The Decibel - What Canada needs to learn from Alabama

Episode Date: March 6, 2026

When it comes to one economic indicator, Canada is lagging behind one of the U.S.’s poorest states: Alabama. And while GDP per capita is an imperfect metric of wealth, Globe reporter Tim Kiladze went down to Alabama and found that there are some things the state has done that are worth taking note of. Tim joins the show to share what he saw down south, explore the criticisms of GDP per capita and respond to the reaction his reporting has generated. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A while back, Globe journalist Tim Kallads went to Alabama and packed his bags and his stereotypes. Well, I think like a lot of Canadians, I had this view of it being backward, for lack of a better term, full of Bible thumpers and bigots, you know. And within an hour of being there, you realize that it is such an outdated view of the state. What Tim learned is that the Alabama of today is home to a home to a lot of. bunch of high-tech industries. Here's how the mayor of Huntsville, Alabama, Tommy Battle, describes his town. We have very good jobs in the high-tech area. We have very good jobs in the engineering area. Now we're known for biotech. You put all those portfolios together and included

with our efforts that we do in AI, our efforts that we do in cyber, quantum computing, and geospatial. You put all those together and it gives you a pretty high-tech community, but some of those technologies and some of those sciences cross over to some of the other areas and it helps make us that much stronger a community. Huntsville is just one town in the state that has undergone an economic rebirth over the last few decades. And that's why Tim was there. In 2023, Canada, a country of 40 million people became poorer than the state of Alabama, which has a population of 5 million people. That's according to one economic. metric. So how did that happen? And is it a fair comparison? Either way, what can we learn from one of the

U.S.'s poorest states? Tim is here to tell us what he found. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Tim. Great to have you back on the show. Always happy to be here. So you went to Alabama, in part, to investigate how Canada became poorer than the state. But what exactly do you mean by poorer? Well, it's based on a metric, which is a pretty important metric called per capita GDP. But it's meant to measure every person's share of the wealth, whether it's of the country or of the state. By this pretty important metric, we are now poorer than Alabama or have been dancing around Alabama for a few years now, which is pretty jarring because Alabama's the fourth poorest state. And so it raised all these questions about like, where does Canada have?

really stand. We think of ourselves in a very positive light. We're a G7 nation, one of the strongest economies in the world. And yet, we could be poorer than Alabama. Yeah, how exactly is per capita GDP calculated? So what you basically do is you take the GDP of the country, which is the value of what the country produces in a year, and you just divide it by the population. So the idea is that you're getting each person's share of the country's production or wealth. and Canada's is around, give or take a thousand or two, about $65,000 U.S. Once you adjust for certain cost differences in the countries and things of that sort, and Alabama's has been about the same as Canada's.

And the only states that are worse than Canada are Mississippi, Arkansas, West Virginia, which are seen as really poor states. And so it just made you really want to know and made me really want to know, like, is it real? That's what I wanted to know more than anything. Is it just a statistical problem? Or is there some depth to it? Before we get into what you learned from going to Alabama,

I'm going to see what's going on there. Help me understand this GDP per capita situation. So is it a question of Canada's GDP per capita shrinking? Or is it that we're growing, but Alabama is outgrowing us? Or is it a bit of both? It's a bit of both. And that is where things got tough to decide. because Alabama's also starting off a lower base, is how we would describe it.

So they could be starting from a very small number, but adding to that number each year, so it looks like really strong, rapid growth. Canada's been wealthy for so long that the percentage change each year doesn't look nearly as good as Alabama's. But Alabama also has a lot of good things going for it. And this is what was so jarring. You know, Alabama's unemployment rate is 2.7%. Canada's is more than double that. And so it was really this mind trip in a way to kind of look into and discover that, you know, like the way we thought of Alabama before is not what Alabama is like today.

But even when you say that perhaps Alabama started a smaller number and it's going up, I mean, we're kind of at the same number either way, right? Like that what you said. Yeah, it's a good point. And I think that that is where this huge debate and fight started about two years ago in 2024 is when I say when it kind of peaked. because there were all these questions around like, is Canada going backwards? This was also the height of like, you know, inflation and everybody was pissed off about house prices. And so that's really when people started getting really mad at Ottawa and the Justin Trudeau era. And then basically Donald Trump came into power and the trade war happened.

