by Hannah Denham
Mass layoffs soared this year in Alabama, impacting thousands of workers and inching toward the number of large-scale job losses the state saw during the first year of the pandemic, as cuts hit hardest in manufacturing.
Roughly two dozen companies accounted for the loss of more than 4,000 jobs across Alabama in 2023, according to WARN notices filed with the state. And half of those employers also permanently closed their facilities or left Alabama altogether.
The Birmingham metro saw the highest share, per the WARN filings. That includes the closures of a CVS distribution center in Bessemer in May, and Luxor Scientific’s Birmingham facility in June.
Elsewhere in Alabama, Help at Home, a home health provider, laid off 785 people across every county in September and left the state. In November, Baxter Health Corp. laid off 459 workers and began closing operations at its plant in Opelika near Auburn.
And the WARN notices piled up.
Transportation company Logistics Insight Corp. and cleaning company Packers Sanitation Services Inc. had multiple rounds of mass layoffs at several facilities. And two other employers – lumber producer Boise Cascade Company in Chapman and biotechnology company Thermo Fisher Scientific in Auburn – filed notices of layoffs effective for 2024.
And they especially jumped over the summer. About 20% of the mass layoffs took place in July alone this year. That included the shutdown of Utz’s Golden Flake factory in Birmingham, a plant closure that cut 175 jobs.
Sam Addy, a senior research economist and the associate dean for economic development outreach at the University of Alabama, said the summer marked a point of worry for employers about the Federal Reserve hiking interest rates and raised concerns about how that might impact consumer spending.
“There was a lot of fear about how the economy will hold out during that time. I think that’s more management issues than actual economic performance,” Addy said. “But things have tampered down much better than people expected.”
Altogether, the cuts marked a big spike over the past couple of years. In 2021 and 2022, mass layoffs affected only about 800 Alabama jobs each year.
Wafa Hakim Orman, economics professor and associate dean of the University of Alabama at Huntsville’s business school, noted that higher interest rates throughout the year, as well as inflation in July, could help explain the uptick.
“Is it that firms were seeing bad things about to happen, so they started laying off a whole bunch of people in July?” she said. “Higher interest rates would absolutely lead to more layoffs, I can see that. It would make working capital harder to access.”
Mass layoffs are classified as those in which a company that employs at least 100 people lays off 50 or more workers. Federal law requires those large employers to file a public WARN notice with the state 60 days in advance of mass layoffs or plant closures. Those WARN notices are published by the Alabama Department of Commerce.
But despite the spike in mass layoffs, total layoffs for the state, which include cuts by small businesses, were mostly flat this year compared to 2021 and 2022. The Bureau of Labor Statistics reported 228,000 layoffs for total nonfarm employers in Alabama between January and October, though the data does show a spike in July.
That didn’t surprise Addy, he said, pointing out that the steady total layoffs reflected the United States’ positive recovery from the economic hits of the pandemic, compared to other countries. He said that some economists think that, due to workforce shortages, more employers hoarded workers this year and cut hours rather than laying people off.
“For us in Alabama, I think that’s also clear that you can see we still have our record employment,” Addy said. “So that theory of employer hoarding could be true, but right now, it’s not a good time to test it.”
In Alabama, durable goods manufacturing makes up 10% of the gross domestic product, per the U.S. Department of Commerce’s Bureau of Economic Analysis.
And in Alabama, nearly half of the announced cuts were manufacturing jobs. The next two areas hardest hit this year were healthcare and transportation. Each made up 21% of the mass layoffs, per an AL.com review of WARN notices.
That could also be because, nationally, tech jobs have seen a lot of cuts throughout the past year, including in the manufacturing sector, Addy said.
“We are a heavy manufacturing state, relative to the nation,” he said. “Typically, when something’s affecting a sector that’s smaller for the nation, like manufacturing, where it’s bigger for us, we will see a relative spike.”
The early days of the pandemic saw a similar pattern, as manufacturing companies in Alabama announced major layoffs and closures in 2020. More than 5,300 people lost their jobs in mass layoffs in Alabama then, a trend that happened across the country as employers responded to COVID-19.
Greg LeRoy, executive director and founder of Good Jobs First, a watchdog group for state and local economic development, said that, across the country, more and more manufacturing jobs are being lost to automation, followed by globalization.
He added that the mass layoffs had largely gone unnoticed in a place like Alabama “because everybody thinks Alabama, and the Southeast generally, is a boom town because of all the EV and battery deals that are getting announced these days.”
But this year, as the job cuts mounted, Alabama also reported record low unemployment, with the rate hovering around 2% throughout the year. That means that most people caught up in these waves of mass layoffs are finding new jobs quickly, Hakim Orman said.
“It’s not like people are getting laid off and getting disenchanted and leaving the labor force,” she said. “Interestingly, as our unemployment rate has fallen, our labor force is actually growing.”
This year’s trend also shows that Alabama is becoming a magnet for new jobs even amid layoffs, Hakim Orman said. That’s particularly true in Huntsville, she said, as the north Alabama city has one of the lowest unemployment rates out of the state’s metro areas.
The 2023 spike in layoffs could’ve just been random, she added.
“Given that inflation has come back down again quite a bit, maybe we’ll see that blip reduced,” Hakim Orman said.