State of the North Carolina Workforce : an assessment of the state's labor force demand and supply, 2007-2017 |
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State of the North Carolina Workforce An Assessment of the State’s Labor Force Demand and Supply 2007 – 2017 The North Carolina Commission on Workforce Development January 2007 The North Carolina Commission on Workforce Development procured the services of the following organizations to conduct this research Table of Contents Members of the Commission .................................................................................................. i Executive Summary................................................................................................................ ii Following are the eight key trends identified in the report:...................................................... iii Many Traditional NC Manufacturing Industries Are Shedding Jobs ....................................... iii North Carolina’s Traditional “ Middle Jobs” Are Disappearing ................................................. iv New Job Creation Is Concentrating in Fast- growing Urban Areas ......................................... v Many Areas Are Not Prospering ............................................................................................. v Future Prosperity Depends on Achieving Higher Educational Attainment Levels .................. v Baby- boom Retirements Will Deplete Labor Force Talent...................................................... vi High Skill In- migrants Can Help Close the Skills Gap............................................................. vi Low Skill In- migrants Present Opportunities and Challenges................................................. vii Call to Action................................................................................................................. ......... vii Introduction ............................................................................................................................. 1 Defining Sub- state Units of Analysis....................................................................................... 2 Identifying a Rural- Urban Hierarchy.............................................................................. ......... 3 Defining North Carolina’s Three Primary Geographic Regions .................................... ......... 6 The Piedmont Region ............................................................................................................. 7 The Coastal Region ................................................................................................................ 8 The Mountain Region ............................................................................................................. 9 State Workforce Demand and Supply .................................................................................... 9 Workforce Demand................................................................................................................. 9 About the Data........................................................................................................................ 9 Industry Job Trends and Projections ...................................................................................... 12 Occupational Employment Trends and Projections ................................................................ 17 Summary of Key Demand Analysis ........................................................................................ 27 Workforce Supply.......................................................................................................... ......... 28 Demographic Analysis ............................................................................................................ 28 Summary of Key Supply Analysis ........................................................................................... 42 Employer Demand & Workforce Supply Gap Analysis ........................................................... 44 Conclusions ............................................................................................................................ 48 Appendix 1: Summary of Existing Economic and Workforce Developments Studies and Plans II Regional Vision Plans................................................................................................... ......... II Vision Plan Strategies for Workforce, Education and Training ............................................... III Selected Workforce Development Strategies Already in Place .................................... ......... VII Appendix 2: 200 Fastest Growing Industries in North Carolina ............................................. X Appendix 3: NC Selected Occupational Employment Projections ......................................... XVII i North Carolina Commission on Workforce Development Members Sylvia Anderson Guilford County Schools Greensboro, NC Dr. June Atkinson NC Department of Public Instruction Raleigh, NC Commissioner Cherie Berry NC Department of Labor Raleigh, NC Lonnie H. Blizzard Education Consultant Kinston, NC Ronnie Bugnar Person County Schools Roxboro, NC Marianna Clampett Clampett Enterprise Raleigh, NC H. Lee Clyburn Grubbs & Ellis/ Thomas Linderman Raleigh, NC Paul Combs Paul Combs Enterprises Boone, NC Ray Deane William Barnet & Son, LLC Kinston, NC Charley Donohoe LifeSteps LLC Winston- Salem, NC Bill Downey L. A. Downey & Son Durham, NC Sandy Drum Nash- Rocky Mount Public Schools Nashville, NC Secretary Jim Fain NC Department of Commerce Raleigh, NC Bill Farmer Time Warner Cable Charlotte, NC Ken Gregory Durham Exchange Club Industries, Inc. Durham, NC Phrantceena Halres Aelmings Human Resources Corp. Raleigh, NC Scott T. Hamilton Henderson County Partnership for Economic Development Hendersonville, NC Jim Henderson Castle Worldwide Inc. Morrisville, NC Meredythe Holmes Monarch Services Durham, NC Earl Jaggers AFL- CIO ( BCT- 317- T) Burlington, NC Edward W. Kelly III Greensboro, NC President Martin Lancaster NC Community College System Raleigh, NC Susan Lassiter Roanoke- Chowan Hospital Ahoskie, NC Helga Mattei Consultant Raleigh, NC Martha Matthews Biogen Idec RTP, NC David McCune McCune Technology Fayetteville, NC MaryBe McMillan NC State AFL- CIO Raleigh, NC Sec. Carmen Hooker- Odom NC Dept. Health & Human Services Raleigh, NC Michael Okun NC AFL- CIO Raleigh, NC Chairman Harry Payne Employment Security Commission Raleigh, NC Juanita Pilgrim County of Cumberland Fayetteville, NC Bill Ragland Ragland Electrical Supply Brevard, NC Alex Rankin Concord Engineering & Surveying Concord, NC Chris Rolfe Duke Energy Corporation Charlotte, NC Chip Roth International Brotherhood of Teamsters Greensboro, NC Mark Sorrells Golden Leaf Foundation Rocky Mount, NC Terry A. Wethington B. R. Retried, Union New Bern, NC ii State of the North Carolina Workforce An Assessment of the State’s Labor Force Demand and Supply 2007 - 2017 Executive Summary The North Carolina economy is transforming in many ways and on many levels. One key transformation involves the State’s shift from an economy based on traditional manufacturing to a new economy driven increasingly by knowledge- intensive, business services activities. In response to this transformation, many firms are changing their products or production processes and offering expanded services as they adapt new technologies and build closer ties with suppliers and customers. Just as important is continued service sector growth, which is creating a large demand for both jobs requiring high skills and offering high wages and jobs requiring minimal skills, leaving a significant gap in the demand for jobs