CULVERHOUSE COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Summer 2001 / Volume 70, Number 3
In this issue:
U.S. and Alabama Economic Outlook:
July 2001
3
Selected Economic Indicators
7
Diversity in Alabama
8
Alabama’s Income: Past and Present
9
THE UNIVERSITY OF
ALABAMA
B U S I N E S S
This report is also available in PDF format on the
Internet at
http://cber.cba.ua.edu
The Center for Business and Economic Research has
available at this site downloadable data on various
topics including population, retail trade, and
employment. Research briefs are also available.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Alabama Business
Associate Dean for Research
and Technology
Carl Ferguson
Associate Director
Samuel Addy
Assistant Directors
Deborah Hamilton
Annette Watters
2002
ECONOMIC
OUTLOOK
CONFERENCE
4 Mark Your Calendars!
January 2002
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The University of Alabama’s Center
for Business and Economic Research
will hold its 2002 Economic Outlook
Conference on January 17, 2002 in
Montgomery. For additional
information:
Phone: (205) 348-6191
Email: [email protected]
Authors
Ahmad Ijaz
Carolyn Trent
Annette Watters
Graphic Design
Sherry O’Brien
Addtional Contributors
Randall Minor
Sunja Park
Alabama Business is a quarterly publication of
the Center for Business and Economic
Research, Culverhouse College of Commerce
and Business Administration, The University of
Alabama.
Articles reflect the opinions of the authors, but
not necessarily those of the staff of the Center,
the faculty of the Culverhouse College of
Commerce, or the administrative officials of
The University of Alabama.
All correspondence should be addressed to:
Editor, Alabama Business, Center for Business
and Economic Research, The University of
Alabama, Box 870221, Tuscaloosa, Alabama
35487-0221.
For information on the Center for Business and
Economic Research, the Culverhouse College
of Commerce and Business Administration or
The University of Alabama:
http://cber.cba.ua.edu
http://www.cba.ua.edu
http://www.ua.edu
CBER
U.S. and Alabama
Economic Outlook
Gross Domestic Product
Annual Percent Change
Over Same Quarter Previous Year, 1996 Dollars
6
5
July 2001
4
3
United States
2
1
Is the U.S. economic slowdown reaching a bottom?
Or is the economy in a prolonged period of
mediocrity? An equally compelling argument can be
made for either case. On one hand, consumer
spending is still on track, housing markets are still
buoyant, most manufacturing inventories are being
worked off, oil prices are declining, and the Fed has
instituted six interest rate cuts. All are signs that the
economy may be about to turn the corner, if not in
the third quarter as many had expected, then maybe
in the fourth quarter or in the first quarter of 2002.
On the other hand, industrial production is still
declining, the manufacturing sector is still in a
recession with layoffs and plant closings increasing at
an alarming rate, and the outlook for both corporate
earnings and profits looks bleak.
0
-1
1
/Q
90
19
1
/Q
91
19
4
1
1
1
1
1
1
1
1
1
/Q
/Q
/Q
/Q
/Q /Q
/Q
/Q
/Q
/Q
93 994 995 996 997 998 999 000 001 001
2
19
1
1
1
1
1
1
2
2
1
/Q
92
19
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
Consumer Expenditures
Annual Percent Change
Over Same Quarter Previous Year, 1996 Dollars
6
5
4
3
2
Gross domestic product growth has averaged around
1 percent for the first half of 2001, compared to
about 5 percent in the first half of 2000. In the
second quarter of 2001, the economy grew at a less
than 1 percent annualized rate, the lowest rate of
growth in eight years. Investment spending on
plants and equipment dropped by 13.6 percent and
spending for computers and software dropped 14.5
percent. This was the largest drop in equipment and
software spending by businesses since 1982 when the
economy was mired in a deep recession. These
business spending reductions have been one of the
major catalysts for the current downturn. As of June
2001, new orders for telecommunications equipment,
one of the fastest growing segments of the economy
until last year, were down 61.0 percent from June
2000. The industrial production index declined 0.6
percent in June, with the manufacturing capacity
utilization rate falling to 77.0 percent, a level not
seen in 18 years. Weakness in manufacturing was
also evident in durable goods orders, which fell 2.0
percent in June. There was a decreased demand for
computers, automobiles, and other electronic
equipment. Manufacturing lost almost 350,000 jobs
in the second quarter of 2001.
