Shelby County named most ‘paycheck friendly’ in state

By NEAL WAGNER / Managing Editor

Shelby County residents, on average, keep more of the money they make than in any other county in the state, according to a study recently conducted by a national consumer advocacy website.

Smartasset.com recently released its ranking of the most “paycheck friendly” counties in Alabama, and Shelby County topped the list by a comfortable margin.

“These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth,” read the website. “First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.

“We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results,” the site added. “Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.”

Shelby County topped every category on the list except for income growth, where it was still near the top in the state.

Shelby County residents make a semi-monthly paycheck of about $1,654, and have a 2.28-times purchasing power. The unemployment rate in Shelby County is about 3.2 percent, and income growth is about 1.3 percent, giving the county an overall “paycheck friendliness index” of 48.88.

Other counties in the top five were Madison, with a 45.95 paycheck friendliness index, Tuscaloosa County with a 44.11 index, Limestone County with a 44.09 index and Coffee County with a 45.43 index.

To view the entire list, visit Smartasset.com/taxes/alabama-paycheck-calculator#alabama/overall.