in the “ middle.” When viewed in the aggregate, economic and occupational shifts are having dramatic impacts on the state’s workforce. This “ State of the North Carolina Workforce” report seeks to shed light on statewide trends and to unmask significant regional patterns in job creation and its impact on the demand for workers. In particular, the study examines economic and workforce development patterns in the state’s urban areas, small towns, and rural communities as well as North Carolina’s geographic regions– the Mountains, Piedmont, and Coast. Based on an in- depth quantitative analysis of the current and projected labor market supply and demand, the goal of the study is to describe North Carolina’s progress to date and the challenges and opportunities for completing a successful economic transformation. Important caveats should be noted related to this analysis. First, this analysis uses data calibrated to the US Bureau of Economic Analysis ( BEA) definition for employment. The BEA combines employment data from the North Carolina Employment Security Commission’s unemployment insurance administrative records ( the most commonly used data source in counting jobs) with data on proprietors, farm workers, and government workers. Second, the forecasts are based on both past trends and assumptions about anticipated future developments, assuming no changes in policy or economic conditions. Thus, these forecasts should be used in the spirit in which they are provided, as a tool for assessing likely future growth patterns in the event that no policy action takes place to change that future and there are no major unforeseen economic upheavals. Third, other analyses may differ slightly in their outlook for certain industries or occupations. These differences come from using different projection tools and models. However, the core predictions hold true across methodologies and represent an accurate picture of the future, assuming current trends do not change. iii Following are the eight key trends identified in the report: • Many of North Carolina’s traditional manufacturing industries continue to shed jobs as part of an on- going economic transition. • North Carolina’s traditional “ middle jobs”— those that paid a family- sustaining wage and required minimal formal education or training— are disappearing as part of this transition. • New job creation is concentrating in certain fast- growing metropolitan areas. • Many areas of North Carolina are not prospering from the economic transformation. • The future prosperity of all North Carolinians depends on achieving higher educational attainment levels for all citizens. • Impending baby- boom retirements will exacerbate an emerging skills gap among experienced, skilled workers. • High- skill in- migrants will help fill part, but not all, of this skills gap. • Low- skill in- migrants present both opportunities and challenges in meeting the state’s workforce needs. This report reviews each of these trends, identifies key issues and challenges for North Carolina, and examines both industry’s demand for labor and the supply of workers available to meet those needs. It should be noted that while these trends are presented separately, many are integrally linked and are only presented discretely for ease of assimilation. Policy actions should take into account the whole of the picture and the relationship among the trends. Following is a brief discussion regarding the eight key trends from the study. Many Traditional NC Manufacturing Industries Are Shedding Jobs Mature manufacturing industries still account for a sizable portion of the North Carolina economy, and many are expected to continue shedding jobs during the next decade. For instance, certain industry sectors— such as elements of textiles, apparel, furniture, and computer/ electronics— are shedding a large number of jobs, offsetting employment gains in other industries. Losses in these industry sectors are occurring throughout the state, but their greatest impacts are being felt in smaller communities that once relied almost entirely on recently down- sized or closed manufacturing facilities. Executive Summary Figure 1: NC Employment in Selected Manufacturing Industries North Carolina Employment 2002 2005 Δ Employ, 2002- 05 % Change Textile and textile product mills 99,091 68,580 - 30,511 - 30.8% Apparel 35,697 26,426 - 9,271 - 26.0% Furniture & related products 67,695 59,280 - 8,415 - 12.4% Computer & electronic products 46,741 39,215 - 7,526 - 16.1% NC MFG Industries 662,354 590,346 - 72,008 - 10.9% Source: US Bureau of Economic Analysis iv Executive Summary Figure 2: US and NC Net New Jobs by Required Education ( Estimated Change 2007- 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Percent of Total New Employment ( 2007- 17) USA NC ‘ Disappearing’ Traditional Middle Jobs ‘ New Middle’ Jobs North Carolina’s Traditional “ Middle Jobs” Are Disappearing The tragedy of the state’s manufacturing jobs loss is that many semi- skilled workers are finding they do not have the skills to compete for jobs in high demand occupations. The difficulties facing these workers are exacerbated by two facts: ( 1) those high demand jobs are disproportionately being created in a few urban areas while the losses are occurring in other parts of the state, and ( 2) the level of skills needed to be competitive for good paying jobs is rising dramatically with time. The lost manufacturing jobs represented many of the ‘ traditional middle jobs’ that offered family- supporting wages but did not require extensive education and training. Many of the state’s dislocated workers did not have a high school education because manufacturers did not require a diploma. Dislocated or unprepared workers who do not have the resources or inclination to obtain the skills required from significant investments in education often must settle for low- skill jobs. Yet, available jobs offering middle- income pay now demand more formal education, often beyond a high school degree. To compete for these ‘ new middle jobs,’ workers must invest years in more education or re- training. At the same time, the economy is creating many new high- skill, high- wage jobs but they are now concentrated in a few major urban hubs. Creating opportunities for workers in less populated areas of the state will take new and innovative approaches to economic development. It is clear, however, that education levels must increase for these new approaches to gain any traction. There simply are not enough skilled workers to fill the high- skill, high- wage jobs in the occupations where they are now growing. Those being squeezed from their traditional middle jobs are not ready to compete for available opportunities. Furthermore, few opportunities are available within easy commuting distance of many displaced workers. Thus, it becomes even harder for the unprepared to gain access to higher income jobs leaving them to compete primarily for low- skill, low- paying wages. The result is an increasingly polarized workforce – those who have skills and access to good- paying jobs and those without skills and only access to primarily lower- paying jobs. Note: Gray areas indicate 2007 proportion of NC employment within the ‘ traditional middle’ educational bands. v New Job Creation Is Concentrating in Fast- growing Urban Areas As North Carolina’s traditional economic base declines, the data reveal that the state’s overall economy is becoming more diverse and more similar to the rest of the country. The state’s services sector is expected to grow more rapidly in the coming decade, as a combination of high- skill, high value- added services and low- skill, low value- added services replace