1
0
-1
1
1
1
1
1
1
1
1
1
1
1
1 Q4
/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q 01/
/Q
90 991
9
9
9
9
9
9
9
9
0
0 20
9
9
9
9
9
9
9
9
9
0
0
1
1
1
1
1
1
1
1
1
1
2
2
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
There are still two bright spots in the economy—
consumer spending and housing, although both are
weakening gradually. Consumer spending, which
accounts for almost 68 percent of GDP, grew by 2.1
percent during the second quarter, below the first
quarter’s growth. One of the reasons consumer
spending has remained strong, despite a loss of
almost 800,000 jobs over the last 12 months, has
been rising home values. With low mortgage rates,
most consumers are opting to either refinance their
homes or take out home equity loans, thereby giving
themselves additional disposable income. Residential housing prices have increased almost 4
percent in each of the last two years, thus providing
homeowners additional equity. Investment spending
on single-unit structures continues to increase, as
does investment in multi-unit structures. However,
at some point, it is possible that both consumer
3
Industrial Production Index
Annual Percent Change
Over Same Quarter Previous Year, 1992=100
6
4
2
0
-2
-4
1 Q4
1
1
1
1
1
1
1
1
1
1
1
/Q 1/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q 01/
0 20
0
9
9
9
9
9
9
9
9
9
90
0
0
9
9
9
9
9
9
9
9
9
9
2
2
1
1
1
1
1
1
1
1
1
1
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
spending and the housing sector will lose their
momentum as employment losses continue.
Employment. After increasing in the first quarter of
2001, employment declined 0.5 percent in the
second quarter. Although most job losses have been
in manufacturing thus far, they are now spilling over
to other sectors of the economy. Employment in
manufacturing industries dropped by over 5 percent
in the first half of 2001, with employment in durable
goods leading the decline.
International Trade. Manufacturing firms continue
to face weakened demand both in domestic and
overseas markets due, to some extent, to a strong
U.S. dollar. However, the strong dollar has also kept
inflationary pressures at bay and continues to finance
the $400 billion trade deficit by attracting capital
from abroad. With Japan mired in recession and
European economies contemplating recession,
demand for U.S. manufactured goods is expected to
remain weak. If the dollar weakens, that would raise
inflationary pressures in U.S. markets, and could
conceivably put other world economies in a much
deeper recession, since the United States imports a
significant portion of the goods and services
produced in other countries.
Outlook. The national economy is expected to
remain weak at least through the third quarter. We
should see a mild recovery in the fourth quarter,
although its signs might not be very clear until the
first or second quarter of 2002. Employment is
expected to increase 0.5 percent in 2001, following
the 2.0 percent increase experienced in 2000. Even
4
after the economy begins to recover, some sectors
will continue to lose jobs. Consumer spending will
slow down to around 1 percent in the third quarter
of 2001, with the rate of growth picking up slightly
to 2.0 percent in the fourth quarter.
The forecast for manufacturing does not look
promising. Manufacturing employment is expected
to decline by 3.3 percent in the third quarter
followed by a 2.0 percent decline in the fourth
quarter. It will be the second or third quarter of
2002 before employment in manufacturing firms
shows signs of growth. Motor vehicle and parts
manufacturers and telecommunications-related
industries have suffered the sharpest employment
declines; almost all manufacturing industries are
expected to suffer job losses. As inventories level off
and the effects of interest rate cuts become evident,
both industrial production and capital investment on
plant and equipment will begin recovering by the
end of the year. But we don’t expect any significant
increases in employment.
The unemployment rate will continue to rise as
layoffs increase, reaching 5.0 percent by year’s end.
