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Eye On Development

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Unemployment numbers a result of very high rates in rural N.C.

By Eric Frazier
Eric Frazier
Eric Frazier covers economic development. He has been reporting and editing at the Observer for more than 15 years. If you have a story idea or news tip to share, contact him at:

Gov. Pat McCrory and his Republican allies leading the General Assembly believe a lower-tax, business-friendly North Carolina will mean more new jobs and lower unemployment.

Looking at the latest unemployment rates, you have to hope they’re right, regardless of your political perspective.

Last week, North Carolina’s unemployment rate rose to 8.9 percent, the first uptick since January. That left us tied with Rhode Island for the nation’s third-highest unemployment rate, with only Illinois and Nevada in worse shape.

With nearly 440,000 North Carolina residents among the ranks of the unemployed, it’s hard to underestimate how much is riding on finding the right answers.

Does the fact that we’re moving up in the unemployment rankings mean there’s slippage in our already shaky economic recovery?

I put that question to N.C. State University economist Michael Walden, who created a monthly index of North Carolina’s leading economic indicators. His recommendations have helped shape past state and local tax laws.

He said he doesn’t believe we’re seeing erosion in the recovery. While big cities like Charlotte and Raleigh remain unsatisfied with their unemployment rates, he contends rural North Carolina has it far worse.

In counties like Scotland, which in June posted the state’s worst unemployment rate at 16.2 percent, no tech firms or big bank headquarters ever showed up to replace those long-gone manufacturing plant and textile mill jobs.

“The real problem in North Carolina is a small-town rural problem,” he said. “The question is what do you do about it?”

The state’s leaders have lowered personal and corporate tax rates. The Commerce Department is working on a plan to privatize some of its functions so it can work more aggressively to recruit industry.

I asked Walden, whose insights have often been cited and sought by lawmakers over the years, the question everybody wants answered: Will it all bring more jobs?

“In my view, it’s not a game changer,” he replied. “This is not the only thing the state has to do to change the economic climate.”

In addition to tax considerations, he said, businesses make relocation decisions based on the quality of the available labor, the cost of that labor, the training expenses, and the quality of life of the location.

But perhaps most importantly, the economy is already gaining momentum. When you look at payroll surveys, he said, job counts for the Charlotte and Triangle metro areas are higher than before the recession. Wilmington and Asheville are coming on strong.

It’s not as bad as our national unemployment ranking might make it seem, he said. And Walden suspects we could indeed get at least a modest bump from the business-friendly tax changes going on the books.

Political differences notwithstanding, we have built a new playing field for business. For the sake of all those looking for work, especially in places like Scotland County, let’s hope the corporations – and jobs – come soon.

Eric Frazier writes about economic development. Got a story tip? Contact him at 704-358-5145, efrazier@charlotteobserver.com or @Ericfraz on Twitter.
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