And we all kind of forgot about it. But I wanted to know, like, is it real? Like, are we actually poorer than Alabama? Okay. So that's a good point to start talking about what you learned. So you went down south. First you went to somewhere called Huntsville, Alabama. paint me a picture of that town.

It's very different than what we think of when we think of Alabama. I think if you ask the average person, they would say like cotton fields and, you know, flat pasture land, that kind of thing. First of all, it's really hilly. I know that sounds like a very like almost like sleeping dimension. But it's surprising for you. Like, oh, wait, I thought it was going to be flat. What was going on here? Yeah.

And so both Huntsville, which is in the north and then Birmingham, which is kind of in the middle of the state, it's the foothills of the apple. are the Appalachians. They get crazy, beautiful fall foliage. I met with the mayor of Huntsville on the seventh floor of City Hall and looking out from the office. You would think you were in Vermont is the best way to describe it. And then on top of that, Huntsville is this huge aerospace and biotech hub. And it's wild. When I started looking into Alabama for the trip, I had never even heard of Huntsville. And it turns out it's like the economic driver of the state. And part of that is Because when we think of Alabama, we think about kind of the civil rights history in Birmingham and Montgomery and things of that sort. But Huntsville is kind of where it's at.

And by fluke or luck, the week before I went down, this was in December, Huntsville had just announced that it had won the bidding war for one of Eli Lilly, the big pharmaceutical giant, one of their new plants. It's a $6 billion plant. It's going in Huntsville. It's going to be very high-end jobs for like scientists and things of that sort. And so it kind of like really proved the point that like this is where a lot of the smart scientist types are. Yeah. Okay. So $6 billion.

That's some serious money. How do you square the fact that this is one of the poorest states of the U.S. But at the same time, there's all this development going on. Like how do you make sense of that? The way I think about it is it's a lot like China in the sense that it's kind of like a low cost state. because it was economically struggling for so long. So, you know, house prices there are a lot lower than they would be here, for instance.

So you can pay workers less because the cost of living for them is much less. In the same way that we outsourced a lot of manufacturing things of that sort to China because it was just cheaper, their cost of living was a lot lower. And it's not just Alabama, the same thing's happening kind of across the southeast.

And a lot of these states, for instance, have attracted a lot of auto manufacturing. So one of the stats that really blew my mind that made me realize, Like there's something going on in Alabama is that they have a huge auto manufacturing hub now. And they now produce basically the same number of cars as Ontario does each year. And at least here in Ontario, we think of that as like a bedrock industry of the province. And they're doing just as much.

So what did Huntsville do to attract these manufacturing and biotech companies to set up shop? Like what was it that made this town and the state more broadly so attractive to business? I think a big part of that answer early on was tax incentives. They were so poor for so long kind of coming out of the 80s and the 90s or early 90s that they were like, we got to just kickstart it somehow. And so they really kind of rolled out the carpet with tax incentives and things of that sort to attract auto manufacturers. That was a big thing.

And so Mercedes-Benz was the first one that went in in 93. And after that, there was just a stream of them kind of like every four to five years, some new auto manufacturer would show up. And then when that happens, more auto suppliers come. And then eventually there's huge network forms. How do they afford all these tax incentives? Well, part of the answer to that is that they couldn't. And so they had to, about two decades in, they had to reform it all.

And they realized, like, this was unsustainable. It was good to kind of get us started. But now this is not good for the taxpayer. We're actually kind of getting too much away. But on top of that, it wasn't just tax incentives. They also had just a lot of land. And they would permit quite quickly. I kind of joke that one of the attitudes down there is that like red tape is for suckers.

Like nobody actually says that, but that's the attitude. It's just like, we're going to get this built and we're going to let you build it real quick. And when I was down in Alabama, I met with this guy named Greg Canfield, who was the head of kind of economic development for the state for a number of years. And it was really interesting to hear him talk because he just said, like, listen, if you are a business and you're putting capital or money at risk to kind of build a new plant, it's going to take five years, it's a big risk that you're putting out there because things would go wrong. of cost overruns, et cetera. So if we can make sure that that company or that plant gets built in two years or three years, you're halving the risk. And that matters a lot.

And that's something that here in Canada, we're trying to fix now. You hear from Prime Minister Mark Carney about the major projects office and this idea of getting projects of national interest. Sped along. Sped along, yeah, in two years or less. Because we just have so many layers of regulation and reviews. People mean well by them because there's like indigenous reviews and consultations and environmental reviews and things of that sort.