Employment generally lags a rebound in the
economy. For example, during the 1990-91
recession, even though the economic recovery began
in April of 1991, employment in some sectors
continued to decline.
Alabama
Employment. The slow economy is also being felt
in Alabama. From June 2000 to June 2001, the state
lost 14,500 jobs. Every sector of the state’s economy,
except the services sector, suffered job losses, and
manufacturing industries experienced the brunt. As
of June 2001, manufacturing industries in the state
had lost approximately 18,000 jobs. Most durable
goods job losses were concentrated in lumber and
wood products, primary and fabricated metals, and
industrial machinery and equipment, with the
industry groups losing 2,000, 4,100 and 2,300 jobs,
respectively. Within nondurable goods manufacturing firms, textile mills lost 4,100 jobs and
apparel manufacturers lost 1,700.
Conversely, there have been significant increases in
trade-related jobs because most economic growth in
recent years has depended on high levels of consumer spending. As a result, trade has been one of
Alabama’s growing sectors. However, as consumer
Alabama Total Wholesale and
Retail Trade Employment
Annual Percent Change
Over Same Quarter Previous Year
5
Alabama Total Nonagricultural Employment
Annual Percent Change
Over Same Quarter Previous Year
3
4
3
2
2
1
1
0
0
-1
1
1
1
1
1
1
1
1
1
1
1
1
/Q 1/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q
90
9
9
9
9
9
9
9
9
9
0
0
19
19
19
19
19
19
19
19
19
19
20
20
Source: Estimates based on Alabama Department of Industrial Relations data.
spending has gradually declined, employment in the
state’s trade sector has also slowed down. The
services sector, the fastest growing segment of the
state’s economy, added 2,600 jobs from June 2000 to
June 2001. Even that substantial number of jobs was
fewer than the same time a year ago when the
services sector added 9,800 net new jobs. As of June
2001, construction-related employment increased by
1,800 over the previous 12 months. During the same
period last year, construction jobs had increased by
6,500.
Between June 2000 and June 2001, the only metro
areas that experienced any gains in net new jobs were
Birmingham and Huntsville, with 1,500 and 2,100
jobs, respectively. Even in these two metro areas, job
growth has significantly slowed down compared to
last year. Over the previous twelve-month period
ending in June 2000, Birmingham and Huntsville
had added 11,700 and 3,200 jobs, respectively. As of
June 2001, almost all job growth in the Birmingham
metro area was accounted for by services (800 jobs)
and state and local government (1,700), while
manufacturing lost 900 and trade lost 800 jobs. In
the Huntsville metro area, the strongest job growth
was experienced by the services sector (1,300) and,
surprisingly, the trade sector (600 jobs), despite
slowing consumer spending. Manufacturing firms
lost 700 jobs.
1
1
1
1
1
1
1
1
1
1
1
1
/Q 1/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q
90
9
9
9
9
9
9
9
9
9
0
0
19
19
19
19
19
19
19
19
19
19
20
20
Source: Estimates based on Alabama Department of Industrial Relations data.
Alabama Total Manufacturing Employment
Annual Percent Change
Over Same Quarter Previous Year
4
3
2
1
0
-1
-2
-3
-4
1
1
1
1
1
1
1
1
1
1
1
1
/Q 1/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q
9
9
9
9
9
9
90
9
9
9
0
0
19
19
19
19
19
19
19
19
19
19
20
20
Source: Estimates based on Alabama Department of Industrial Relations data.
Alabama Total Services Employment
Annual Percent Change
Over Same Quarter Previous Year
7
6
5
4
3
2
1
Tax Revenues. Like many other states, Alabama is
currently experiencing a shortfall in tax receipts as a
consequence of the slowing economy. During the
first three quarters of the current fiscal year, state tax
revenues dropped $55 million, a decline of 1.2
0
1
1
1
1
1
1
1
1
1
1
1
1
/Q 1/Q 2/Q 3/Q 4/Q 5/Q 6/Q 7/Q 8/Q 9/Q 0/Q 1/Q
9
90
9
9
9
9
9
9
9
9
0
0
9
9
9
9
9
9
9
9
9
9
0
0
1
1
1
1
1
1
1
1
1
1
2
2
Source: Estimates based on Alabama Department of Industrial Relations data.
5
percent over the same period of the previous fiscal
year. While individual income tax revenues
increased $4.3 million (less than one quarter of one
percent), corporate income tax receipts dropped $58
million (an almost 30 percent decline). Signs of
weakening consumer spending were also evident in
sales tax receipts, which dropped $19 million, a 1.7
percent decline over the previous fiscal year.
Outlook. The outlook for Alabama calls for slow
growth for the remainder of the year. The total gross
state product is expected to increase by 1.1 percent,
compared to around 3.7 percent growth last year.
Employment will increase very little. The state will
add about 5,700 net new jobs, a significant slowdown
from last year when the state added close to 15,000
new jobs. Almost all job growth is expected to be in
the services sector. Manufacturing is expected to lose
another net 15,000 jobs. Trade-related businesses
will add 1,500 new jobs, if the economy begins its
recovery by the fourth quarter of 2001. Most job
growth will be in the larger metro areas of the state;
rural areas will continue to struggle with economic
development and growth issues. Rural Alabama,
faced with a sharp increase in job losses, particularly
in textiles and apparel industries, is in desperate need
of new economic development projects providing
employment opportunities. As of June 2001,
Alabama’s rural counties had lost almost 10,000 jobs
over the last 12 months, with 15 rural counties now
posting unemployment rates in double digits.
Ahmad Ijaz
6
Alabama Nonagricultural Employment
Change in Number of Jobs
June 2000 to June 2001
Total Nonagricultural
Mining
Construction
Manufacturing
Durable Goods
Lumber Products
Primary Metals
Fabricated Metal
Industrial Machinery
Electrical Machinery
Transportation Equipment
Stone, Clay & Glass
Nondurable Goods
Food Products
Textile Mill Products
Apparel
Paper & Pulp Products
Chemicals
Rubber and Plastics
TCPU
Wholesale & Retail Trade
FIRE
Services
Total Government
Federal Government
State Government
State Education
Local Education
-14,500
-100
1,800
-10,800
-2,000
-3,100
-1,000
-2,300
200
-1,500
-100
-6,900
300
-4,000
-1,700
-700
-800
-100
-100
-2,500
300
2,600
1,200
-1,400
1,200
1,100
-600
Source: Alabama Department of Industrial Relations.
Selected Economic Indicators
United States
Gross Domestic Product (billions)
Percent Change
30-Year Treasury Bond Rate
3-Month Treasury Bill Rate
Consumer Price Index
Inflation Rate
Housing Starts (millions)
Percent Change
Total Employment (millions)
Percent Change
Unemployment Rate
Alabama
Total Nonagricultural
Employment (thousands)
Percent Change
Total Manufacturing
Employment (thousands)
Percent Change
Durable Goods Manufacturing
Employment (thousands)
Percent Change
Nondurable Goods Manufacturing
Employment (thousands)
Percent Change
Total Wholesale and Retail Trade
Employment (thousands)
Percent Change
Total Services Employment (thousands)
Percent Change
Alabama Unemployment Rate
Initial Benefit Claims (thousands)
Manufacturing Weekly Hours
Total Tax Revenues (millions)
Percent Change
Total Income Tax Revenues (millions)
Percent Change
Total Sales Tax Revenues (millions)
Percent Change
1999/Q4
2000/Q1
2000/Q2
2000/Q3
2000/Q4
2001/Q1
2001/Q2
9,084.1
5.0
6.3
5.0
168.5
2.6
1.7
-1.9
134.3
1.5
4.1
9,191.8
5.3
6.3
5.5
170.3
3.3
1.7
-1.6
135.0
1.6
4.0
9,318.9
6.1
6.0
5.7
171.5
3.3
1.6
0.9
135.2
1.5
4.0
9,369.5
5.2
5.8
6.0
173.0
3.5
1.5
-8.1
135.0
1.1
4.0
9,393.7
3.4
5.7
6.0
174.3
3.4
1.6
-7.9
135.6
1.0
4.0
9,439.9
2.7
5.4
4.8
176.1
3.4
1.6
-5.4
135.9
0.6
4.2
9,465.3
1.6
5.6
3.4
177.5
3.5
1.5
-4.0
135.9
0.6
4.6
1999/Q4
2000/Q1
2000/Q2
2000/Q3
2000/Q4
2001/Q1
1,937.2
1.1
1,914.1
0.9
1,939.8
0.9
1,932.3
0.5
1,948.6
0.6
1,926.3
0.6
364.4
-3.0
361.6
-2.3
363.0
-1.8
361.3
-1.4
357.8
-1.8
352.1
-2.6
196.4
-1.1
195.5
-0.2
196.1
-0.7
193.7
-1.5
191.4
-2.5
188.2
-3.7
168.0
-5.2
166.1
-4.6
166.9
-3.1
167.6
-1.2
166.4
-1.0
163.9
-1.3
452.2
1.9
462.5
3.1
4.9
22.5
42.3
1,353.9
4.8
556.2
6.0
384.0
2.9
439.1
0.9
462.7
3.9
4.7
29.6
41.9
1,578.1
10.5
628.0
5.8
383.5
8.0
447.0
0.7
472.2
3.3
4.5
18.9
42.1
1,683.4
11.1
865.6
20.2
384.4
1.3
447.2
-0.1
475.7
3.0
4.6
25.7
41.8
1,441.1
-0.6
617.4
-5.0
378.2
1.0
455.9
0.8
476.7
3.1
4.6
28.0
41.7
1,351.6
-0.2
541.9
-2.6
381.4
-0.7
445.5
1.5
472.9
2.2
5.0
37.0
41.0
1,471.2
-6.8
621.2
-1.1
370.2
-3.5
Note: All percent changes indicate change over same period of the previous year.
Source: U.S. Bureau of Labor Statistics, U.S. Department of Commerce, Alabama Department of Industrial Relations,
Alabama Revenue Department, and Center for Business and Economic Research, The University of Alabama.
7
Diversity in Alabama
Distribution of
Alabama’s Black Population
Since we began getting results of Census 2000,
newspapers and television have been telling us about
the growing racial diversity in Alabama. Alabama’s
black population is growing faster than the white
population; the Hispanic population is the fastest
growing ethnic group in the state. A careful
examination of the flood of Census information tells
us a more detailed story about how our state is
changing.
African American. Alabama’s racial patterns have
distinctly regional dimensions. African Americans
make up 26 percent of the total population, but the
state’s black population is distributed very unevenly.
A broad swath of the northern portion of Alabama is
heavily white, as it has been since the founding of
the state. This is an area where much of the terrain
never lent itself to large numbers of big plantations
in the agricultural economy of the early 1800s.
Slavery was not as pervasive in that part of the state,
and into the 21st century the concentration of
African Americans is not as heavy in the north as in
the south where the plantation experience was more
common.
Of the 67 counties in Alabama, there are 10, all in
the Black Belt region, having a black majority.
Conversely, there are 13 counties, all in the northern
half of the state, where less than 10 percent of the
population is African American.
Asian. Nationally, 0.9 percent of the American
population is Asian. In Alabama 0.7 percent is
Asian, accounting for 31,346 people. The Asian
presence is small and highly concentrated in a few
counties, largely in the metro areas. Jefferson,
Madison, and Mobile Counties each have more than
5,000 Asians. Montgomery, Lee, Tuscaloosa, and
Shelby have 2,200 or fewer each, and other counties’
numbers drop off sharply from there. Several
counties have fewer than 10 Asian persons living
there.
Hispanic. No county in Alabama comes close to
approximating the U.S. Hispanic population share.
