Alabama’s and Maryland’s Similar Black Unemployment Rates Mask Major Differences in Labor Market Conditions
Nationally, the Black unemployment rate remains below historic norms, averaging 6% in the first quarter of 2024. Since 2019, two states—Maryland and Alabama—stand out as consistently having Black unemployment rates below the national average. Among states where Black workers comprise at least 5% of the labor force, the state with the lowest Black unemployment rate has been either Maryland or Alabama for the last 13 quarters (back to 2021 Q1). In fact, these two states have had the lowest and second lowest Black unemployment rates (not always in the same order) for eight of the last nine quarters (from 2022 Q1 to 2023 Q4).
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Despite the remarkable similarity in unemployment rates shown in Figure A, Black workers in Maryland and Alabama may not be as equally well off as they appear to be. Figure B reveals that between 2018 and 2023, a much larger share of Maryland’s Black population was employed than Alabama’s. In 2023, the employment-to-population ratio (EPOP) in Maryland was 64.6%, compared with just 55.5% in Alabama and 59.6% for the United States as a whole.
If Black unemployment rates are so similar in both states, why are employment-to-population ratios so different? Because of fundamental differences in each state’s approach to social and economic policy. While Alabama adopts the Southern economic development strategy, for example, Maryland does not. This strategy seeks to disempower workers—especially Black and brown workers—to ensure employers can extract their labor for as little compensation as possible. In practice, this translates to higher rates of incarceration in Alabama than in Maryland, especially for Black men. Alabama has no minimum wage, compared with Maryland’s $15 per hour wage floor. Alabama lacks pro-worker, family-supportive labor policies like Maryland’s paid sick days and paid family and medical leave laws. And Alabama underinvests in public services.
Each of these policy decisions limits job opportunities that support a decent standard of living and can lead workers to become discouraged and leave the labor market. Since workers who leave the labor market are no longer counted as unemployed, the Southern economic development strategy may be artificially lowering Alabama’s Black unemployment rate. To underscore how vastly different labor market conditions are for Black workers in two states with similarly low unemployment rates, we compare these components of the Southern economic development strategy in Alabama versus Maryland.
Alabama incarcerates more of its residents
Figure C shows that Alabamians are incarcerated at a rate that is 1.4 times higher than all Americans and 1.7 times higher than Marylanders.1 This is remarkable given that the United States as a whole already incarcerates its citizens at a rate higher than any country in the world. It is not just that Alabama imprisons more of its residents than Maryland does, Black Alabamians are highly overrepresented in the prison population.
According to data from the Prison Population Initiative, in 2021 just 26% of Alabama’s resident population was Black compared with 43% of its jail population and 53% of its prison population. Maryland also incarcerates Black residents at a disproportionately high rate—Black Marylanders made up 29% of the resident population of the state but were 59% of Maryland’s jail population and 71% of those in Maryland’s prisons. However, since Maryland incarcerates residents at a lower rate, fewer Black residents are incarcerated overall: 594 per 100,000 Black Marylanders compared to 1,014 per 100,000 Black Alabamians are incarcerated in prisons alone.
Incarceration disproportionately impacts Black men and has ripple effects in the labor market for reentering workers since having a criminal history makes it more difficult to find a job. Ban the box policies seek to reduce the stigma and penalty associated with a criminal record by eliminating disclosure on job applications and delaying background checks until later in the hiring process. Maryland has a statewide ban the box policy for both public and private sector employment, while in Alabama, ban the box has only been adopted for the city of Birmingham.
While these facts do not establish a causal relationship, a striking pattern between rates of incarceration and EPOPs for prime age Black men emerges. Between 2017 and 2021, prime-age (25–54) Black men in Maryland, where incarceration rates are lower, were an average of 14.9 percentage points more likely to be employed than prime-age Black men in Alabama. As shown in Figure D, 83% of prime-age Black men in Maryland were employed compared with just 68.1% in Alabama and 75.4% of Black men nationally. Similarly, Black women were more likely to be employed in Maryland (78.6%) than they were in Alabama (70.6%) or nationally (72.5%).
Large numbers of low-wage jobs do not serve Alabamians and their families
Another factor distinguishing Alabama’s labor market from that of Maryland is the quality of available jobs. The Southern economic development model prescribes that workers are paid low wages and, in keeping with this, Alabama has no state minimum wage; what applies is the federal minimum wage, which has been stuck at $7.25 per hour since 2009. In contrast, as of January 1, 2024, Maryland raised its minimum wage from $13.25 per hour to $15 per hour.
In December 2023, before Maryland’s $15 per hour minimum wage was in effect, fewer than 10% of Marylanders were paid less than $15 per hour. But in Alabama, the percentage of workers was 22%: More than one in five Alabamians were paid less than $15 per hour.
Many Alabamians lack access to paid sick leave and paid family and medical leave
In addition to differences in employment-to-population ratios, incarceration rates, and minimum wages, Alabamians are much less likely than Marylanders to have access to paid sick leave and paid family and medical leave—supports which are crucial for balancing work and family. For example, while 90.8% of workers in Maryland have access to paid sick leave, just 68.2% do in Alabama. Again, these dramatically different outcomes reflect different policy approaches in the two states.
Maryland has an earned sick and safe leave law whereby all workers can accrue up to 64 hours of leave time to use for their own or a family member’s illness and in cases of domestic violence, sexual assault, or stalking. The law requires employers with 15 or more employees to provide paid leave, while smaller employers may provide unpaid leave. Additionally, Maryland Family and Medical Leave Insurance goes into effect starting in 2026. This law requires all employers to participate in some form of paid leave insurance offering workers up to 12 weeks of paid leave for the birth of a child, their own or a family member’s serious illness, or to arrange for a family member’s military deployment. In contrast, Alabama does not require employers to provide workers with paid family and medical leave. Rather, employers or individuals may purchase paid family leave benefit policies from private insurance companies. This approach will undoubtably leave many workers, especially low-wage workers, without paid leave. For those who are covered, policies will likely provide fewer weeks of coverage and lower wage replacement rates at higher costs.
Alabama underinvests in the public sector
The private versus public approach to paid leave is emblematic of broader differences in how the role of government is perceived in Alabama versus Maryland. These disparate views are clearly reflected in each state’s willingness to invest in its public sector, even when the cost is subsidized by the federal government rather than being paid from state and local revenues. Under the American Rescue Plan Act of 2021 (ARPA), federal funds were granted directly to state and local governments. In addition to investments in infrastructure and public health, other approved uses of these funds included offering hiring and retention bonuses to fill public employee vacancies and raising public sector wages. As of September 2023, Maryland has spent 86% of its total state allocation and increased public sector employment by 3.5% between September 2022 and September 2023. Alabama, on the other hand spent just 36% of allocated funds and public sector employment grew just 1.1% over the same period.
These data show that comparing state unemployment rates in isolation paints a misleading picture. At any level of geography, the unemployment rate overlooks workers who want a job but aren’t actively searching due to discouragement, care responsibilities, or other obstacles. But interstate comparisons of unemployment rates also fail to distinguish the quality of jobs available and how policy choices influence these outcomes. Maryland and Alabama provide a striking example of how policies to support working people, ensure adequate pay and access to paid leave, and invest in public goods can help drive higher rates of employment while helping workers to cover basic necessities like food, rent, childcare, and transportation.
1. The overall incarceration rate includes those in prisons, jails, federal prisons, youth facilities, and involuntary commitments. Prisons and Jails make up the vast majority of these.
*source Alabama outline map, Maryland outline map.
Chandra Childers is a senior policy and economic analyst with the Economic Analysis and Research Network (EARN) at EPI. Her work is primarily focused on supporting EARN’s state and local policy research and advocacy network in the Southern United States. Childers is committed to economic justice and ensuring that all workers have a voice in their workplaces and that they experience real economic security independent of race, sex, or economic status. Using an intersectional lens, her research focuses on employment, earnings, job quality, and worker power.
Before joining the EARN team at EPI, Childers was a Study Director at the Institute for Women’s Policy Research, where her work focused on occupational segregation, the gender wage gap, and Black, Hispanic, and Native American women’s access to good jobs that pay well, provide benefits, and ensure economic security for them, their families, and their communities.
Valerie Rawlston Wilson (she/her) is a labor economist and Director of the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy (PREE), a nationally recognized source for expert reports and policy analyses on the economic condition of America’s people of color. As PREE Director, Wilson has worked to elevate EPI’s thought leadership on issues of racial and economic justice and expand PREE’s capacity to prescribe policy solutions that center racial equity. Prior to joining EPI, Wilson served as Vice President of Research at the National Urban League, where she played a pivotal role in the production of the organization’s annual signature publication, The State of Black America, and assisting the historic civil rights organization in shaping its national economic policy. In 2022, she was President of the National Economics Association, an organization founded to promote the professional lives of black economists while expanding knowledge of economic issues of particular interest to communities of color. In 2023, she was elected to become a fellow of the National Academy of Public Administration.
Throughout her career, Wilson has written extensively on various issues impacting racial economic inequality in the United States—including employment, wage, income and wealth disparities—and has also appeared in major print, television, and radio media. Wilson has testified before Congress on racial disparities in unemployment and earnings and was keynote speaker for the regional Federal Reserve Banks’ series on Racism and the Economy: Focus on Employment. She has twice served on National Academies panels charged with proposing ways to improve the EEOC’s ability to measure and collect pay information from U.S. employers in support of the agency’s responsibility to investigate charges of pay discrimination. In 2010, through the State Department’s Bureau of International Information Programs, she was selected to deliver the keynote address at an event on Minority Economic Empowerment at the Nobel Peace Center in Oslo, Norway.
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