Birmingham Economy: Healthcare, Banking, and the Steel Legacy

The Birmingham metro area — formally Birmingham-Hoover — is the largest metro economy in Alabama and the historic industrial capital of the Deep South. It is the corporate hub of Regions Financial Corporation, Protective Life, Vulcan Materials, and the medical-and-research empire built around the University of Alabama at Birmingham. Birmingham's economy runs on healthcare and biomedical research, banking and insurance, professional services, and a still-meaningful but greatly diminished steel-and-metals legacy that defined the region for the first half of the 20th century.

This is a plain-English tour of how the Birmingham metro economy works. For the state-level picture, see Alabama Economy. For the country-level view, see The State of the U.S. Economy and the broader Economy hub and city cluster.

How big is the Birmingham metro economy?

For example, recent metro GDP for Birmingham-Hoover has run around $75 billion, according to the Bureau of Economic Analysis. Metro population is roughly 1.1 million, per the U.S. Census Bureau. That makes the Birmingham metro larger by population than 6 of the 50 U.S. states.

The biggest industries

A handful of sectors do most of the work in the Birmingham metro economy:

• Healthcare and biomedical research — the University of Alabama at Birmingham (UAB) and UAB Hospital together form the largest single employer in Alabama, with tens of thousands of workers across patient care, research, and teaching. Children's of Alabama, Brookwood Baptist Health, and St. Vincent's Health System fill out the metro's hospital sector. UAB's research funding is among the highest in the Southeast.
• Banking and finance — Regions Financial Corporation, one of the largest U.S. regional banks, is headquartered in downtown Birmingham. ServisFirst Bancshares, BBVA USA's southern operations (now PNC), and a deep banking back-office and asset-management cluster fill out financial services.
• Insurance — Protective Life Corporation is headquartered in Birmingham, joined by Blue Cross and Blue Shield of Alabama (the largest health insurer in the state) and a steady cluster of specialty insurers.
• Industrial materials and metals — Vulcan Materials Company (the largest U.S. producer of construction aggregates) is headquartered in Birmingham. U.S. Steel Tubular Products, Nucor, and a deep tier-2 metals supplier base across Jefferson and Shelby counties keep manufacturing a meaningful share of metro employment, though far below the steel-industry peak.
• Higher education — UAB, Samford University, Birmingham-Southern, Miles College, and the University of Alabama System administrative offices anchor faculty and staff workforces.
• Professional services — accounting, legal, engineering, and consulting firms cluster in downtown and the Highway 280 corridor, much of it tied to the metro's banks, hospitals, and Fortune-500 HQs.
• Logistics and trade — the metro's central location at the intersection of Interstates 20, 59, and 65, and the Norfolk Southern and BNSF rail lines, make it a meaningful Southeastern distribution hub.

Jobs and wages

Metro labor data is published by the Bureau of Labor Statistics Southeast region. For example, the Birmingham metro unemployment rate has typically run close to the national average, helped by the steadiness of healthcare, banking, and insurance employment.

Alabama uses the federal minimum wage of $7.25 — among the lowest of any state — though most large hospital, bank, and insurance employers pay well above it. The latest figures are at the Alabama Department of Labor.

Cost of living

Birmingham's cost of living tends to run below the national average, more affordable than Atlanta or Nashville. For example, recent HUD Fair Market Rent for a two-bedroom in the metro has run around $1,100 a month, with Mountain Brook, Vestavia Hills, Hoover, and Homewood higher and parts of western Birmingham, Bessemer, and the outer counties lower. Current county-level numbers are at HUD User.

The federal government tracks region-specific inflation data through the BLS Southeast region. Birmingham's CPI tends to track close to the national average month to month.

Taxes in Birmingham

Alabama has a mildly progressive state income tax with three brackets and a low top rate. Combined sales tax in Birmingham is 10%, made up of the state's 4% base plus a 6% city/county/transit piece — among the highest combined sales-tax rates in the country. Property taxes are among the lowest in the country, with a generous homestead exemption that keeps owner-occupied bills low. Birmingham levies a 1% city occupational tax on wages earned within city limits. State rules live at the Alabama Department of Revenue, and you can read more about how sales tax works in our glossary.

How the Birmingham metro fits into the national picture

Birmingham is one of the more diversified medium-sized metros in the Southeast, with healthcare, banking, insurance, and metals all doing meaningful work. The metro's transformation from a steel town to a medical-and-banking center is one of the more complete economic-restructuring stories in the U.S. South. UAB and Regions Financial together set the regional white-collar rhythm, and the metro's low cost structure has kept it competitive with faster-growing Sun Belt peers.

From steel to medicine

Birmingham was nicknamed the "Pittsburgh of the South" for nearly a century because of its iron-and-steel industry. The Sloss Furnaces, U.S. Pipe, and a deep ironworks base shrank dramatically from the 1970s onward, and the metro's identity has shifted decisively to UAB's medical complex and the banking-and-insurance cluster downtown. Federal data on metro industry mix lives at the Bureau of Economic Analysis, and metro employment is tracked by the BLS Southeast region.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and HUD User for the most current data on the Birmingham metro.