Nationally, 12.5 percent of the American population
is Hispanic. Counties in Alabama that have seen an
influx of Hispanics in the last decade now have 5 to
7 percent Hispanic population. Some counties have
experienced very little Hispanic immigration at all.
8
Source: U.S. Bureau of the Census, 2000 Census of Population,
P.L. 94-171 file.
Just 28 Alabama counties account for 81 percent of
the state’s Hispanic population. Several counties
have fewer than 100 Hispanic people. The largest
concentration of Hispanics, 10,284, is in Jefferson
County, accounting for 1.6 percent of Jefferson
County’s total. Other Deep South metro
areas—Charlotte, Raleigh-Durham-Chapel Hill,
Greensboro-Winston Salem-High Point, Atlanta—
experienced 300 to 600 percent increases in Hispanic
population during the 1990s and have Hispanic
populations tens of thousands greater than
Birmingham’s.
The diffusion of minorities across Alabama is less
rapid and far less pervasive than recent press accounts
imply. While residents in Alabama counties with no
Hispanic presence a decade ago have been talking
about the recent difference, broadly speaking,
Alabama is still an ethnic frontier for immigrant
minorities. We can expect ethnic pioneers to
continue trekking into Alabama during the current
decade; Census 2010 should have a new and
different story to tell.
Annette Jones Watters
Alabama’s Income:
Past and Present
Figure 1
Per Capita Income in 1999
Total Personal Growth Slow in 2000
Alabama’s total personal income grew just 4.0
percent between 1999 and 2000, the weakest gain of
all 50 states. While this outpaced the year’s 2.4
percent rise in consumer prices, it fell far below the
U.S. increase of 7.3 percent. Only seven states had
income gains of less than 5 percent from 1999 to
2000. Fast-growing states, like Colorado and
California, saw strong increases in net earnings,
particularly from manufacturing and services. By
contrast, Alabama’s earnings growth was weak in all
major industries during 2000. Farm and mining
earnings declined, while earnings in manufacturing
rose just 1.1 percent. Service-producing industries
fared better, although overall sector earnings gains of
5.4 percent were well below the U.S. average of 8.9
percent. Alabama’s income growth improved in the
fourth quarter of 2000, when acceleration in personal
income growth ranked among the top six states.
Per Capita Income Loses Ground
Per capita personal income (PCPI) reached $23,471
in Alabama for 2000, 79.1 percent of the U.S.
average of $29,676. The Bureau of Economic
Analysis (BEA) calculates this widely used measure of
economic well-being as earnings; dividends, interest,
and rent; and transfer payments per resident. During
the 1990s, Alabama per capita income rose 48.2
percent, while U.S. per capita income increased 51.5
percent. Below average gains dropped Alabama’s per
capita income ranking from 42nd in 1990 to 44th in
2000. Yet Alabama has come a long way in the 50
years since 1950 when per capita income of $909 was
60.2 percent of the U.S. average and ranked 48th.
Still there is cause for concern that after steadily
closing the gap in the decades of the 1950s through
the 1980s, Alabama has fallen behind in the 1990s.
Wide Disparities Remain Among Counties
In 1999, the latest year for which county per capita
income is available, Alabama’s estimated per capita
income of $22,972 amounted to 80.5 percent of the
U.S. average. Per capita income in Alabama’s 67
counties varied widely, however, as seen in Figure 1.
Residents of only two counties, Jefferson and Shelby,
had incomes exceeding the U.S. average of $28,546.
Greater than U.S. — $28,546 (2)
Less than U.S., but greater than Alabama — $22,972 (7)
Below Alabama, but greater than 65% of U.S. (41)
Less than 65% of U.S. — $18,555 (17)
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Another seven counties—Baldwin, Coffee, Houston,
Madison, Montgomery, Morgan, and
Tuscaloosa—fell below the national but above the
state average. In 41 counties, per capita income was
below the state but above 65 percent of the U.S.
average. Income in Alabama’s 17 poorest counties
fell below 65 percent of U.S. per capita income in
1999.
