Income gap in Alabama closing

MONTGOMERY - Living in Alabama often means making less money than residents of other states, but that historical income gap is narrowing thanks to economic development gains during the past 15 years.

Alabama's personal per capita income traditionally has been around 79 percent of the national average. That gap began closing during the late 1990s and continues to narrow.

In 2001, the state's per capita income was $24,740, or 81 percent of the national average. In 2006, per capita income was $30,894, or 84 percent of the nation's average, according to the U.S. Bureau of Economic Analysis.

The average American worker made $36,714 in 2006, based on bureau data.

Personal income in northwest Alabama increased in absolute dollars from 2001 to 2006, but the growth did not keep pace with national income growth.

Per capita income in Franklin County, for example, grew from $21,354 in 2001 to $24,448 in 2006, but it fell from 70 to 67 percent of the national average.

Colbert County improved 1 percent to 71 percent during those six years, while Lauderdale County fell from 76 percent of the national average income in 2001 to 75 percent in 2006.

Income in the South typically is less than other regions of the country, particularly those in the Northeast and West.

Alabama's urban counties do the best economically.

In 2006, 59 of 67 Alabama counties had income percentages less than the state average of 84 percent. Jefferson and Shelby were the only two Alabama counties with income averages higher than the national average, according to the Bureau of Economic Analysis.

The implication for policymakers in a state with significant rural areas is that there is a need for job growth, personal and corporate income tax policies and support for education.

Sam Addy, director of the Center for Business and Economic Research at the University of Alabama, said income of 84 percent of the national average is nearly the highest in state history. In 1929, right before the Great Depression, Alabama's per capita income was 46 percent of the national average, he said.

Income estimates for Alabama's metropolitan areas for 2007 showed slight increases over Bureau of Economic Analysis numbers for 2006.

Addy has an opinion about the shrinking income gap.

"It's mainly the economic development we've had in this decade," he said. "Our economy has outperformed the national economy, and it is reflected in income growth."

Addy said the state can continue income gains through economic development, but he added the Legislature should consider fundamental tax changes to support more workplace education, adult education, job placement and retraining, as well as transportation and public safety.

"All that is supported by tax revenues so, in essence, if we don't address tax policy in the state, I don't think we'll be able to sustain the kind of economic growth we want," he said.

Annette Watters, director of the Alabama State Data Center, said poorer counties share traits including: