Innovate Birmingham.
The report is the second comprehensive study Burning Glass has performed for a city. The first was Pittsburgh, a city with strong roots in the steel industry like Birmingham that has faced similar economic troubles.
Coalition representatives said Tuesday that they will be meeting with stakeholders around the seven-county region over the next six months to formulate plans based on the study’s findings.
Stacks of Studies
Such efforts are by no means new, both in greater Birmingham and nationwide. The landscape of good intentions is littered with the remains of campaigns begun by well-meaning groups. They often follow the same pattern: realize there are problems, hire a company to study the particulars of the issue, then roll out the study – which leads to little significant action as carefully crafted reports gather dust in desk drawers.
But Jones, who retired in 2014 as vice chairman of O’Neal Industries — one of the traded industries that the report encourages the coalition to recruit — is confident that won’t be the case with this study.
“It started as a collaborative effort, and it will continue as a collaborative effort,” he said. “It will be very transparent, and the website will be used to put our goals and our strategies out there, and our results will be there as well. I suspect that the structure that is going to develop will be somewhat fluid, and I suspect the structure will have an element in it for checking our goals and making sure we are doing what we say we will do. It (the coalition) is different in that it is broad-based, and we’ve been very methodic in rolling this report out. The report is very matter-of-fact.”
The report’s website is buildingittogether.com. The website will fully launch in two weeks, but currently it has a form that those interested can use to sign up for updates on the coalition’s progress. The coalition’s main website is boldgoals.org.
Birmingham Watch has received a grant from the Community Foundation of Greater Birmingham, a member of the Bold Goals Coalition, to expand its news reporting.