There is a wide disparity among Alabama’s richest
and poorest counties. Per capita income averaged
$15,420 in Alabama’s six poorest counties in 1999,
just 57.1 percent of the $27,002 average for the six
wealthiest. The gap between the bottom six and the
top six narrowed considerably in the ten years from
1969 to 1979, with the ratio rising from 46.3 percent
to 60.1 percent. However, a sizeable difference
between rich and poor remains and has widened
since 1979, with the 1999 ratio at 57.1 percent.
Over the last 31 years, Alabama’s poor counties have
generally stayed poor and the rich have stayed rich.
Only 11 of the state’s 67 counties have cracked the
9
top six in per capita income during
this time, as shown in Table 1. Four
counties—Jefferson, Madison,
Montgomery, and Morgan—have
been there every year; Shelby joined
in 1971. Baldwin, which was in the
group for a few years in the late
1970s, displaced Houston in the top
six in 1996. Many of Alabama’s
poorest counties have also been in
the cellar for most of the last 31 years.
Greene and Perry have always been
there; Lowndes, Sumter, and Wilcox
have been there well over 20 years,
including 1999; and Hale, which
spent 27 years in the bottom six, now
ranks seventh from the bottom.
Macon, also in the bottom six in
1999, has been in the group for about
half of the last 31 years, as has
Bullock, which was just above, at
60th, in 1999.
Table 1
Counties with Highest/Lowest PCPI, 1969-1999
Highest Six (11)
Baldwin
Colbert
Dale
Etowah
Houston
Jefferson
Lauderdale
Madison
Montgomery
Morgan
Shelby
Years
7
4
1
1
20
31
1
31
31
31
29
Lowest Six (13)
Bullock
Choctaw
Conecuh
Coosa
Crenshaw
Greene
Hale
Lowndes
Macon
Perry
Pickens
Sumter
Wilcox
Years
16
11
3
2
3
31
27
22
16
31
3
23
26
Never in Either Group (43)
Source: U.S. Department of Commerce, Bureau of Economic Analysis, and Center for
Business and Economic Research, The University of Alabama.
Long-term Income Growth Varies
Some Alabama counties have been much more
successful than others in fostering and attracting
well-paying jobs that can improve the economic
status of their residents. Most Alabama counties saw
their per capita income rankings change between
1969 and 1999, with about half going up and half
down (see Table 2). Several counties, including
Calhoun and Dale, saw income rankings decline as a
result of outside factors—in these cases, a reduced
military presence. Others lacked the resources to
compete as economies evolved in the wake of
burgeoning technology.
In general, counties in metropolitan areas fared
better than their nonmetro counterparts. Alabama’s
22 MSA counties averaged per capita incomes of
$24,482 in 1999, or 106.6 percent of the Alabama
average of $22,972. Residents of the state’s 45
nonmetro counties had, on average, just 79.3 percent
of the income of metro area residents. This gap has
narrowed slightly since 1969 when nonmetro income
was 74.0 percent of the metro average.
for population quintiles in each state during the late
1970s, 1980s, and 1990s. In 46 states, including
Alabama, the income gap between the richest and
poorest 20 percent of families widened. From the late
1970s to the late 1990s, Alabama’s wealthiest families
saw the largest increases in real income (38 percent, or
$33,000), while Alabama’s poorest families
experienced the smallest gains (17 percent, or $1,610).
(See Figure 2.) In contrast, however, the poorest fifth
of families in 18 states faced real income declines.
Figure 2
Income Change for Alabama Families
Late 1970s to Late 1990s
40%
38%
30%
23%
20%
21%
21%
17%
10%
Income Inequality Increasing
Income inequality among Alabama’s families grew
over the last two decades. Using data from the
Census Bureau’s March Current Population Surveys,
the Public Policy Institute studied income changes
10
0%
Poorest Second Middle Fourth Richest
Fifth
Fifth Fifth
Fifth Fifth
Source: Economic Policy Institute/Center on Budget and Policy Priorities.
