Study: Alabama's economy one of the most competitive

Alabama ranks in the top half of the country in economic competitiveness because of its state policies that foster economic growth and prosperity, according to a study conducted by a Washington, D.C.-based conservative group.

The American Legislative Exchange Council ranked Alabama No. 18 in a recently released study dubbed, "Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index."

Alabama's low property taxes and labor costs are an attractive selling point to industries, which lure "talented individuals and business to move into their borders," and have given the state a more competitive edge in recent years, said Jonathan Williams, director of Tax and Fiscal Policy at ALEC.

The study found that Southern states' right-to-work laws, which allow employees to opt out of union membership, are correlated with faster growth in jobs and personal income.

"Many international and domestic companies won't even consider locating a plant in a non-right-to-work state, which is why almost all new foreign auto plants owned by Mercedes, Nissan, BMW and Honda are locating in Southern states like Alabama, South Carolina and Texas," the study said.

In 2007, two of the largest industrial deals in modern Alabama history were announced: National Alabama Corp.'s $350 million rail car manufacturing facility in the northwest part of the state and ThyssenKrupp AG, a German steelmaker building a plant in Mobile.

"I think the evidence is clear that states can be more competitive," Williams said. "Alabama's got to be very aware of how it ranks competitively."

According to ALEC-backed study, which supports free-market philosophies, high-taxed and union-organized states, such as Michigan, New York, Pennsylvania and Illinois, have seen more U.S. residents leave than arrive because of union-organized labor laws, higher taxes and high spending conditions.

Alabama is also competitive because of its wages compared to its low cost of living and low unemployment rates, said Ahmad Ajaz, economist for the University of Alabama's Center for Business and Economic Research.

Ajaz pointed out that nearly 35,000 people migrated to the state in 2006. "People have a better prospect of finding a job here and new jobs in the automotive industry," he said.

Alabama did receive some low marks. The state ranked 34th in debt obligations compared to total tax revenue, 42nd for high worker's compensation costs for businesses and 47th for its lawsuit-friendly court system.

Larry Harper, Samford University's director of Education Programs, agrees that the state's high debt can stunt Alabama's economic growth.

"It's good to have low taxes but, then, our taxes are servicing debt and paying for administration," he said. "That's not good."