Yeah, there's a reason we have reviews or, you know, reasons that are important, right? Yeah, it's just once you add all these things together that over time, you don't realize you've added like seven layers of review to something that never meant to get this out of hand. Right. So it sounds like Alabama is good for business. But what kind of impact is all this money coming into the state having on the quality of life in Alabama? Well, this is where things get a little bit more gray, I guess you could say, because another big element of Alabama

is that it's a right to work state. Yeah, what does that mean? That you can't force people to pay union dues, which makes it harder for unions to set up shop. Okay. That's how I'd summarize it. Whereas here, all the auto plants are unionized. Down there, they aren't.

So, one, you have lower pay because it's not a union shop. And then on top of that, it's just you can pay less because the cost of living is lower. And so one thing that really stood out to me and came to my mind as I was doing all this, is that last summer here in Ontario, there was a big brouhaha because Stalantis, which is one of the big auto manufacturers,

they effectively said, we're going to close this plant in Brampton, which is just kind of northwest of Toronto, and move a plant to the U.S. And it got all these headlines because it was kind of tied to Trump's trade war and this idea that we're losing all these jobs just because Donald Trump's forcing companies to build in the U.S. Well, that's not the full story.

Like part of it is that Brampton, And the whole GTA has gotten very expensive. You know, the average home price in Brampton now is a million dollars. Brampton used to be kind of the lower end pocket of the GTA. So people there could make less because the house prices in Brampton were lower, you know? It's all flipped now. And now the union has to fight for higher wages because how else are you going to afford like a million dollar home? And that's just an average, you know, detached home.

Down in Alabama, home prices are like 300 grand. So just it's like simple math, right? Actually, it's kind of basic. At the same time, a big element of studying whether or not somebody's a richer or poor is digging into how much of these corporate profits that companies are making or getting paid out to workers versus just beyond kind of being collected by the companies and kind of being shipped out of state. Yeah. And beyond that, I mean, quality of life also comes down to education and health as well. So what is that like in Alabama? That's the really jarring thing.

and that's where you need a lot of nuance because per capita GDP doesn't capture those things. It's kind of a simple metric. Down in Alabama, you know, like the easiest that I can think of that this explains the divide or difference from Canada is that,

you know, their life expectancy is about 74 years, which again is one of the lowest in the U.S. And in Canada, ours is 82 years, which is one of the highest globally. So you're living a lot longer. One of the big differences between,

not just Alabama, but the whole U.S. and Canada, is that they fund schools often at the town level. So basically a town's property taxes are what fund the school. And so when you think about it, it's kind of baked in inequality. Like if you are a rich town or neighborhood and you pay property tax, you're going to have more money to fund the school than if you are a lower income area, right? You literally just can't pay teachers as much.

It's that simple. It sounds like there's no distribution happening then. Is that, am I getting that right? Exactly. Whereas here in Canada, you know, we're all. often funded at their regional level. So every school gets the same level of funding, broadly speaking. There's much more equalization, I guess you could say. So, Tim, when I think about Alabama, I think about the civil rights movement as you brought up. Where does race factor into this?

It's a big element of it. What was quite interesting is that when I was down there, I found that it was the thing that nobody wanted to talk about. I would say in Birmingham, especially, like the city itself, kind of like the downtown core area, is quite black. And the suburbs are quite white. And I'm generalizing, but that's pretty much the case. And where is there a lot more crime and poorer neighborhoods and poorer schools? It's in the black areas. It's just persisted for so long that people kind of see it now is like, well, this is just how it is.

And how would we fix this? You know, it's just kind of part of life here. Well, when you're an outsider coming in, it's kind of so obvious to you and so stark. Yeah, absolutely. Yeah. So, I mean, like you've laid out, that Alabama is doing well, but there are many areas where, you know, there's definitely a big need for improvement. Yeah. And I would say, too, that it's not just along racial lines, to be honest.

A big part of Alabama is rural in the Appalachian area. It is quite white still. And some of the stats are crazy. 26% of adults can't read past a third grade level. Wow. And 40% of adults struggle to do math problems that have more than one step. So that's a real educational divide. We'll be right back.

