Why Alabama is America’s Most Improved State for Business

Huntsville, Alabama, real estate broker James Morgan has worked across the country and around the world. Right now, he says, there is no place he would rather be than Northern Alabama. He says he has plenty of clients who apparently feel the same way.

“We’ve got clients from Pennsylvania, Colorado, Michigan — a lot of Michigan people come down here — California, obviously. So, we have a lot of growth coming in,” he said.

The numbers bear that out.

Alabama ranked a respectable 14th in net migration of college-educated workers in 2022, based on figures from the U.S. Census Bureau. That is up from last place the year before, and it is a big reason why Alabama is the Most Improved State in CNBC’s annual competitiveness study, America’s Top States for Business, in 2024.

Alabama surges 22 places to finish No. 20 overall in the CNBC rankings. That is due in large part to a 20-place jump in the state’s Workforce rank, now tied for 24th place with New Hampshire and Wisconsin. Under the study’s methodology, the Workforce category accounts for 15% of a state’s total score, with metrics including the Census Bureau figures on migration, as well as a talent attraction index developed for CNBC by workforce data firm Lightcast, in which Alabama also ranks No. 14.

“There [have] been clear trends over the last decade plus, of people wanting to live in the Southeast,” said Josh Wright, Lightcast’s executive vice president for growth.

The engine for Alabama’s growth is the Huntsville area, where Morgan and his wife Angie have been selling real estate for 20 years. The home of NASA’s Marshall Space Flight Center, with some 7,000 employees, as well as major data centers for Facebook and Google, metropolitan Huntsville’s population has grown 7% in just the past three years.

“The Huntsville area has such a great standard of living, and it has a degree of separation from the rest of Alabama,” Morgan said. “It’s a melting pot — very diverse, very educated.”

Shovel-ready sites give companies room to grow

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

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

The Economic Development Partnership of Alabama, or EDPA, which manages the program, told Guild researchers that Alabama poured $40 million into site readiness last year. The EDPA says it currently has 60 active sites across the state. Under the program’s guidelines, each site is at least 25 acres, is zoned for industrial use or has the support of the local government and either has utilities on site or a plan to get them there.

In the program’s 15 years of existence, the organization says 55 projects have been located on its sites, investing upward of $2.8 billion and creating more than 7,700 new jobs.

Having a strong site readiness program — which was not a consideration in the CNBC rankings before this year — helped Alabama improve its rank in the Infrastructure rating to No. 8 this year, up from No. 13 last year.

Lack of education is a big workforce issue

Alabama may be the Most Improved State, but there is still plenty of room for more improvement, based on the data.

The workforce may be growing but it is still, statewide, one of the least educated workforces in the nation. Just 27% of Alabama adults age 25 and older have a bachelor’s degree or higher, the seventh lowest in the country, according to the Census Bureau.

The state falters badly on some key metrics in the Quality of Life category, many involving inclusiveness.

Alabama is one of only five states — along with Georgia, Mississippi, North Carolina and Texas — with no law against discrimination in public accommodations for nondisabled people, according to the National Conference of State Legislatures. The Human Rights Campaign has accused Republican Gov. Kay Ivey of a “systematic attack” against LGBTQ+ people, with a series of laws she signed over the past two years.

The state has banned transgender athletes from competing based on the gender they identify with; required public schools and universities to designate bathrooms based on “biological sex;” and banned public school diversity, equity and inclusion initiatives.

Alabama is also one of the most difficult states to vote in. It is one of only three states that does not allow early voting, according to The Center for Election Innovation and Research.

It is one of America’s least healthy states, ranking No. 45 for primary care doctors, No. 49 for dentists and last for mental health providers, according to the United Health Foundation.

Sweet homes in Alabama real estate market

But none of that seems to be slowing the flow of people into the Huntsville area.

While the real estate market is no longer the frenzy seen a couple of years ago, Morgan said activity is still strong, even with high interest rates. Sellers are still making a profit, and out-of-state buyers — who he says make up about a quarter of his clientele — are finding they can get 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’ve got three major lakes and river sources. So, you really have a great standard of living and a lifestyle that you can adapt, if you embrace it.”

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

“The amount of permits and apartments that are going up right now is just insane,” he said. “I think every time we drive around, we lose a cotton field and it’s now an apartment complex.”

It is not a bad problem to have in America’s Most Improved State for Business.