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step forward,
two steps back
Editor’s note: The following comes from the N.C. Center for Public Policy Research. It illuminates some of the challenges, of which there are many, that Eastern North Carolina faces to escape poverty.
Eastern North Carolina continues to lag the state in terms of assets needed for growth, says the N.C. Center for Public Policy Research in a follow-up report on the state’s poorest region. The East, the Center found, has improved on some indicators such as Internet access, natural gas availability and employment. But an over-reliance on agriculture, low-wage retail, and low-skill manufacturing, combined with a less-educated work force, hurts the region in competing for new jobs.
“The state seems to keep looking for one big project that can drive the East the way Research Triangle Park drives the Triangle, such as the Global TransPark or the new international port near Southport,” says Mike McLaughlin of North Carolina Insight, the Center’s journal. “But our bottom line finding is that different approaches to economic development are necessary for different parts of the East.
The Center finds the East still has fewer college graduates, more high school dropouts, lower per capita income, and higher poverty than the rest of the state. Sparse population and a lack of cultural amenities also can be obstacles for some areas, says the Center’s McLaughlin. State Senate Majority Leader Tony Rand (D-Cumberland) says that if North Carolina’s eastern third were a state it would be among the poorest in the nation.
Since the Center’s initial research, economic development efforts in the East have been a “one step forward, two steps back” proposition -- some jobs gains met or exceeded by lay-offs.
Key findings
•The East’s dependence on public employment – Eastern North Carolina is more dependent on public employment than the state as a whole, with local, state, and federal governments employing 23.7 percent of the work force compared to 17.7 percent statewide. In several counties, public institutions are the largest employers.
•Fewer manufacturing jobs – The East has fewer manufacturing jobs than the statewide average, with manufacturers employing 12.9 percent of the eastern work force compared to 15.6 percent for the state as a whole. The Center found that manufacturers were among the three largest employers in 27 of the region’s 41 counties, but many of these firms are low-wage, low-skill industries susceptible to international competition. Such plants often close with little notice, leaving eastern towns reeling.
•Number of farms declining sharply, but agriculture still important – Meanwhile, the number of farms, farmers, and farm workers continues to shrink, while farm size and farm values increase. From 1974 to 2004, the number of North Carolina farms decreased by 58 percent, while the size of farms increased by 57 percent.
The farm economy faces challenges on a number of fronts. The federal buyout of the tobacco support program changes the business arrangement for raising the region’s most lucrative crop. Livestock production and especially hog farms face issues around environmental regulation, waste management, and odor control. Debate rages about whether consolidation of ownership into larger and more valuable farms is a good thing or a bad thing for the farmer. Ultimately, global competition may render many of these questions moot.
Yet Eastern North Carolina continues to have seven of the state’s top 10 counties in agricultural production. And, North Carolina is first in the nation in production of tobacco and sweet potatoes and second in production of hogs, turkeys raised, and Christmas tree cash receipts. George Upton, Sampson County agricultural extension chairman, is optimistic about agriculture’s future. “We haven’t had any layoffs,” quips Upton. “Farmers don’t seek incentives, and they don’t opt to move their operations overseas to cut costs. Hard luck and hard times may have hit some individual farmers, but farm values are up, and working farms still produce much of the cash flow in the eastern economy.”
•The rising service sector in the East – Three of four workers in the East are employed in the service or retail sectors, but most of them are in lower paying, non-professional jobs. As part of the service sector, tourism is huge along the coast, with beach counties attracting thousands of visitors and generating millions of dollars in tourism revenue annually.
•Heavy dependence on military bases – The East also relies heavily on the U.S. military, with six major installations providing some 116,000 uniformed jobs and more than 21,000 civilian jobs. The region escaped the latest federal Base Realignment and Closure Act cuts with few net job losses, but could face further reductions in the future. For the present, the East hosts the fourth highest number of troops in the nation, but North Carolina is 23rd in defense contracts and attracts less than 1 percent of U.S. Department of Defense procurement dollars.
• Small businesses very important – Large employers like Nucor Corporation’s steel plant in Hertford County are a rarity in the East. “The vast majority of businesses in Eastern North Carolina are small ones, employing fewer than 50 people,” say Catherine Moga Bryant, senior research associate at the North Carolina Rural Economic Development Center. “These establishments often are overlooked because of their size, but collectively they have a significant economic impact.”
“The state as a whole needs to help the East play catch-up, and it’s going to take a serious, long-term commitment to do this,” says McLaughlin.
The N.C. Center for Public Policy Research is an independent, nonpartisan, nonprofit corporation created in 1977 to evaluate state government programs and to study public policy issues facing North Carolina.