So Tim, your reporting has garnered a lot of reaction online. So just here's a sampling of some videos people posted in response to it. Oh, of nowhere. Canada became poorer than Alabama. How was that even possible? Canada just became poorer than Alabama? No way. So this clickbait headline was making its rounds yesterday through the conservative side of Twitter. Canada as a country is poorer than Alabama. I just want to say that again because of how pretentious Canadians are.

Canada is poorer than Alabama. Alabama really richer than Canada? Well, no, I'll tell you that right now. But talk about a headline catching our attention. Good news, Canada. good news. This country is not poorer than Alabama. This is trash, period. Good day. Trash, period, good day. And also pretentious Canadians, I am a little bit offended.

Oh, Lord. The funny thing is that I put so much care into this piece to try to get all the nuance in. And even with the headline that we had for our piece, out of nowhere, Canada became poorer than Alabama. How is that possible? Like, we tried to raise his idea. of like, is it real? You know, like, how is that possible? How is this a thing? Yeah. But in the social media sphere, like, people just run with the most click-bady side of things.

And the worst part is there's a lot of people who make these comments don't even actually read the piece. So on one hand, I'm not used to it, but it's also a very sad state of things because a lot of people to see this to their own either political lens or whatever kind of values they have. They don't actually want to factor in that maybe there are things. we need to improve on. Yeah. For those that perhaps did read the whole piece,

there has been, the reaction does seem to be split into two camps. So either people are criticizing GDP per capita as a metric of wealth, or people are using your reporting to make their argument that Canada should be more like the U.S. So let's break these down, starting with the GDP per capita. How valid is the criticism that this is not a useful metric? It's pretty valid.

Like there are some major issues with it. But it's also a legitimate metric. And that's where it gets really complicated because both things can be true. And in life, when you have things that are like that, it gets messy. I would break it down like this. So all the nuances that we've talked about, things like inequality, on top of that, it gets a bit wonky here. But one of the ways that you calculate GDP, because there's multiple ways to calculate it

and they all get to the same answer or number, it's called the income approach. And what you basically do to get the value of the economy is, you add up everything that was made in the country or state in a given year. So wages, profits, and investment income. That's the best way to break it down. Wages can be low, but profits are high. And if corporate profits are high, those profits are like generated in a state, but they can be shipped elsewhere.

Or they can be generated in Canada, but shipped elsewhere. So the best example for this, and I got this from an economist Jim Stanford, who did a really great kind of critique and breakdown of for capita GED. is if you look at Ireland, Ireland ranks really, really high. The thing that skews everything in Ireland is that a lot of multinational companies book their profits through Ireland. And they can basically around the world kind of shift profits around so that they're quote unquote generated in Ireland. And so what that does is it makes Ireland's GDP look quite big. But those profits don't stay in Ireland.

Is it that businesses are booking their profits there because of low. taxes? Yes. So Ireland has one of the lowest corporate tax rates in the world. So companies like to just kind of shift things around to these internal transfers so that things land in Ireland. That's a simple way of putting it. Another thing that per capita GDP doesn't really account for is inequality. So if you have some really rich people, particularly like we do in the U.S. with, you know, these oligarch types from the tech world and things of that sort, they can really pull the average up. Because there's just so much wealth. So it makes the average wealth per person just look that much higher.

But it's not actually going to everybody. So it's like a couple of people at the top that are making a lot of money. Yeah, exactly. And then another big element that per capita GDP misses is this idea of kind of quality of life. And so think about it this way. In very simple terms, if you have one state that everybody works eight hours a day and you have another state where everybody works 12 hours a day

and you account for the same thing everywhere else. They have the same populations, et cetera. The state that works 12 hours a day is going to have a higher GDP because they're just producing 50% more. Right. And so it comes down to this question of, okay, they produce more,

but like are they getting sicker more often because they're working too much and their bodies are breaking down, things of that sort. So yes, you can produce more, but to what end? Right, exactly. I don't want to get too in the weeds here when it comes to GDP per capita,

but I do want to read you another comment from a globe reader named Tom Gray. So Tom Gray writes, Can we ever be free of this GDP per capita nonsense? Money borrowed to pay for its federal deficit is directly added to the U.S. GDP. So money that foreign governments and private interest used to buy U.S. treasuries is added to the GDP and pushes up GDP per capita artificially. He goes on to write, so GDP per capita in the U.S. reflects the money that the U.S. borrows. So, Tim, the U.S. federal deficits sits around $1.78 trillion U.S. dollars.

