Momma Watson is pretty disparaging about Flint. She particularly hates the weather in this neck of the woods, claiming that it's so cold it's like living in an igloo. She goes on to tell her husband how wonderful Birmingham is by comparison. The weather isn't just a lot better down there, she says; life is slower and people are friendlier. It's at that moment that Dad interjects with his sarcastic comment about Birmingham folk being a laugh a minute.
He clearly doesn't have much time for Momma's contention that people in Birmingham are friendlier than Flint folk. For one thing, he can't ever recall having seen a "Coloreds Only" bathroom in downtown Flint. This is a reference to the widespread racial segregation that existed in the South at that time and which authorized separate facilities such as public washrooms for each race.
As Flint is in the Midwest, there is no such segregation, and therefore none of those notorious "Coloreds Only" signs. What Dad is driving at here is that, although Flint may not be the best place in the world and certainly not the warmest, it at least has the advantage over Birmingham that it isn't subject to legalized racial segregation and the rampant injustice it entails.