North Carolina's economic "U-turn"

[caption id="attachment_3309" align="alignleft" width="150"] Mike Walden[/caption]

by Dr. Michael Walden, NCSU Professor of Economics, June 30, 2017.

By some measures, North Carolina’s economy has moved in reverse compared to the national economy in recent years. Specifically, two broad measures – North Carolina per capita income relative to national per capita income, and North Carolina per worker earnings relative to national per worker earnings, have declined. 

Behind both of these trends are changes in the distribution of jobs in the state. Examining changes in jobs grouped into three categories – High Pay, Middle Pay, and Low Pay – reveals that from 2001 to 2015, North Carolina had a greater percentage increase in High Pay jobs than the nation, a decrease in Middle Pay jobs compared to the nation’s increase, and a larger increase in Low Pay jobs than the nation. Collectively, these differences between national and state job trends were responsible for North Carolina’s U-turn in relative per capita income and relative per worker earnings. 

Yet just as interesting are differences in job distribution changes among North Carolina’s regions. Based on comparing High Pay, Middle Pay, and Low Pay jobs, the state’s regions were found to coalesce into seven categories. Extreme Hollowing-Out describes those regions with large gains in both High Pay and Low Pay jobs and declines or small gains in Middle Pay jobs. Hollowing-Out regions follow the same pattern although not as pronounced. Regions in the Bottoming-Up category lost or had no gains in the High Pay and Middle Pay categories while adding jobs in the Low Pay category. The Deflating regions lost jobs in all three levels, while the Expanding Middle and Bottom region had its biggest gains in Middle Pay and Low Pay jobs. One region accomplished a Reverse Hollowing-Out by adding Middle Pay jobs at the same time as losing High Pay and Low Pay jobs, and several regions were Gaining at the Top by adding a substantial number of High Pay jobs relative to changes in Middle Pay and Low Pay jobs.

 Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University. A member of the faculty since 1978, Walden specializes in personal finance, economic outlook, the North Carolina economy, and public policy.