Service station

As manufacturing continues to wane, the service sector has made a home for itself in the top tier of employers.
By Chris Richter

It might seem a cinch to land a job in North Carolina. The unemployment rate was 4.8% in October, nearly a percentage point below the U.S. average and 1.6 lower than a year earlier. But while the state’s unemployment rolls held 71,500 fewer names, its labor force shrank by 89,000 and 17,500 jobs vanished. “What has happened is there has been a very moderate recovery in the service sector while manufacturing has continued to decline,” says John Kasarda, director of the Kenan Institute of Private Enterprise at UNC Chapel Hill.

The service sector again dominates the top of Business North Carolina’s ranking of for-profit employers. Retail behemoth Wal-Mart has more than 45,000 employees in North Carolina — double its number 10 years ago, when it was third. J.C. Penney, in the top 20 last year, dropped after selling its Eckerd drugstore subsidiary. The two largest energy companies also cut their Tar Heel work forces — Duke by some 1,400 and Progress by about 600.

The manufacturing sector lost 14,400 jobs between October 2003 and 2004, but the rate at which they’re disappearing has dropped — 2.4% last year, compared with 4% the previous year. Together, Burlington Industries and Cone Mills had about 19,390 North Carolina employees in 1994. International Textile Group, formed last year by the merger of the two, reported about a quarter of that in 2004. Furniture Brands International, the only company in this year’s top 10 that gets most of its revenue from textiles or furniture, reported about 1,800 fewer North Carolina employees than in 2003. Once the cornerstones of Tar Heel manufacturing, textiles and furniture have been pummeled by competition from low-wage countries.

Kasarda sees a long-term shift to making complex products such as airplane parts and drugs, which don’t require as many workers. That’s evident in wages. While the state has bled jobs in manufacturing, the sector’s average wage has risen steadily. It was $14.31 an hour in October, up 52 cents from a year earlier, adjusted for inflation, and 82 cents more than in October 2002. “The economy itself is notching up in the quality of manufacturing. But the low-wage, labor-intensive jobs — it will be difficult to keep them given the competitive pressures.”

Expect more of the same this year, he says. Growth will continue in the service sector. Look for increases on both ends of the spectrum — high-paying, white-collar jobs and low-paying retail jobs. The economy is recovering, he says, but this time around has been more painful than when the state emerged from recession in the early ’90s. “It was much faster and stronger. Manufacturing employment recovered. Here, it’s not recovering.”