the jobs lost in mature goods- producing sectors. Whereas the state’s traditional manufacturers are often located in small towns, we see that the bulk of these emerging new activities, particularly those that require higher skills and thus have higher pay are concentrating in the state’s larger metropolitan areas. Many of the metropolitan counties of the Piedmont region, for instance, enjoy the most dynamic economies. The companies in the Piedmont account for 64 percent of current jobs and 68 percent of new jobs projected to be created in the next decade. Statewide, metropolitan counties have 74 percent of current jobs while 81 percent of projected new jobs are expected to be created in these metropolitan areas. Many Areas Are Not Prospering In contrast to the success in the Piedmont, especially around Charlotte and the Research Triangle, relatively slower growth has occurred throughout much of the rest of the state, especially in the Mountains and Coastal regions. While many of the largest metropolitan areas are growing rapidly, smaller urban ( or “ micropolitan”) areas and rural counties are creating fewer jobs, many of which include lower wage consumer services or temporary jobs. In addition, the Piedmont Triad has also not yet gained traction in finding a new economic base to replace its declining manufacturing industries. Overall, about 40 percent of the state’s new jobs will require little more than short- term training ( see “ Below GED” in Executive Summary Figure 2), but in the micropolitan and rural areas, that figure is closer to 50 percent. Unfortunately, these low- skill jobs pay approximately 60 percent of the state’s current average earnings. The metro areas are enduring labor supply shortages even though they offer higher average wages. Increasingly, they are tapping the workforce in nearby micropolitan and rural labor markets for the best and brightest talent, requiring either relocation or extended commuting patterns. Quite simply, the state’s micropolitan and rural economies are not creating enough high- and middle-income jobs to meet all of their local employment needs. For some workers, the option is to settle for underemployment or no employment. Future Prosperity Depends on Achieving Higher Educational Attainment Levels Even in the most successful regions, North Carolina’s earnings trail the rest of the country. Not only is this true statewide, but also in the state’s high earning metro counties and Piedmont region where average earnings trail the US by 4 percent. Based on the mix of industries and occupations projected to grow the fastest in North Carolina, this relative earnings pattern will not change during the coming decade. To close that gap, the future prosperity of North Carolinians relies heavily upon further enhancing workers’ education and skills. Simply put, the more education that an occupation demands, the higher the average earnings. Workers with no post- secondary education or certification are finding it increasingly difficult to compete for jobs in vi high wage occupations. The highest wage occupations require an advanced degree and pay 106 percent greater than the state average. Those requiring a bachelor’s degree pay 90 percent greater than the state average. Those occupations requiring some college or an associate’s degree offer earnings 15 percent higher than the state average. Even jobs that required some college or at least one year of training and experience paid about 5 percent above average. The good news is that, overall, the state’s educational attainment levels are rising. In 1990, 70 percent of North Carolina adults aged 25 and older held a high school degree, increasing to 84 percent by 2005. Likewise, in 1990, only 17 percent of adult North Carolinians held a bachelor’s degree or higher, but this rate increased to 27 percent by 2005. Even with this significant progress during the past 15 years, the state continues to trail the nation in educational attainment and still has far to go to ensure that workers without a formal post- secondary education, especially those without access to or the resources to take advantage of education opportunities, do not fall farther behind. Baby- boom Retirements Will Deplete Labor Force Talent Global demographic shifts will create additional challenges in meeting North Carolina’s future workforce needs. Perhaps most pressing is the impending retirement of the first wave of the baby- boom generation ( those born between 1946 and 1955). If this segment of the workforce is lost en masse, it could create tremendous upheaval in the workplace. While the boomers are retiring, the state is projected to add about 30,000 new adults each year as potential workers, enough to replace the retirees but not enough to fill the new jobs being created. With 70,000 new jobs being created each year during the next 10 years, 40,000 net new jobs could go begging for workers annually. The retirement of one- quarter of the workforce, especially many of the state’s most experienced workers, in just 13 years has the potential to leave a gaping hole in the supply of workers during the next two decades. High Skill In- migrants Can Help Close the Skills Gap Fortunately, new in- migrating workers are helping to mitigate the state’s current labor shortages. New North Carolinians represent several key cohorts – including highly- prized college- educated, young adults ( especially those aged 20- 29). In addition, Hispanics, Asians, and foreign- born residents are also common in- migrants to North Carolina. While the state’s overall age structure is relatively similar to the US, in- migrants are, on average, about seven years younger. In- migrants provide potential solutions to the demand for workers for both high- skill and low- skill occupations. Attracting young talent is not the only solution for closing the state’s skill gap. The state is also attracting retirees and, importantly, ‘ pre- retirees’ ( aged 50- 64). These pre- retirees are often looking for their eventual retirement destination, but they are not yet ready to leave the workforce. Nearly one in four retirement and pre- retirement age in- migrants chose to move to Charlotte during the last decade. The Raleigh- Durham area has also served as a major destination for pre- retirees. Certainly, Asheville has also benefited from in- migrations among this group, with 9 percent of all 50- and- older in- migrants to North Carolina choosing the Asheville metropolitan area as their new home. vii Low Skill In- migrants Present Opportunities and Challenges Just as experienced in- migrants help in closing the state’s skills gap, the state is also attracting a large number of unskilled or semi- skilled in- migrants. One of the largest cohorts within this group of in-migrants is Hispanic workers. This cohort of new North Carolinians poses new challenges for the state’s workforce development leaders. Growth in the state’s Hispanic population continues to far outpace the national average. In 2005, North Carolina was ranked 11th for total number of Hispanic residents, and official estimates put that number at over 600,000. However, recent research on unauthorized at the Pew Hispanic Center ( www. pewhispanic. org) of unauthorized migrants suggests that the total may actually be as high as 1 million ( or 11 percent) North Carolinians are of Hispanic origin. The large scale influx of low- skill Hispanic workers provides a significant source of workers for many industries, including construction, agriculture, food processing and a number of other services. Nevertheless, this population also poses several real challenges for the state’s education, workforce and social services providers. Many