Resource: Report

When the income gap between the rich and everyone else gets too large, the resulting inequality can threaten America’s foundations of fairness, equality and opportunity. Income inequality is deep in Alabama, and it has been getting even deeper in recent decades. Between 1979 and 2007, the top 1 percent of Alabamians saw their incomes grow by nearly 159 percent. But for everyone else in the state, the average income growth in that time was just 20.5 percent.

Policy analyst Carol Gundlach’s new report, part of ACPP’s State of Working Alabama 2014series, examines the growing income gap between the richest Alabamians and everyone else and considers the gap’s implications for the state’s economy and our children’s future. The report also considers how Medicaid expansion, investments in education and infrastructure, and other public policies could mitigate the worst effects of income inequality and promote broadly shared prosperity for all Alabamians.

Many Alabama workers may find little reason to celebrate as we approach this Labor Day. The Great Recession is officially over, but the average Alabama worker has not yet recovered from it, as employment and jobs continue to lag behind and wages remain stagnant.

Policy analyst Carol Gundlach’s new report, part of ACPP’s State of Working Alabama 2014 series, examines the difficult employment, job and wage trends that working Alabamians face, as well as the growing income inequality between the top 1 percent and the rest of the population. The report also considers how Medicaid expansion, investments in infrastructure, an end to the state sales tax on groceries and other policies could help boost job growth, reduce unemployment and support Alabama workers.

Well after the nation’s official recovery from the Great Recession began, Alabama continued to feel the downturn’s lingering effects in 2010: lower median household incomes, more poverty and more residents without health insurance. Unemployment has fallen from its 2009 peak, but the state’s jobless rate remains above the national average. Higher poverty, fueled by lower incomes and stubbornly high unemployment, hit the state’s youngest residents especially hard, with one in four Alabama children living below the poverty line in 2009-10.

Like this summer’s BP oil disaster, the Great Recession started for many Alabamians as something far away and impersonal. Then the disaster hit Alabama, and it hit hard. The resulting devastation was far-reaching, with scars that could last for decades even as things begin to return to normal.

The economic recession took longer to crash the party in Alabama than in many other states. But once it did arrive in late 2008, it made its presence known swiftly and severely. Alabama once boasted a far lower unemployment rate than the national average. Now it has one of the highest. Despite a decade of solid growth in the state’s productivity, the shares of Alabamians who live in poverty or lack health insurance have shown no appreciable declines in this decade. And the state’s workers face broader challenges in their efforts to climb the economic ladder, such as soaring college tuition costs and a regressive tax system.

What if this is as good as it gets? That’s a question many Alabama workers may ask themselves in the near future as this year’s national economic slump continues. The state’s economy has been healthy in a number of areas since the business cycle last peaked in 2001. The unemployment level is below the national and regional averages. Alabama has added a net of almost 100,000 jobs since 2001. The labor force is more diverse than it was when the decade began. And the state is still ahead of the national curve for the percentage of children with health insurance converage. But warning signs of a potential downturn abound for many working Alabamians.

From the Tennessee Valley to the Gulf Coast, Alabamians share a strong work ethic and a deep commitment to individual responsibility. They go to work each day, pay their taxes, participate in the lives of their communities, and nurture their children. But for many, the promise that hard work will provide a good living for them and their families remains just that — a promise, unfulfilled. This report looks at the strengths and needs of these families who watch Alabama’s economic growth from a distance. We review the state’s investment and outcomes in workforce development and evaluate how effectively our much-heralded industrial expansion efforts, along with existing state supports and services, are bridging the gap in family self-sufficiency.