Why Alabama is the state with the greatest business improvements in the USA

Huntsville, Alabama, real estate agent James Morgan has worked all over the country and the world. Right now, he says, there’s no place he’d rather be than north Alabama. He says he has many clients who seem to feel the same way.

“We have customers from Pennsylvania, Colorado, Michigan – a lot of people from Michigan come here – and of course California. So we’re seeing strong growth,” he said.

The numbers prove this.

Alabama ranked a respectable 14th in net migration of college graduates in 2022, based on U.S. Census Bureau figures. That’s an improvement from last place the year before and a big reason why Alabama is the state with the most improvement in CNBC’s annual competitiveness study, America’s Top States for Business, in 2024.

Alabama climbs 22 spots in CNBC’s rankings, coming in at number 20. This is largely due to a 20-spot jump in the workforce rankings, putting Alabama in a tie for 24th place with New Hampshire and Wisconsin. According to the study’s methodology, the workforce category makes up 15% of a state’s overall score. The metrics include Census Bureau migration figures and a Talent Attraction Index developed for CNBC by labor market data firm Lightcast, which also ranks Alabama 14th.

“There have been clear trends over the last decade and beyond that people want to live in the Southeast,” said Josh Wright, executive vice president of growth at Lightcast.

The driving force behind growth in Alabama is the area around Huntsville, where Morgan and his wife Angie have been selling real estate for 20 years. Huntsville is home to NASA’s Marshall Space Flight Center with around 7,000 employees, as well as important data centers for Facebook and Google. In the last three years alone, the population of the metropolitan area has grown by 7%.

“The Huntsville area has such a high standard of living and is isolated from the rest of Alabama,” Morgan said. “It’s a melting pot – very diverse, very educated.”

Immediately developable plots offer companies room to grow

Alabama’s growing workforce isn’t the only reason for the Yellowhammer State’s improvement in CNBC’s rankings.

In the infrastructure category, the most important this year, the study includes new metrics on so-called site-readiness programs, which match prospective companies with certified, immediately ready-to-build land. Alabama’s program, known as AdvantageSite, is one of the strongest in the country, according to data compiled for CNBC by the Site Selectors Guild, an industry trade group.

The Economic Development Partnership of Alabama (EDPA), which administers the program, told Guild researchers that Alabama spent $40 million last year preparing the sites. The EDPA says it currently has 60 active sites across the state. According to the program’s guidelines, each site is at least 25 acres in size, zoned for industrial use or supported by local government, and has either utilities on site or a plan to bring them there.

In the 15 years of its existence, the organization says 55 projects have been located at its sites, a total of over $2.8 billion has been invested and more than 7,700 new jobs have been created.

Thanks to its strong site readiness program – which was not included in CNBC’s rankings before this year – Alabama improved its infrastructure rating rank to 8th from 13th last year.

Lack of education is a major problem for the labor market

While Alabama may be the state with the greatest improvement, the data shows there is still plenty of room for further improvement.

The workforce may be growing, but nationally the population is still one of the least educated in the country. Only 27 percent of adults ages 25 and older in Alabama have a bachelor’s degree or higher, the seventh-lowest rate in the country, according to the Census Bureau.

In the quality of life category, the state performs significantly worse on several key metrics, many of which relate to inclusivity.

Alabama is one of only five states, along with Georgia, Mississippi, North Carolina and Texas, that do not have a law against discrimination in public facilities for able-bodied people, according to the National Conference of State Legislatures. The Human Rights Campaign has accused Republican Gov. Kay Ivey of a “systematic attack” on LGBTQ+ people stemming from a series of laws she signed over the past two years.

The state has barred transgender athletes from competing based on their sense of gender identity; public schools and universities are required to name bathrooms after “biological sex”; and diversity, equity, and inclusion initiatives in public schools are banned.

Alabama is also one of the hardest states to vote in. According to the Center for Election Innovation and Research, it is one of only three states that do not allow early voting.

The state is one of the least healthy in the United States, ranking 45th in the number of primary care physicians, 49th in the number of dentists, and last in the number of mental health providers, according to the United Health Foundation.

Beautiful homes on the Alabama real estate market

But none of this seems to slow the influx of people into the Huntsville area.

Although the real estate market isn’t as hectic as it was a few years ago, Morgan says activity is still high despite high interest rates. Sellers are still making a profit and out-of-state buyers — who Morgan says make up about a quarter of his clientele — are finding they’re getting a lot for their money.

“I think people are pleasantly surprised when they see the infrastructure. They see the growth. They see the arts and culture that we have here in the community,” Morgan said. “We have three major lakes and river springs. So you really have a great standard of living and a lifestyle that you can adopt if you embrace it.”

If anything, he said, there are some growing pains.

“The amount of permits and housing being built right now is just crazy,” he said. “I think every time we drive around we lose a cotton field and it’s now an apartment complex.”

This is not a serious problem for the most economically progressive state in the United States.