low- skill workers, especially persons whose first language is not English, could inhibit growth of the state’s standard of living. Efforts to acculturate this new in- migrant community will be critically important to the state’s economic success. Call to Action North Carolina’s changing economy will demand an adaptable workforce. During the past decade, jobs losses in traditional manufacturing sectors have resulted in significant economic hardship across the state. Many of those dislocated workers settled for lower paying, low- skill jobs because they did not qualify for the new jobs that offered better wages, but demanded higher skills or better education. Furthermore, many dislocated workers lacked access to educational resources, could not afford to take advantage of those educational opportunities, or simply were not inclined to disrupt their lives any further by going back to school. These issues continue in those basic sectors as certain manufacturing industries shed more jobs in the future, but North Carolina’s future economy will look very different. New industries are emerging, many of which offer high wages to those with the most skills. Consequently, North Carolina finds itself with a widening gap: on one end is a growing shortage of high skill talent needed to fill emerging well paying jobs and on the other end are many low skill workers settling for jobs that do not offer a family- sustaining wage. The state’s workforce and education system faces the challenge of preparing an increasingly larger proportion of North Carolinians for better- paying, higher skill jobs. This challenge is made more daunting by the large existing pool of workers that lack the most basic skills or credentials ( e. g., a high school degree or post- secondary training and education) necessary for these new higher quality jobs. As a result, North Carolina must seek to provide the state’s existing workforce with better access to longer-term training and education to meet the needs of its fast- growing industries. Importantly the State must also create opportunities throughout all of North Carolina. As leaders review the key trends facing the state, North Carolina must consider the implications for state policy. How do we respond most effectively to the painful transitions caused by worker dislocations in our traditional industries? How do we prepare workers for emerging, fast- growing industries? How do we help the entire state to prosper while encouraging the state’s fast- growing urban economies to continue operating at their fullest capacity? How do we help our citizens to value education more highly viii to ensure that they are fully prepared for the opportunities that fast- growing new industries offer? These are some of the questions raised key challenges facing our state. State and local policy makers and practitioners involved in workforce development, education, and economic development must all participate fully in developing the solutions to address these challenges effectively. The responses from these existing networks and the state’s multi- billion dollar investment in education, workforce development and economic development should be directed to efforts that create an environment in which the economy continues to develop and allows all citizens to contribute as valued members of that economy. These solutions must recognize that North Carolina is no longer a source for low- cost, low- skill labor for global markets. Our success will be based on innovation, new ideas, entrepreneurial behaviors, and continuously advancing education levels. How we achieve these ideals and create a more integrated system of life- long learning are at the heart of whether North Carolina can continue to prosper and truly become “ The State of Minds.” To access the complete State of the Workforce Report electronically, please visit: http:// www. nccommerce. com/ workforce/ swr 1 North Carolina State of the Workforce: An Assessment of the State’s Labor Force Demand and Supply Introduction North Carolina’s economy is undergoing a critical economic transformation. For decades, the state depended on agriculture and manufacturing industries for its middle- income, family- sustaining jobs. Increasingly, North Carolinians are finding those jobs subsumed by an economy that is much more globally oriented, knowledge- driven, and service- based. During the past several years, numerous studies and strategies have characterized these challenges and identified potential policy responses. Appendix 1 summarizes several of the state’s key regional economic development plans, as well as representative workforce studies conducted in various state regions. The transformation occurring in North Carolina has significant implications for the state’s businesses and workers, changing what they do and how they compete in a globally integrated economy. This analysis explores how far North Carolina has traveled in the transformation process and looks to the future to identify the jobs that will provide family- supporting wages. Not only is the goal of this analysis to examine projections of where jobs will be in the future, but the analysis also explores the readiness of North Carolina’s workforce to fill those jobs. What kinds of jobs can the state expect to be available? Will North Carolina have the workers required to fill these jobs? How might the state’s public education and training system prepare for North Carolina’s economy as it continues this historic shift during the next ten years? In looking to the future, we must rely on economic forecasts, which are, at best, educated guesses about what the future holds. Forecasts, such as the one offered in this report, provide users with a sense of the state’s direction as well as information about expected growth patterns should no policy action be taken to change the future. However, it is critical to note that forecasts rely on information about recent trends and assumptions about future behaviors. Furthermore, not all economists agree on what these trends mean or what assumptions should be made. In addition, these trends are subject to unforeseen events as well as the concerted efforts of policy makers to address the state’s challenges. In fact, the most important reason for examining these past and projected patterns is to help policymakers determine how best to invest resources to change undesirable trends. This study of the state’s workforce is designed primarily to provide policy makers with information about the state’s growth path, in order to help leaders understand what may happen if the economy follows its current trajectory. In making strategic investments or critical policy choices, leaders can, of course, help dramatically redirect economic and workforce development trends. In North Carolina, leaders make many of these strategic choices at the regional and local level without a single statewide vision. Assuming access to resources that can influence development, this approach is appropriate in a state, such as North Carolina, with many regional economies bound together by a single political border. Clearly, the economies of the Piedmont metropolitan areas of Charlotte and Raleigh- Durham are very different from the Mountain or Coastal regions. Policies that will influence growth and development in these fast-growing metropolitan economies should differ substantially from those that create opportunity in 2 stagnating rural areas. Even so, this report will define the similarities among those sub- state regional economies, as much as it confirms some of the differences that we expect to find. In the following pages, the report examines both North Carolina’s labor market demand and supply. Labor