Economic Outlook - October 2008

North Carolina’s society has become multicultural, its economy has become more diverse, and the state has prospered in recent decades. But leaders must adjust their policies for a more metropolitan economy — focused on cities and suburbs — and address a widening disparity between rich and poor, says Ferrel Guillory, director of The Program on Public Life at UNC Chapel Hill.

Aside from the obvious — Research Triangle Park, higher education, technology, globalization — what have been the key agents of change in the state economy since 1950?

The enactment of liquor-by-the-drink laws gave us the ability to have a fine restaurant industry right at the time knowledge workers wanted more amenities. Favorable interstate banking rules were passed right at the time major figures of Charlotte banking were ready to take their banks national. The elimination of Jim Crow laws opened the South to greater economic activity and investment by big corporations, which in a previous era didn’t want to do business or locate in the South for fear of getting mixed up in the racial politics. All of these things interact. It’s hard to imagine Charlotte being the second-largest banking center in the United States under a system of rigid racial segregation.

In a recent paper, you note that the state’s economy has become more metropolitan.

We have to think about how we devise strategies and set policies to assure that our metropolitan regions stay healthy and are governed well. We need to continue improving our public school systems. It’s important to stem the trend toward resegregation. We clearly need more math and science teachers. We need to pay community-college teachers better. We need to pay attention to all of the pieces that go into bringing more and more people to an educational level beyond the 12th grade, because the jobs of the future in our metropolitan areas are going to require that.

What about rural parts of the state?

We have spent, as a state, a lot of energy and resources bolstering our rural areas, and I believe in that. But we’ve reached a point that we have to have metropolitan policy as much as we think in terms of rural policies, because even rural areas are increasingly dependent on the job-producing capacities of our metropolitan areas.

In more than a third of the counties, more than 40% of workers cross county lines to reach their jobs.

It means we are producing jobs, but it also means stress and strain. People have long commutes. It means less time with their families and more struggle to assure that their kids get to recreational and arts programs. It uses up people’s time and energy, not to mention their money to pay for gasoline.

What about the aging of the population?

In some counties, the median age will be 40 to 50 fairly soon, particularly on the coast and in the mountains. A lot of teachers, a lot of middle managers, a lot of foremen will be retiring and will need to be replaced by people who are better educated than was typical a generation ago. And a look at demographic studies suggests they will be replaced largely by blacks and Latinos.

You mentioned a trend toward resegregation in the schools.

Research suggests that it’s not just racial but class. High-poverty schools, which tend to be majority black, depress the achievement of all the students in the school. They tend to have assigned to them the least-experienced teachers. It isn’t absolutely important that a white kid sit next to a black kid, and vice versa, but it is important that there be a healthy share of middle-class young people in a school, so that the school is not dominated by the children of families in poverty.

How has the influx of Latinos affected the economy?

They’ve come in and done work in construction, gardening and meat processing. They’ve filled needs in the economy. But we’ve noticed a widening in income inequality, particularly in our metro areas. In some ways, it’s a function of the way we’ve developed. As more knowledge workers have moved into our metro areas, they’ve created an economic demand for goods and services that low-wage, low-skilled people provide — not only Latinos but also blacks and whites from rural areas looking for jobs in stores, restaurants and other service industries.

Is that a problem?

If the income gap remains wide, then you risk social instability over the long term. It’s critical that folks who are now in low-wage, low-skill jobs have education and training opportunities so that they aren’t stuck in that job for a lifetime.

North Carolina’s population is expected to grow about 25% in 22 years. What will its economy look like?

Much more metropolitan-based — a more high-tech, professional, knowledge-based economy. And we’ve got to prepare for that. We are going to find ourselves challenged in terms of transportation. How do you move people from one place to another so they can enjoy the amenities and get to the jobs?