Economic Growth Concerns Highlighted for Birmingham Metro Area

Economic Growth Concerns for the Birmingham Metro

In a recent discussion about economic development in the Birmingham metro area, guest columnist Don Erwin outlined some pressing issues that the region faces regarding job creation and capital investment. As the second-largest city in Alabama, Birmingham serves as a significant economic hub but is falling short in vital growth indicators.

Population and Employment Trends

According to the Alabama Department of Commerce’s 2023 annual report, the Birmingham metro area, which includes seven counties, accounted for over 23% of Alabama’s population this year. However, it only generated 12.1% of the new jobs and 15.55% of the new capital investment in Alabama. When looking at a five-year trend from 2019 to 2023, the metro area’s contributions in job creation and capital investment were still below expectations, with 15.9% of the state’s new jobs and 11.22% of its capital investment.

Challenges in Economic Development

Erwin pointed out that if Birmingham wants to thrive, it must do better in these areas. The primary agency responsible for stimulating economic growth, the Birmingham Business Alliance, has been performing well with the limited resources available to them, but Erwin believes that significantly more funding is required for the organization to effectively accelerate growth.

The disparity in staffing between regional organizations highlights this need. For instance, the Regional Planning Commission of Greater Birmingham has a staff of 67, the Greater Birmingham Convention & Visitors Bureau has 33, while the Birmingham Business Alliance operates with just 17 employees. This may reflect a greater local priority on tourism and planning rather than directly generating new jobs and investment opportunities.

Rethinking Recruitment Strategies

Another critical point raised concerns the nature of the job market in the Birmingham metro. While the region does have industrial parks, Erwin emphasized that its economy leans more towards white-collar operations, typically located in office spaces. The cities like Hoover lack industrial parks entirely, which poses further challenges for job creation.

Erwin pointed out that there are over two million square feet of vacant office space in Jefferson and Shelby counties. If occupied, this space could potentially house more than 8,000 workers, thus generating much-needed tax revenue for the area. However, simply waiting for the Alabama Department of Commerce to bring in businesses is not a viable option. The Birmingham Business Alliance must take proactive steps to attract companies on its own.

Funding Challenges and Solutions

Erwin suggested that substantial resources must be allocated not just for recruitment but also to train and support a sales team dedicated to economic development. This situation is compounded by the fact that the Birmingham Business Alliance relies heavily on private contributions from regional companies for its funding, making it more vulnerable compared to organizations with guaranteed funding sources like the Planning Commission and Convention Bureau.

Compounding these challenges, many local businesses are hesitant to contribute financially to recruitment initiatives, fearing competition or loss of employees. Erwin highlighted that the current funding model for the Birmingham Business Alliance needs dramatic improvement if the city is to see the economic growth it seeks.

Final Thoughts

As Birmingham residents and stakeholders continue to consider the prospects for economic development, it’s evident from Erwin’s insights that a collective effort is needed. Increased focus on resources and priorities for organizations like the Birmingham Business Alliance could make a notable difference in steering the metro area towards a more prosperous future.