market demand is determined by assessing which industry sectors are growing and what occupations those industries require. This analysis projects the number of jobs required today and in ten years to meet the state’s economic demands. It also examines the education and training requirements demanded by those industries and occupations. Following this analysis of worker demand, the report explores the labor market supply so as to determine which people are available ( and will likely be available) to fill the jobs being created in the state’s economy. The focus of the discussion is on identifying the skills necessary to meet the market’s need for workers. The study concludes with an analysis of the existing education and training system’s capacity to meet the demand by adapting the supply of workers to meet those needs. It also offers key findings and conclusions that will better allow the State’s Workforce Commission to determine appropriate recommendations for action. In the next section, the report focuses on how and why the state’s economy has been subdivided in the analysis, and provides a glimpse of what kind of data were used in this assessment. Defining Sub- state Units of Analysis North Carolina possesses a significant amount of economic diversity, and therefore the issues facing its workforce differ widely across the state. In places like Charlotte and the Research Triangle, firms require highly- skilled workers to support activities in rapidly growing economic sectors such as financial services, information technology, and biosciences. While the Charlotte and Research Triangle regions are two of the nation’s most economically dynamic regions, other parts of the state struggle to face the challenges of transforming in response to the needs of an increasingly knowledge- driven economy. In western North Carolina, for instance, industries that once employed many of the region’s workers, including textiles, apparel and furniture, no longer provide enough viable employment options. Similarly, in eastern North Carolina, textiles and tobacco no longer drive employment and economic growth. If the regions lack the competitive advantage to support emerging knowledge- driven sectors, they are seeking alternative economic drivers, frequently relying on solutions designed to attract tourists or new residents. However, these new solutions often result in creating consumer service jobs that typically pay workers less than the jobs being shed from declining industries. Clearly, assessing these trends at the state- wide level is necessary but not sufficient for understanding the full range of dynamic change affecting North Carolina. One approach to consider sub-state differences would be to focus at the individual county level. Of course, county level distinctions are an important part of the North Carolina culture; counties often tackle problems independently of the state or one another. However, frequently adjacent counties face many similar political, social, and economic challenges and could equally benefit from opportunities to collaborate regionally. Consequently, the study opts to assess relevant patterns and trends at a multi- county level of analysis. There are several ways to conduct a multi- county analysis – some focus on grouping counties through adjacent geographies while others focus on grouping counties with similar characteristics. One approach, for instance, compares the observed economic dynamism and prosperity in the Piedmont with 3 the identified poverty and unemployment in the Mountains and along the Coast. This is relevant because, at that geographic scale, multiple ( and sometimes disparate) challenges face the different parts of North Carolina. Another approach recognizes that these adjacent counties may not always share common challenges. Why, for instance, is Watauga County doing so well economically while surrounding counties struggle? Why has Durham County not been able to take as much of an advantage of the success of the Research Triangle Park as have Wake and Orange counties? What has caused the economic struggles of the Piedmont’s micropolitan areas while nearby metro areas flourish? Why are several eastern counties, such as Lenoir and Edgecombe, experiencing population declines while nearby counties enjoy growth? The conventional wisdom is that the west and east both are suffering economically while the state’s large metropolitan areas continue to grow. It is important not only to validate this perception, but also to better appreciate the nuanced challenges facing North Carolina’s industries and workforce in different parts of the state. Consequently, this report must look beyond the obvious regional breakdowns to find the key issues that inhibit the state from enjoying more balanced economic development. After detailed assessments of possible regional configurations, the project team collaborated with the state Workforce Commission’s Policy Research and Assessment Committee ( PRAC) to identify several regional distinctions for study. These distinctions focused on the rural- urban nature of the state’s population as well as the traditional view that the state is composed of three major regions – the Coast, the Piedmont, and the Mountains. The analysis also recognizes the critical role for counties as well as the potential role the legislatively defined regional economic partnerships might play in developing greater demand for labor. Thus the analysis is consciously built on units that respect the partnership boundaries. Identifying a Rural- Urban Hierarchy The state’s urban- rural dichotomy explains some of the differences in economic performance. Traditionally, North Carolina has been a state of small towns and rural places. Its agrarian culture was celebrated for generations. The rise of the textile industry in small communities across the state at the turn of the 20th century marked the initial shift of a large portion of the state’s economy toward manufacturing. During the past generation, the state’s growth was concentrated in its larger urban centers. The state may have reached a tipping point with the emergence of three major urban areas with more than one million people– Charlotte, the Piedmont Triad, and the Research Triangle. About half of the state’s population now lives in one of these three regions, frequently called the “ Golden Crescent.” Large cities, small cities, towns, and rural areas all face different kinds of workforce challenges and opportunities. Figure 1 shows North Carolina’s metropolitan, micropolitan and rural counties. 1 The definition established by the US Office of Management and Budget identifies metropolitan counties as those with an urban area of 50,000 people or more. These areas include adjacent counties in which 25 percent or more of the population commutes to the urban center. Micropolitan counties are those with 10,000 to 50,000 people. For the purposes of simplicity, counties that are not classified as either metropolitan or micropolitan are identified as “ rural counties” in this report. Rural counties are defined as 1 Regional distinctions provided by the US Office of Management and Budget, 2003 and updates; Calculations by CREC based on US Census Bureau 2005 population estimates. 