So how exactly does that get factored into this GDP per capita metric? It is a really important note. I would say it's maybe not so much important for GDP per capita in this argument with Alabama. Even though it's relevant, it's just it's more important to show that even GDP, which is kind of the gold standard of how you measure growth, how you measure how wealthy a country is, can be gained. I often say that the U.S. in a way is a fake economy. Like, they're running close to a $2 trillion deficit every single year.

That deficit just juices growth. Like nobody holds them accountable for how much money they're borrowing. So they're going to have more growth than Canada because they're just basically funding it with a credit card. The one... It also goes back to our... our age-old conversation about what is money at the end? Your favorite topic.

What is wealth? But the one thing that I would say about per capita GDP that is very relevant and does create problems with using it to measure Canada's wealth, at this moment in time, is the other side of the equation, which is not GDP, but population. Canada's population has exploded in the last few years. You know, we brought in in 2023 and 2024 two million more people to this country. And population has been rising before that.

And they were basically doing that because they were seeing that birth rates, for instance, here in Canada, are not at the replacement rate. So there's going to be a drag on growth. And so they were like, we need immigrants. They are economic driver. And so if you kind of have relatively stagnant or normal GDP, but you add in all these people, that GDP is now being spread over more people, and that's going to lower the number. And of course, it's also good to note that people that are coming into the country might have a bit of time to set up and therefore might not be making high amounts of money when they first start living here.

Yeah, exactly. You know, there's a very classic tale of like new immigrants where they come in and, you know, it takes a while to like land a good job and get settled, but over time they contribute more to GDP. Before you wrap up, Tim, I want to shift gears a bit. We talked about how Alabama managed to grow quickly, but we haven't talked about some of the challenges in Canada's economy that are slowing our growth as a country. What would you say those issues are? One of them is this idea that red tape is the norm here. Someone described it best as in the U.S., the answer is always, how do we make money off this? Like something gets proposed and it's like, hmm, that's interesting.

How do we make money? Here, it's like, hmm, that's interesting. What are the risks? And so I think we need to shift that mindset a little bit. At the same time, I think the U.S. needs to be a little bit more like us. To be honest, we both need a little bit more of each other. Because in the U.S., they'll like greenlight anything. And then it's like, okay, but what about the environmental impact of this?

Another element of this is that I think Canadians are just too complacent. And I'm a proud Canadian. So this is not like meant to, you know, take a dig at us. I think it's something that we have to face so and come to terms with. Give me some examples. I mean, one thing that I think is a huge problem. You hear this from anybody in the healthcare sector is that we don't have enough funding for our aging population. So health care standards are just going to decline.

And nothing really happened. If you think about even like after COVID, right, what we realized across the country was that the real bottleneck in COVID for the healthcare system was like ICU beds and also nurses. what have we really done to change that? What's the answer? Maybe the answer is you just throw more money at nursing. If it's a huge part of our health care system and it matters, you can answer it with money. And we just don't really think that way. Why is that?

So what I'm understanding here is that, you know, in Canada, we're kind of complacent to these issues. Why do you think we're like this? I think we have a high sense of self, is how I describe it. This ties back to this idea that we are a G7 nation. You know, we were one of the wealthiest countries for a long time. I just don't think that we realized that the rest of the world has woken up. It's not just China. Like, it's like Southeast Asia is booming.

And so we just have not accepted that like the rest of the world is catching up. You know, we have this idea that companies just want to be here. And I think that that ties into another theme that came up in the feedback to the piece, which is that we have these morals and values and campaigns. Canada that I think everybody assumes that they're what make us superior. So it's this idea that, you know, we have public health care, which, listen, I am very proud of. I think it's a very important thing. But we kind of like hide behind the morals and values as Canadians without looking at the core

business elements of it all. And it's like on some ways or in some ways, Alabama's eating our lunch. And we cannot just keep hiding behind these morals and ignoring the. reality of where jobs are shifting and how other countries are developing. I think that's a really good point to end on then, Tim. So thank you so much for coming back on the show. No problem. I was always happy to be here.

That was Tim Kallads, a financial reporter and columnist for the Globe's Report on Business. That's it for today. I'm Cheryl Sutherland. Bianca Thompson joins us from the Canadian Journalism Foundation's Black Fellowship Program and is our associate producer. Our producers are Madeline White, Rachel Levy McLaughlin and Michal Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor.

Thanks so much for listening.