During the past five years, Alabama has been one of the top states at providing jobs for its people. The unemployment rate today is lower than in all but five other states.
When jobs are plentiful, incomes rise. Personal income is best measured by the average amount of money available to a state’s residents after payment of taxes, which economists call “disposable income per capita.”
From 2001 to 2005, Alabama led the Southeast and ranked ninth among all states in the increase of after-tax income per resident.
For more than a century, Alabama was known as one of the nation’s poorest states. Fifty years ago, the after-tax income per Alabamian was 31 percent below the national average. Twenty-five years later, the gap fell to 23 percent. With the state’s recent economic gains, after-tax income per resident is now only 12 percent shy of the national average.
Among Southeastern states, Alabama compares favorably with Tennessee, Georgia and North Carolina, all of which have after-tax personal incomes that are around 90 percent of the national average.
Florida is the only southeastern state at the national average in after-tax income.
The remaining five states in the region are well below Alabama’s level. These include South Carolina, Kentucky, Arkansas, Mississippi and Louisiana.
The latter two states were hard-hit by the devastation of Hurricane Katrina.
Alabama’s urban counties have benefited most from the state’s economic successes. Jefferson, Madison and Shelby counties enjoy not only very low unemployment, but also income levels at or above the national average.
Least impacted have been the small rural counties in Alabama’s “Black Belt,” an area in southern Alabama named for its rich soils, that has been the most impoverished part of the state for many years. In the most recent calculations, six of these counties had average personal incomes 30 percent or more below the statewide figure. These included Bullock, Hale, Macon, Perry, Sumter and Wilcox counties.
As a state’s economy grows, so does its capacity to raise revenue for government services such as education and public safety.
Our next column will focus on trends in the state’s tax revenues.
EDITOR’S NOTE — Jim Williams is the executive director of the nonprofit, nonpartisan Public Affairs Research Council of Alabama.
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