4 those without an urban center of 10,000 people or more and in which less than 25 percent of the population commutes to a metropolitan or micropolitan area. There are many varying definitions in North Carolina for “ rural,” and most of the state’s counties contain both urban and rural elements. However, the three designations – metropolitan, micropolitan, and rural – provide a straightforward, useful framework for distinguishing among different types of counties in the state. The distinctions provide a way to group counties together that may not be geographically proximate but may be similar in terms of their population density and their relationship to nearby urban centers. Roughly 6.2 million people, or 70 percent of all North Carolinians, live in the 40 counties that make up the state’s officially designated metropolitan areas. Businesses, governments, and nonprofits in the metropolitan areas offer 3.8 million jobs, about 74 percent of the 5.15 million jobs available. Approximately 2 million people live in the 31 counties in micropolitan areas. These areas are frequently built around North Carolina’s “ small town” growth centers and account for almost 970,000 jobs. The micropolitan areas represent 23 percent of the state’s people, but only 19 percent of the state’s employment. Twenty- nine North Carolina counties are defined for this analysis as part of neither the state’s metropolitan nor micropolitan areas. Unsurprisingly, these counties have relatively few residents and small employment levels. These rural counties have about 600,000 people and approximately 340,000 jobs, representing 7 percent of the population and 7 percent of the state’s employment. Most North Carolinians work in the metropolitan areas, and they also earn more on average than in micropolitan and rural areas. Combined, people in metropolitan counties have projected average Figure 1 Center for Regional Economic Competitiveness Metropolitan and Micropolitan Areas in North Carolina Metropolitan Area Micropolitan Area Rural Area 2005 Population Estimates Metro Area: 6.2 million Micro Area: 2.0 million Rural Area: 0.6 million * Source: US Census Bureau * Hickory- Lenoir- Morganton, NC * Jacksonville, NC * Raleigh- Cary, NC * Rocky Mount, NC * Virginia Beach- Norfolk- Newport News, VA- NC * Wilmington, NC * Winston- Salem, NC * Asheville, NC * Burlington, NC * Charlotte- Gastonia- Concord, NC- SC * Durham, NC * Fayetteville, NC * Goldsboro, NC * Greensboro- High Point, NC * Greenville, NC Metropolitan Statistical Areas * Mount Airy, NC * New Bern, NC * North Wilkesboro, NC * Roanoke Rapids, NC * Rockingham, NC * Salisbury, NC * Sanford, NC * Shelby, NC * Southern Pines- Pinehurst, NC * Statesville- Mooresville, NC * Thomasville- Lexington, NC * Washington, NC * Wilson, NC * Albemarle, NC * Boone, NC * Brevard, NC * Dunn, NC * Elizabeth City, NC * Forest City, NC * Henderson, NC * Kill Devil Hills, NC * Kinston, NC * Laurinburg, NC * Lincolnton, NC * Lumberton, NC * Morehead City, NC Micropolitan Statistical Areas 5 earnings2 for 2007 of $ 42,784 which is about $ 3,000 more ( 7 percent higher) than the statewide average of $ 39,953. Conversely counties in micropolitan and rural counties have below average earnings at $ 32,836 and $ 27,944 respectively. Figure 2 shows industry employment in each of North Carolina’s metropolitan and micropolitan statistical areas. The Charlotte- Gastonia- Concord, NC- SC Metropolitan Statistical Area ( MSA) is the state’s largest with an estimated 938,000 jobs available in the North Carolina counties. The combined MSAs of Raleigh- Cary and Durham are roughly the same size with an estimated 926,000 jobs. The two major metropolitan areas in the Piedmont Triad region — Greensboro- High Point and Winston- Salem — account for a combined 706,000 employment. Outside the core metro counties of the Piedmont, each of several regional metro areas, including Asheville, Jacksonville, Hickory- Morganton- Lenoir and Wilmington, has roughly 100,000 to 200,000 jobs. The state’s largest micropolitan areas include Thomasville- Lexington, Statesville- Mooresville and New Bern. Each of these areas has about 70,000 jobs. As the three major metropolitan areas ( Charlotte, Piedmont Triad, and Research Triangle) continue to grow, it is likely that many micropolitan and small metropolitan areas will become subsumed into adjacent metro areas as more workers opt to commute to relatively higher paying jobs found in those large metro areas. 2 Earnings include not only wages and salaries but also other compensation accrued to workers in the form of supplements such as paid health insurance, day care, transportation, and Social Security taxes, as well as proprietors' income Figure 2 Source: Regional Dynamics Center for Regional Economic Competitiveness Charlotte- Gastonia- Concord, NC- SC Asheville, NC Hickory- Morganton- Lenoir, NC Winston- Salem, NC Greensboro- High Point, NC Burlington, NC Durham, NC Raleigh- Cary, NC Fayetteville, NC Goldsboro, NC Jacksonville, NC Greenville, NC Rocky Mount, NC Virginia Beach- Norfolk- Newport News, VA- NC Wilmington, NC Metropolitan Area Micropolitan Area 50K 200K 600K Industry Employment Industry Employment in North Carolina Metropolitan and Micropolitan Areas ( est. 2007) * Employment for North Carolina counties only ** Only metropolitan areas identified 6 Defining North Carolina’s Three Primary Geographic Regions In addition to metropolitan, micropolitan and rural distinctions, this study also explores differences among the state’s geographic regions. The most traditional way to sub- divide North Carolina is to examine its three major land regions focused around the Appalachian Mountains, the Piedmont and the Coastal Plain/ Tidewater areas. While there are conventional methods for assigning these counties to regions, 3 this study also seeks to align the regional designations with the state’s economic development partnerships as the foundation for drawing economic distinctions and perhaps later for exploring potential policy solutions. Figure 3 illustrates the state’s three primary regions using the partnerships as the basic unit for grouping counties. The 23 counties of the Advantage West Regional Partnership provide the foundation for classifying counties as part of the Mountain region. The 37 counties that comprise the three urban regional partnerships ( the Charlotte, Piedmont Triad, and Research Triangle Regional Partnerships) form the basis for the Piedmont region. Finally, the 40 counties of the three eastern partnerships ( North Carolina’s Northeast Region, North Carolina’s Eastern Region and North Carolina’s Southeast Region) constitute the Coastal region. It should be noted that using the partnership geographies to divide the state creates some minor analytical challenges. None of the three primary regions represents a single natural economic area. Advantage West’s 23 counties encompass an area roughly the size of Maryland and has at least four 3 Dept. of Geography and Earth Sciences, The University of North Carolina at Charlotte, < www. ncatlasrevisited. org> Figure 3 95 95 40 85 77 26 40 40 85 Miles 0 70 Johnston Wilson Clay Swain Macon Transylvania Polk Madison Buncombe Mc- Dowell Mitchell Watauga Ashe Alleghany Wilkes Burke Ruther - ford Cleve - land Lincoln Catawba Alex-ander Iredell Surry Stokes Yadkin Davie Rowan Cabar - rus Mecklenburg Union Anson Forsyth David - son Rock-ingham Guilford Randolph Stanly Mont-gomery Richmond Scotland Cas-well Alam - ance Chatham Lee Moore Dur - ham Wake Harnett Hoke Robeson Columbus Brunswick Bladen Cumber - land Sampson New Hanover Pender Duplin Onslow Carteret Jones Lenoir Craven Gre - ene Pitt Nash Franklin Warren Halifax North-ampton Edge-combe Beaufort Hyde Tyrrell Dare Wash-ington Hertford Chowan Gates Perquimans Pasquotank Currituck Hender - son Mountain region Piedmont region Coastal region 2005 Population Estimates Piedmont: 5.3 million Coast: 2.4 million Mountains: 1.1 million * Source: Estimate based on 2000 Census and 2004 data from AGS Demographics North Carolina’s Primary Regions 7 economic sub- areas. 