$weet Home Alabama

In the 1950s and 60s thousands of Alabamians left their home state to “go up North” to find jobs. In fact my dad and uncle moved their families to Michigan for manufacturing jobs that didn’t exist in Alabama and wages that far exceeded what they could earn back home.

How things have changed. Even though most other states have enjoyed the benefits of the economic recovery spurred by the Bush tax cuts Michigan has not. Compared to Michigan Alabama is now the place you want to be if you want a good job with good wages.

A recent article entitled “Sweet Home Alabama” by Paul Kersey of the Mackinac Center for Public Policy in Midland Michigan points out that “… Alabama’s economy is poised to overtake Michigan’s in the important task of providing opportunities for workers to find good jobs.”

Reports from the Bureau of Labor Statistics show that between 2001 and 2006 Alabama added 73000 jobs and increased payrolls by 3.9 percent while Michigan lost 220000 jobs and suffered a reduction of 4.8 percent in payrolls. Moreover Alabama’s unemployment rate averaged 4.7 percent during that period compared to 6.5 percent in Michigan.

Kersey’s article is based on "The Economic Effect of Right-to-Work Laws: 2007" a recent Mackinac Center report that compares the economic status of right-to-work states like Alabama with non right-to-work states like the heavily unionized state of Michigan.

Right-to-work states are those states with laws that protect workers from being forced to pay union dues or fees. Consequently right-to-work states such as Alabama have a far lower percentage of union members in the workforce. The Mackinac study shows that the economies of right-to-work states grew faster and created jobs at more than twice the rate of states that allowed forced unionism.

Alabama has a long history of strong anti-union sentiment. In fact most people in the state’s workforce have no desire to be part of a union. The recent attempt to unionize the Honda plant in Lincoln was overwhelmingly rejected by the employees giving further evidence of this anti-union sentiment among the Alabama workforce.

With such a strong conviction against unions it is odd that so many Alabama teachers are members of the Alabama Education Association which is the education union.

In fact the majority of union members in Alabama are government employees. According to a report done for Alabama Arise by the organized labor-backed Economic Policy Institute only 8.8 percent of the total Alabama workforce is unionized and over 56 percent of those are government employees.

While it is true that the average per capita personal income for pro-union states is $2400 higher than for right-to-work states the right-to-work states have been gaining over the last five years. According to the Mackinac report the income gap is closing because right-to-work states have a real advantage over heavily unionized states not only in employment but also in wages.

For years Alabama lagged behind Michigan in per capita income but according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau now the gap is only $2552 and it’s closing quickly. Alabama’s per capita income increased by 5.6 percent last year – from $29623 in 2005 to $31295 in 2006. In contrast Michigan’s per capita income increased by only 3.2 percent – from $32804 in 2005 to $33847 in 2006. Since 2000 Michigan’s per capita income has increased by only about 14.5 percent while the Alabama per capita income grew by over 33 percent.

The Mackinac Center projects that if the current trend continues Alabama’s per capita income will surpass Michigan’s in 2011. However when you take into account the higher cost of living in Michigan Alabama’s per capita income is already equal to that of Michigan. 

Kersey points out that another major difference between Alabama and Michigan is taxes. He quoted a report from the Tax Foundation that found the tax burden imposed by state and local governments in Michigan takes 11.2 percent of their citizens’ personal income. The tax burden in Alabama takes 8.8 percent of our citizens’ personal income which leaves more money for individuals to invest or spend in our economy which helps create even more jobs. 

Kersey makes a strong case that Alabama’s right-to-work laws and low taxes have attracted businesses and families. When it comes to solving economic problems Kersey recommends that Michigan’s leaders look to Sweet Home Alabama for answers.

Gary Palmer is president of the Alabama Policy Institute a non-partisan non-profit research and education organization dedicated to the preservation of free markets limited government and strong families which are indispensable to a prosperous society.