Introduction

Manufacturing has long been central to the U.S. economy as both a source of high value production and a provider of relatively well paying jobs for workers without advanced degrees. A recurring theme in the economics of work is the “manufacturing wage premium.” This is the idea that manufacturing workers often earn higher wages than workers in other industries, even after accounting for differences in skills and education. The size of this premium is not fixed. It changes over time and varies across industries and places, reflecting both structural shifts in the economy and the conditions of local labor markets.

This study looks at manufacturing wage premiums in Alabama, focusing on the wage advantage of manufacturing compared to all industries. By examining county level data from 2022 through 2024, the analysis highlights important geographic differences and raises questions about the long-term sustainability of Alabama’s manufacturing economy.

Alabama offers a useful case for studying these dynamics. The state has a diverse mix of manufacturing industries, ranging from older sectors such as metals and paper to newer and faster growing ones like aerospace and automotive production. At the same time, its economy shows strong regional contrasts. Urban centers such as Jefferson County, Madison County, and Mobile County have seen rapid growth and high wages, while many rural counties in the Black Belt and northern hill regions continue to struggle. This mix makes Alabama an ideal place to study how the manufacturing wage premium is distributed across different kinds of communities.

Data and Approach

This project uses data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) for the years 2022–2024. Two datasets were combined: one covering all industries and one covering the manufacturing sector. Both provide county level detail on employment, total wages, and average annual wages per employee across Alabama.

From these sources, a manufacturing wage premium was calculated as the ratio of average annual wages in manufacturing to the average across all industries within the same county. This measure allows for comparison of how manufacturing pay differs from the local wage structure in each county.

In addition to wages, the analysis incorporates manufacturing employment growth between 2022 and 2024. While not combined into a single index, this second measure provides critical context: counties with high wage premiums but declining employment may represent limited opportunity, whereas counties with both high wage premiums and positive employment growth suggest stronger prospects for economic development.

The analysis proceeds in two steps:

1. Compare wage premiums across counties to identify local differences.

2. Examine manufacturing employment growth to contextualize whether higher wages coincide with job expansion or contraction.
   
   

Discussion

The county level results reveal three distinct patterns in Alabama’s manufacturing sector.

1. High Premium, Mixed Growth
Several counties display very large manufacturing wage premiums, meaning manufacturing workers earn substantially more than the local average. Hale County (1.65), Clarke County (1.59), and Autauga County (1.56) are among the leaders. However, their trajectories differ: Autauga has strong growth (+27.8%), while Hale and Clarke are shrinking despite their high premiums. This indicates that high wages alone do not guarantee sector expansion, a finding consistent with prior work on mature or “legacy” manufacturing hubs.

2. Strong Growth Leaders
Other counties stand out for rapid employment expansion. Lawrence (+244%), Washington (+177%), and Limestone (+62.9%) are the fastest growing manufacturing counties between 2022 and 2024. Although their wage premiums are more modest (1.13–1.28), their growth-adjusted performance suggests they may be emerging centers of industrial activity. These results echo economic geography theory, where new clusters build momentum through agglomeration effects and reinvestment.

3. Warning Signs: High Wages, Decline
Some counties show the least sustainable combination: relatively high wage premiums but negative growth. Dallas (1.37, –11.0%), Hale (1.65, –8.7%), and Mobile (1.46, –2.4%) fall into this category. These counties risk being “high wage but hollowing out,” where remaining jobs pay well but the overall employment base is eroding. This dynamic limits the multiplier effects of manufacturing and could weaken long-term community resilience.

Implications
For policymakers, these findings suggest differentiated strategies. Higher growth counties like Limestone and Lawrence may benefit from infrastructure and workforce development to sustain momentum. Counties with high premiums but shrinking employment, such as Hale and Dallas, may require targeted investment or diversification to avoid further contraction. For businesses, the results highlight opportunities in counties where wage competitiveness and growth align, signaling strong local markets for both labor and suppliers.

Limitations
As with any county level analysis, averages may mask within county disparities. Reliance on mean wages may also overstate pay in smaller counties with a few high earners. Expanding the analysis to median wages, industry sub-sectors, or educational data could provide a fuller picture of manufacturing’s role in regional economic development.