Table 2
Winners and Losers (county rank in terms of per capita income in 1969 and 1999)
Rank
1969
Gaining Counties
Rank
1999
Positive
Change
Autauga
Baldwin
Barbour
Bibb
Blount
Chilton
Choctaw
Clarke
Clay
Coffee
Colbert
Conecuh
Crenshaw
Cullman
DeKalb
Elmore
Franklin
Greene
Hale
Henry
Houston
Lawrence
Limestone
Marengo
Monroe
Pickens
Pike
Shelby
St. Clair
Tallapoosa
Tuscaloosa
Walker
17
14
47
56
19
43
63
44
45
25
11
60
57
31
46
27
29
67
66
52
8
38
18
58
53
54
39
7
36
25
22
34
12
5
13
53
17
34
45
43
38
9
10
47
27
20
18
11
21
64
61
32
7
24
15
30
46
52
16
1
28
14
8
29
5
9
34
3
2
9
18
1
7
16
1
13
30
11
28
16
8
3
5
20
1
14
3
28
7
2
23
6
8
11
14
5
Jefferson
Marion
Montgomery
2
40
3
2
40
3
No Change
No Change
No Change
Rank
1969
Bullock
Butler
Calhoun
Chambers
Cherokee
Cleburne
Coosa
Covington
Dale
Dallas
Escambia
Etowah
Fayette
Geneva
Jackson
Lamar
Lauderdale
Lee
Lowndes
Macon
Madison
Marshall
Mobile
Morgan
Perry
Randolph
Russell
Sumter
Talladega
Washington
Wilcox
Winston
59
55
10
28
37
30
41
32
5
35
33
6
42
12
20
49
9
16
64
51
1
15
13
4
65
48
24
62
23
50
61
21
Losing Counties
Rank
Negative
1999
Change
60
58
26
37
56
54
59
42
31
44
48
25
50
35
22
55
19
36
65
62
4
33
23
6
67
51
39
63
49
57
66
41
-1
-3
-16
-9
-19
-24
-18
-10
-26
-9
-15
-19
-8
-23
-2
-6
-10
-20
-1
-11
-3
-18
-10
-2
-2
-3
-15
-1
-26
-7
-5
-20
Source: U.S. Department of Commerce, Bureau of Economic Analysis, and Center for Business and Economic Research,
The University of Alabama.
The income gap between Alabama’s richest and
poorest ranked 11th worst among the 50 states, while
the discrepancy between the richest and middle fifths
ranked 24th. In the late 1990s, Alabama’s poorest
families held 5 percent of the state’s income (Figure
3), while the wealthiest families held 45 percent.
Economic Prosperity Not Equally Shared
Across Alabama, economic prosperity has not been
shared equally between Alabama counties and among
residents of each county. Interrelated factors,
including long-standing poverty, low education
11
levels, and lack of economic opportunity, are
depressing income growth in Alabama. Wage
inequality among the highest paid and middle- to
low-wage workers has increased. Globalization,
declining manufacturing jobs, expanding low-wage
service and trade jobs, and weakening of labor
market institutions have contributed to the erosion
of wages for workers without technical or college
training.
Only by helping her poorest citizens become
educated, productive participants in the state’s
economy, by developing tax policies that help
mitigate the effects of increased income inequality,
and by attracting and nurturing higher wage jobs can
Alabama pull itself out of the income cellar.
Carolyn Trent
(with assistance from
Randall Minor)
The University of Alabama
Center for Business and Economic Research
Box 870221
Tusscaloosa, Alabama 35487-0221
Address service requested.
12
Figure 3
Share of Income Held by Each Income Fifth
Late 1990s
I.
5.0%
V.
45.0%
I.
II.
III.
IV.
V.
$0-$19,800
$19,800-$35,000
$35,000-$50,700
$50,700-$72,326
$72,326 and over
II.
11.0%
III.
16.0%
IV.
23.0%
Source: Economic Policy Institute/Center on Budget and Policy Priorities.
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