Unemployment in Georgia is down, but so is the labor force. Why?

The labor force is the number of people in Georgia who are working or who are actively seeking employment.

Normally, a low unemployment rate correlates with an increase in the labor force, as discouraged individuals who stopped looking for work — and therefore weren’t counted in the labor force — find new hope and return to the job search.

Yet, even though Georgia’s unemployment rate is below the national rate of 4.1%, the Peach State has still seen a decrease in total workers.

The number of initial unemployment claims has also fallen a bit in Georgia in recent months, meaning there are fewer job seekers out there who were recently laid off.

Though the jobless rate is lower, job growth has been relatively soft. Experts say demographic trends, such as an aging population and young people seeking higher education, play big roles. Stepped-up immigration enforcement could be another factor.

Where have the workers gone?

According to Emory University economics professor Chris Karbownik, the decrease isn’t anything to worry about — yet.

“It looks scary and substantial, but if you think about the size of the state, it’s actually not that large,” he said.

Georgia’s labor force drop of about 30,000 over the past year has meant a statewide labor force participation rate — the population measure of how many people are actively working or searching for work — drop from 61.8% to 60.7%, according to Shawna Mercer, chief marketing officer with the state Department of Labor.

Credit: arvin.temkar@ajc.com

Credit: arvin.temkar@ajc.com

“From a national perspective, several factors contribute to labor force changes, including increased retirements among those 55 and older, lack of access to child care, a rise in entrepreneurship — as reflected in new business applications — shifts toward flexible work arrangements, and a move toward digital commerce,” Mercer said in an emailed statement.

As Mercer noted, one key factor in the explanation of the shrinking labor force is the aging population, combined with a declining birth rate. People are retiring, and there may not be enough new workers to replace all of them. The University of Georgia’s Workforce and Economic Resilience Center found that more than 1 in 5 workers in the state are over the age of 55.

Rajeev Dhawan, an economist at Georgia State University, cautions against putting too much stock in these numbers, though. The 30-year industry veteran is wary of the Current Population Survey, from which the unemployment and labor force numbers come. He prefers to look at the number of actual jobs, which comes from the nonfarm payroll report and increases over the month and year to an all-time high of almost 5 million.

Dhawan and Karbownik agreed that an aging workforce plays at least somewhat of a role in the decline, with the latter saying that it may actually be the primary factor.

Karbownik added that a contributing factor is education. More people are going to college, and even graduate school, before entering the workforce instead of beginning a career out of high school. This postponement, while not a bad thing, can create a gap in the number of workers.

“It takes a little bit longer to train these people, but they’re going to be in higher-skilled jobs with higher productivity,” Karbownik said.

Beyond the age of the population, there’s another factor to consider: internal U.S. migration, or people moving to and from Georgia. For decades, Georgia has seen net positive internal migration. This influx may have made up for labor force declines that would have otherwise been obvious and now may be more detectable as the Peach State gets fewer newcomers.

“The big boom of moving into Georgia is slowing down, at least to a certain degree,” Karbownik said.

The Peach State population is still growing, though, according to Dhawan. A chunk of these newcomers may be older, retired individuals who wouldn’t be counted in the labor force.

What about stricter immigration enforcement?

As the Trump administration steps up immigration enforcement and moves to revoke the legal status of certain groups of foreign-born residents, it’s natural to wonder whether the decline can be, at least partly, attributed to a decrease in immigrant workers.

Migrant workers comprise about 20% of the U.S. labor force, according to HR group SHRM. That population has doubled during the 21st century. Undocumented immigrants make up as much as 5% of the total workforce, according to a 2024 report from the Center for Migration Studies.

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

Specific industries are especially reliant on immigrant and undocumented workers, such as maintenance, construction, farming, engineering, food preparation and health care support. Many of these industries and the jobs in them are not easily automated, making them all the more reliant on workers, according to Ben Johnston, chief operating officer of Kapitus, a small business lender.

Karbownik and Johnston agreed that immigration likely plays at least some part in the workforce decline.

International immigration into the U.S. has declined in recent months, and that doesn’t even consider deportations or detentions that might further drain the labor pool.

According to the Center for Migration Studies, approximately half of the immigrant workforce population in the U.S. is Latin American — a group targeted by recent deportation efforts.

While some immigrant-dependent industries saw job growth last month, some industries well-populated with both documented and undocumented immigrants — including services, agriculture, hospitality and construction — saw notable declines.

“Decline has been pretty substantial, particularly in construction,” Karbownik said.

Georgia’s proportion of foreign-born construction trade workers is 43%, outpacing the national rate of 34%, according to Ken Simonson, chief economist of the Associated General Contractors of America.

“That means the state will be vulnerable if demand for construction workers picks up and net immigration continues to decline,” Simonson said in an email.

Georgia is one of 16 states to see a decline in the construction industry in the past year, with employment decreasing by 1.5%, Simonson said. However, this may be due at least in part to decreases in spending across the industry and the completion of multiple major projects in 2024. So far, immigration policy doesn’t appear to have had a significant impact, he said.

Dhawan said across industries, the immigration impact is limited.

Nonetheless, trades that were already facing labor shortages are now even more under water amid these disruptions. According to The New York Times, analysts expect immigration to slow, and possibly decline, through the rest of this year. But, again, it is still relatively early for new immigration policies to have had a significant effect on the workforce.

Whether the trend of a shrinking workforce continues is unclear.

But, if it does continue, that combined with low unemployment could put further pressure on an already “incredibly tight” labor market, according to Johnston. This could become especially pronounced if the decline is significantly tied to undocumented labor, which outpaces the amount of unemployment.