4 Likewise, the Coastal region includes ten different economic sub- areas, many centered on metro and micro areas. The Piedmont region includes three overlapping economic areas roughly equivalent to the urban partnerships. The map in Figure 4 shows commuting patterns throughout North Carolina, reflecting the most significant commuting flows. The map clearly illustrates the interconnections among the Piedmont’s three large metro areas. In examining the map closely, there are two particular examples where the primary region boundaries split naturally occurring economic areas, in Hickory and Fayetteville. Part of the Hickory area, largely included in the Charlotte partnership area, also includes the Advantage West counties of Burke and Caldwell. A similar division occurs in the southeast where the boundary between the Research Triangle and the Southeast partnership regions separates the Fayetteville metro area’s Harnett County from Cumberland County. Consequently, Harnett is assigned to the Piedmont region while Cumberland is assigned to the Coastal region even though a single labor market unites these two counties. It is also important to note that a significant flow of workers commute from South Carolina counties near Charlotte and these workers are critical components of Charlotte’s workforce although North Carolina’s workforce development organizations and educational institutions may have only a limited role in ensuring that they are appropriately trained and educated for future jobs. The Piedmont Region Each of the three urban partnerships represents a relatively coherent economic region and the communities within those partnership areas enjoy considerable economic interaction. In examining the commuting patterns illustrated in Figure 4, it is difficult to identify where one metropolitan area ends and 4 Advantage West Vision Plan Figure 4 95 1 2 3 4 5 6 7 8 9 12 10 11 95 40 85 77 26 40 40 85 1 Asheville 2 Hickory 3 Charlotte 4 Winston- Salem 5 Greensboro 6 Durham 7 Raleigh 8 Fayetteville 9 Rocky Mount 10 Wilmington 11 Greenville 12 New Bern 40,000+ Commuters 20,000 to 39,999 Commuters 10,000 to 19,999 Commuters 5,000 to 9,999 Commuters 2,500 to 4,999 Commuters 1,500 to 2,499 Commuters Miles 0 70 Source: US Census Bureau, 2000 North Carolina Inter- county Commuting Patterns 8 another begins. Incorporating the state’s largest urban areas, the Piedmont drives much of North Carolina’s economy. Roughly 60 percent ( 5.3 million) of the state’s population resides in the region. About 3.3 million people work in the Piedmont region, representing 64 percent of the state’s workers. The Piedmont’s average earnings are $ 43,077 per year, exceeding the state average of $ 39,953 by almost 8 percent. Even though, the regions’ partnerships are relatively inter- connected, their economies each tend to focus on a different set of activities. The 12- county Charlotte Regional Partnership includes the Charlotte metropolitan area as well as several smaller satellite cities. The region’s economy not only includes declining industries like textiles and furniture, but also advanced and emerging growth segments like financial services and motor sports. The Piedmont Triad includes the Winston Salem- Greensboro- High Point center, but it also includes a number of less urbanized rural counties. The Piedmont Triad area, more so than other parts of the Piedmont region, traditionally relied on mature industries such as furniture, apparel, textiles and tobacco for its economic base. As a result, the Piedmont Triad’s economy has been slower than the other two urban regions in making the necessary economic transformations. Similarly, the Research Triangle region’s center is Raleigh, Durham and Chapel Hill, but there are a number of outlying rural communities that also historically relied on textiles, apparel, and tobacco. The Research Triangle’s economic base has developed so that it now relies heavily on high value- added activities such as biotechnology, information technology and higher education. Raleigh’s role as the state capital also makes government employment and related activities a particularly significant component of the region’s economy. The Coastal Region Roughly 2.4 million people live and 1.3 million people work in the Coastal region. This represents about 27 percent of the state’s population and 25 percent of the workforce. The Coastal region’s average earnings, at $ 35,706 per year, represent only 89 percent of the state average and trail the state average by more than $ 4,000 annually. Tourism represents an important component of the region’s economy, building on assets such as the state’s barrier islands and the Atlantic coast. The tourism industry, however, tends to pay lower than average wages and offers jobs that are typically more seasonal in nature. The Coast has also been one of the state’s leading agricultural regions, relying on tobacco, pork and poultry. Tobacco has historically been one of the region’s leading agricultural products, but livestock production also employs large numbers of workers. Manufacturing and distribution operations, particularly along I- 95, offer another source of regional employment. The northeastern part of the region is especially dependent on tourism and agriculture. The low wages and seasonality of the work are part of the reason why it is one of North Carolina’s poorest regions. The region’s significant military presence plays an important role in its economy. About one in nine workers, or 140,000 people, are employed at one of the Coastal region’s major military installations ( i. e., Fort Bragg, Pope Air Force Base, Seymour Johnson Air Force Base, Cherry Point Naval Air Depot, and Camp Lejeune). The relatively good paying jobs associated with these bases help raise the region’s average earnings. Anecdotal evidence, based on interviews with military leaders, suggest that while some retiring military professionals stay in the area upon their retirement, many others leave the area due to the limited post- military occupational opportunities available for themselves or their spouses. That 9 said, the Coastal region, especially communities near the ocean, is becoming a destination for new residents seeking second or retirement homes. The Mountain Region Of the three main geographic regions, the Mountain region has both the smallest population and the lowest overall average earnings. The region has slightly more than one million residents and 570,821 jobs. Consequently, the area has 13 percent of the state’s people but only 11 percent of the state’s employment. Average earnings in the Mountains are $ 31,561 per year, or 79 percent of the state average. The Asheville metropolitan area is the region’s largest with roughly 400,000 people. Portions of the Hickory- Morganton- Lenoir metropolitan area located in the region also represent an important urban hub for the Foothills. Communities in the Mountains are undergoing a significant economic transformation. Industries such as textiles and furniture manufacturing historically provided much of the region’s economic base, particularly in the Foothills area. These industries are in decline, creating economic hardships for workers and curtailing opportunities for those seeking new careers in the area. Much like the Coast, tourism is one of the Mountain region’s fastest growing industries. Unfortunately, the work’s low wages and seasonal nature do not typically translate into economic prosperity for a large number of people. The area has also proven to be an attractive destination for retirees and second home buyers. These new residents bring money into the region and have contributed to a growing demand for jobs in key industries such as residential construction and retail. State Workforce Demand and Supply Workforce Demand This section examines the current industrial and occupational composition of the North Carolina economy. The goal is to examine detailed geographic differences and long- term projected trends in the demand for new workers. The research focuses on estimated employment for 2007 and net new employment between 2007 and 2017 in order to identify future demand trends. The study also examines relevant geographic differences as well as explores detailed trends in the mix of industries and occupations. About the Data To accomplish the study’s intended goals, data used were developed and provided through the ReDYN economic forecasting model, published by Regional Dynamics. 