Policy & Progress article: A Strong Economy that Works for Everyone

August 2012
By Tazra Mitchell

One of the nation’s most cherished ideals is that hard work pays off, that with effort and ingenuity anyone can get ahead. It’s the American Dream.

And North Carolinians are working harder. Their productivity is up 1.5% since the end of the Great Recession. But their wages have dropped over that same time period. North Carolina workers are increasing productivity and their employers’ profits, but they are not benefitting from their efforts (see box below).

That’s not how the economy is supposed to work.

At the same time workers are boosting productivity, they are also losing economic mobility—the ability to improve their socioeconomic status over the course of their lives. In fact, recent research by the Pew Center on the States shows it is harder for North Carolinians to achieve economic mobility than it is for the average American or Southeasterner.

Hard work is supposed to lead to financial stability and middle-class status, but it just isn’t happening for many North Carolinians. That’s a sure sign of an economy that’s not working for the majority of people.

Now the good news—it doesn’t have to be this way, and state policymakers can act to put North Carolina on a better course.

 

Attracting and Growing Better Jobs

Building an economy that rewards hard work and works for everyone involves attracting, retaining and creating businesses in high-growth industries that pay well, offer benefits, and provide opportunities for career advancement.

The NC Department of Commerce has already studied which industries have a stable presence in the state or are poised for growth in the future. The list includes tire manufacturing, medical-device manufacturing, boat building, pharmaceuticals, and heavy-duty-truck manufacturing. So how do we attract businesses in these industries to move to North Carolina and—more importantly—encourage those businesses already here to expand and hire more workers?

We invest in the public structures that make North Carolina a great place to live and do business.

North Carolinians who want to start and expand businesses must have access to the technical assistance and capital that will allow them to bring their ideas to market. State-supported community development finance institutions, which make small loans for businesses to start up and expand, particularly in underserved and minority communities, play an important role in business development. So do the state’s Small Business Centers—but they have been defunded. That’s a fixable problem.

Any manufacturing company needs good roads on which to transport its products. But more than 5,000 of the state’s 13,000 bridges are structurally deficient or functionally obsolete, and more than one-third of the state’s primary and secondary roads are in poor or mediocre condition, according to the NC Department of Transportation. That is a fixable problem, too.

Pharmaceutical and other science-related companies need workers with credentials ranging for community-college certificates to associate’s degrees to doctorates. But state investments in the community college system and the public university system have dropped 4.3% and 11.1%, respectively, since 2007, even as enrollment has jumped. Another big—and especially pressing—problem the state legislature can fix.

 

Providing Workers with a Path to Better Jobs

This issue of decreased funding for post-secondary education is of particular damaging to job creation. A recent report in USA Today (August 10) found that companies are cutting their training programs and instead are only willing to hire workers who already have the skills they need.

The NC Community College System is a vital pipeline for employers seeking workers with skills beyond the high-school level. Several community colleges in North Carolina have innovative career pathway programs—a series of connected education and training programs and student support services—that enable individuals to secure a job or advance in a skill-demanding industry or occupation. For example, Pitt Community College has a program focused on energy efficiency/weatherization construction, repair, and maintenance.

A growing body of research shows that career pathway programs are an effective way to improve economic outcomes not only for dislocated or discourage workers but also for businesses and local communities, which benefit from a higher-skilled workforce.

But in order to build a more inclusive economy, career pathway programs must be accessible to low-income residents who rely heavily on public transit to access employment and education networks. Sixty percent of North Carolinians traveling to work by means of public transit have incomes at or below $25,000. Many low-income residents rely on the public transit systems due to high transportation costs—such as the cost of a vehicle, insurance premiums, and operating expenses—which account for the second largest share of expenditures for the typical American household.

Even though strong transit systems enhance transit-dependent residents’ mobility and ability to connect to opportunities like job training programs, the state legislature reduced investments in public transit grants by nearly $2 million. The pathway to better jobs must consider residents’ access to transportation options to ensure that low-income residents will not be left behind as new opportunities enter their communities. This is especially true in suburban and rural areas where the transit systems are less robust compared to urban areas.

 

Building Stronger Public Structures

Developing and promoting access to career pathway programs is just one way state leaders can move North Carolina toward an economy that works for everyone. Investments in other public structures are necessary too – better schools, more access to the health care system, and a smarter justice system (page Y). And don’t believe the hype that North Carolina can’t afford to make these investments; it can, with a fairer and better revenue system.

No state or country ever got ahead by cutting its investments in its people and its public structures. North Carolina has the resources to make the investments necessary to create an economy that works for everyone.

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