Not long ago, Mecklenburg County seemed almost recession-proof, buoyed as it was by Charlotte’s prosperous big banks. Its unemployment rate after 9/11 peaked at a mere 6.2% in June 2002. Meanwhile, neighboring Gaston County, once celebrated as having the most textile mills in the nation, struggled with an exodus of jobs, first to Latin America and the Caribbean, then to Asia. Post-9/11 unemployment reached 10% in January 2002.
Like many North Carolina counties, Gaston is again struggling with double-digit joblessness — 11.4% in December. Before long, Mecklenburg will, too. Mike Walden, an economist at N.C. State University, says its unemployment rate could hit 11% by the end of this year and 13% by the middle of next year. “This is a recession that started in residential housing and spread into financial services. Charlotte’s economy is built on that sector.” About 35,000 people work there for Bank of America Corp. or San Francisco-based Wells Fargo & Co., which acquired Wachovia Corp. last year.
Mecklenburg posted a jobless rate of 8.3% in December, but the layoffs were just beginning, says Tony Plath, associate professor of finance at UNC Charlotte. He says the two banks ultimately will lay off about 7,000 employees in the Queen City — with Wells Fargo shedding about 4,000. Plenty of smaller companies are cutting jobs, too.
Mecklenburg County might be helped by efforts to diversify, Walden says. The biotech-research campus under way in Kannapolis is expected to create 30,000 jobs a short commute up Interstate 85, and UNC Charlotte is beefing up its technological research.
But part of the county’s resurgence could rest on the availability of laid-off financial-services workers attracting new employers. New York-based Morgan Stanley has aggressively courted Wachovia employees, and persistent rumors have it basing its new retail bank in Charlotte. Another scenario has Detroit-based GMAC LLC, run by former Bank of America Chief Financial Officer Al de Molina, moving headquarters to Charlotte or expanding there.
Many Queen City bankers aren’t waiting around to collect their unemployment checks and become part of the statistics. Other banks, such as First Commonwealth Financial near Pittsburgh, have been recruiting them. “People are going to be available at a reasonable price,” Plath says.
Without a paddle
Water has been roiling more than two years at the U.S. National Whitewater Center near Charlotte. So has its river of red ink. The nonprofit that runs it lost $2.1 million in the fiscal year that ended Oct. 31 — after losing $1.3 million the year before — and has yet to begin paying down its $38 million construction loan. That worries leaders in Mecklenburg County, the city and four local governments in Gaston County. Together, they agreed to cover shortfalls up to $12 million during the center’s first seven years. It increased revenue 17% in its second full year, but expenses grew 23%. Center officials pledged to cut costs, but they didn’t say how.