5 The analysts use this model in lieu of data provided by the North Carolina Employment Security Commission ( NCESC), in part, because the proprietary model defines employment more broadly, projects employment for detailed industries and occupations through 2017, and estimates employment at the five- digit North American Industry Classification System ( NAICS) level for all 100 North Carolina counties. 5 Unless otherwise described, employment estimates and projections were developed using an econometric model developed by Regional Dynamics, an economic forecasting firm. The model was developed by researchers at the University of Georgia for tax, transportation, and economic planning The base data set used in developing the estimates is the US Bureau of Economic Analysis with data estimates calibrated using US Bureau of Labor Statistics and US Census Bureau County Business Patterns ( CBP). The ReDYN model includes employment estimates and projections of wage and salaried employment, proprietorships, military, farm, government, and certain private education institutions. 10 This workforce analysis recognizes the comprehensive definition of employment used by the US Bureau of Economic Analysis ( BEA). The BEA definition builds on NCESC’s very sound snapshot of wage and salary employment and adds other kinds of employment not included in the NCESC reports. Under the US Bureau of Labor Statistics ( BLS)- sponsored national labor market information program, NCESC reports employment using data from its administrative records created for the unemployment insurance program. Each quarter, the NCESC does a census of employees and payroll for companies participating in the program to compare the data against the taxes paid monthly. The Quarterly Census of Employment and Wages ( QCEW) data collection program, sponsored by BLS, provides monthly updates based on firm payroll employment and taxes reports and offers the timeliest snapshot of state employment. Consequently, it is one of the most useful data sources in tracking current NC employment and wage patterns. NCESC does not, however, typically report information about employment for proprietors or other enterprises that do not participate in the unemployment insurance program. Even so, NCESC’s estimates represent about 80 to 85 percent of all employment within nine months of the initial business report to the government. Furthermore, the proportion of employees represented in the QCEW report is particularly high in certain sectors— such as manufacturing— but it is somewhat lower in others like construction, real estate, and government ( especially military employment). NCESC provides the most vital foundation estimate for determining North Carolina’s employment estimates. NCESC data is integral to many other data estimates, but the US BEA measures a larger share of the total employment picture. Annually, approximately 12 to 18 months after the end of the reporting year, the BEA reports all employment by industry using a variety of data sources including labor market information provided by NCESC and its sister agencies in other states, Internal Revenue Service proprietorship tax filings, and a variety of other data sources to develop the employment and earnings data required for calculating the national Gross Domestic Product and other BEA data products. In addition to proprietorships, BEA employment estimates data for farmers and farm workers, railroad workers, military personnel, and certain government agency employees that do not participate in the unemployment insurance program. NCESC data is extremely valuable for describing the patterns and challenges facing many traditional employers. It is also useful in examining large geographic areas or broad industry groupings; however, one of the most significant drawbacks in using this data for this study’s purposes is that NCESC is precluded by law from releasing data at sufficient geographic or industry- level detail to meet the needs of this study. NCESC is legally restricted from disclosing data that could potentially reveal information about a specific firm. Thus, the publicly available information for certain industries with particularly large firms or related to county- level employment includes suppressions designed to protect the confidentiality of reporting firms. This analysis required constructing multi- county data tables that required detailed data be available at an individual county level. Data suppressions in NCESC- provided reports are particularly problematic in obtaining industry detail for most North Carolina counties. Several proprietary enterprises encounter these challenges on a regular basis and have created algorithms designed to estimate the number of workers in a specific county and/ or industry where data disclosure issues arise. The data used for this analysis was derived from one such model. NCESC also provides very useful and soundly developed employment projections that recognize the broader employment definitions described earlier. The data available at the time of this analysis included 11 NCESC’s projections from 2002 to 2012. More recent data, based on 2004 employment estimates and including projections to 2014 were due for release by January 2007. Unfortunately, these NCESC projections also suffer from the data suppression limitations noted earlier. Furthermore, sub- state projections are made only at the workforce development board level. Thus, the projections available were not well aligned with the study’s needs since this analysis was aimed at understanding projected employment changes at the metropolitan, micropolitan, or rural area level as well as the economic development partnership level. The Workforce Commission’s Policy Research and Assessment Committee ( PRAC) and the consulting team felt that the broader US BEA definition of employment was most appropriate for this analysis. This decision was based on recent shifts in the North Carolina economy from its traditional dependence on manufacturing to services, the growing importance of entrepreneurial enterprises as an employment source, and the critical role of military employment as an economic driver. The PRAC and consultants also felt that the projection period for this analysis should be at least 10 years into the future in order to help educational institutions, the State Workforce Commission, and local area workforce boards consider longer- term strategies for adjusting to the state’s changing economic realities. Finally, the PRAC and consultants were very interested in examining patterns and projections in detailed industries and geographies that could not be revealed by NCESC data due to state and federal data disclosure laws. Thus, the PRAC and consultants opted to utilize a data source that builds on NCESC data while also making efforts to address the acknowledged data limitations and concerns. The US BEA does not make industry projections, and the data detail US BEA makes available at the sub- state level is limited. