Editor’s note: The North Carolina Department of Commerce has unveiled a new strategic economic development plan for the state, and given the importance of recruiting new companies and existing company expansions to the state’s economy, WRAL TechWire is taking an in-depth look at the plan, “First in Talent,” which was released earlier this month.  WRAL TechWire also went in-depth with the staff of the North Carolina Department of Commerce on the plan, and that article is linked here.

RALEIGH – Economic development, or the recruitment of companies to establish new facilities or relocate headquarters locations, or the expansion of existing facilities, is a key driver in North Carolina’s economy.

That’s why the North Carolina Department of Commerce released a new strategic economic development plan for the state.  But the plan names the state’s current and future workforce as critical infrastructure for economic growth, as the executive summary of the plan notes that “expanded strategies and new approaches are required to ensure an available and skilled workforce.”

That’s why WRAL TechWire conducted a series of interviews with researchers and practitioners across North Carolina.  We asked about the strengths of the report, what it contains and what it doesn’t, and how the report might exacerbate or alleviate existing economic development divides.

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The interviewees are:

Dr. E. Anne York (Dr. York) is the program director and professor of economics at Meredith College in the School of Business.  Dr. York’s primary field of specialization within economics is labor economics, with a particular focus on issues for women in the labor market.  She holds a Ph.D. in economics from North Carolina State University.

Dr. Michael L. Walden (Dr. Walden) is a William Neal Reynolds Distinguished Professor and Extension Economist at North Carolina State University and a member of the graduate economics faculty with The Poole College of Management.  Dr. Walden retired at the end of March 2021 and is now a Professor Emeritus, and is often a contributor to WRAL TechWire.

Dr. Greg Brown (Dr. Brown) is a professor of finance and director of the Frank Hawkins Kenan Institute of Private Enterprise. He also is the founder and research director of the Institute for Private Capital.  His recent research centers on alternative investments, including hedge funds and private equity funds.  He also is a leading expert on financial risk and the use of derivative contracts as risk management tools.  Prior to joining UNC Kenan-Flagler, he worked at the Board of Governors of the Federal Reserve System in the Division of Research and Statistics.

We’ve formatted our conversations as a Q&A, and responses have been edited for clarity by WRAL TechWire.

WRAL TechWire (TW): What’s there to like about this plan—and why? 

Dr. York: It seems to be a fairly comprehensive plan that makes a good point that without workforce development first, we won’t be able to attract employers to our state.  No amount of tax incentives can offset not being able to find the workers a business needs to succeed.

Dr. Walden: The focus on training, and especially all types of training, from short-term credentials to four-year colleges.  In the 21st century, “human capital,” as compared to “physical capital,” will be the true measure of a state’s competitiveness.

Dr. Brown: The most effective economic development for NC will come from focusing on talent/skills development.  There is a fundamental economic reason for this that is often overlooked: in the long-run workers in the private sector cannot earn wages that exceed the value they add to a business (and the broader economy).  This derives from the basic fact that a company will not hire someone who doesn’t contribute to the bottom line.  So in an economy like NC that has a fairly robust labor market, the only sustainable way to increase the standard of living is to increase the quality of the workforce.  In a nutshell, the state must invest in talent development to continue to grow.


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TW: What aspects concern you—or don’t you like—and why?

Dr. York: This document is ambitious and does identify many methods to “prepare North Carolina’s workforce for career and entrepreneurial successes,” and “prepare North Carolina’s businesses for success by growing and attracting a talented workforce,” to quote two of their three goals.  However, some goals rely on actions by our NC Legislature that I don’t foresee happening any time soon, in particular, raising the state minimum wage and expanding Medicaid coverage. 

But if they do accomplish other aspects of their strategic plan to have a better-educated workforce and a more robust economy, that will drive wages higher and, hopefully, give more North Carolinians access to employer-based health insurance.

Dr. Walden: First, the focus is very, very broad, with all economic and social issues covered.  Some prioritization would have been useful.  Second, I’m not sure about wind-power as an economic driver in the state.  Third, I would have liked to have seen more discussion of international trade and the state’s lack of a major seaport for shipping products—particularly agricultural products.  Fourth, while this is a “vision document,” more specifics on reaching goals and objectives would have been valuable.

Dr. Brown: In many cases, private sector business will provide training, but this is also costly for them, especially for basic education.  Consequently, companies will choose to locate (or expand) operations where affordable, high-quality workers are available.  This provides a reason for the public sector to make meaningful investments in talent.

In North Carolina, in particular, our current position is mixed.  With regard to primary and secondary education—the quality is not great and a strong case can be made for more investment by the state.  This is probably the most important single policy for North Carolina.

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TW: What’s NOT in the plan—but needs to be addressed?

Dr. Walden: Consideration of alternative approaches to the visions and goals.

For example, one goal mentioned is raising the minimum wage.  While there are clear benefits from this policy, economists have long pointed to downsides—such as businesses reducing their use of low-wage labor.

One alternative is a public wage subsidy for low wage workers.  I would have also welcomed some discussion of how the state’s urban-rural divide might be reduced via remote working.  Households who can remotely work may be attracted to residences in rural and small-town areas where housing costs are much lower.

Of course, reliable high-speed internet availability is necessary for such a move.  In this regard, a schedule and state plan for spreading high speed internet to all regions of the state would have been useful.

Indeed, this may be the most important economic development tool for the near future.

Dr. York:  This document is vague on how much is needed to be spent for their initiatives and sources of revenue.  It does identify current programs to partner with and relies on some spending from the American Recovery Plan.


TW: What’s an important takeaway to consider?

Dr. Walden: There are already groups in the state working collaboratively with businesses and educators to develop plans for matching educational offerings with on-going changes in skill needs in the workforce.  There are resources at the state level that could facilitate and complement these efforts.

Also, there’s not much in this plan with regard to tax incentives.  I believe incentives will continue to be used, but they aren’t broadly liked by the public—which likely why they weren’t mentioned. “Supply-side” structural tax changes—usually cuts—generally have come from the General Assembly.

Dr. Brown: For post-secondary education in North Carolina, we have excellent universities with expertise in almost all economically important areas.  In the southeast NC probably ranks first or second overall, in terms of being able to provide post-secondary education in high-wage/high-growth industries.