The N.C. economic paradox
By some measures North Carolina’s economy has outperformed the national economy during the past two years, yet the state’s job growth has been very slow. N.C. State University economist Mike Walden explains.
“If we look at a measure called gross domestic product, translated simply the value of everything we produce, North Carolina’s actually done better than the nation. In 2009 we both slipped, but we slipped less than the nation. In 2010, the last year we have full data for, we actually grew 25 percent faster than the nation. Yet … our job growth rate has been very slow — one third the national rate.
“Why is this? Why are we producing more yet we’re not seeing that translate into more jobs? Well,there could be several reasons. One is that there are different relationships between output trends and job trends among the states. Maybe in North Carolina we simply have a longer span there between seeing increases in output and increases in jobs.
“Second potential reason is that we are continuing to see downsizing in some of our traditional industries, and this downsizing has gone on even during economic growth periods — industries like textiles and apparel and tobacco.
“And the third reason could be that our employers have more flexibility since we have a very low unionization rate. We’re a right to work state. Perhaps our employers have better able … to economize on labor in the last two years — something that most employers have tried to do, but maybe our employers have been able to do that better.
“So, this is a very important factor — that, yes, we have seen growth, yet it’s not translated into job growth. Hopefully, that’ll turn around in the years ahead.”Category: Economic Perspective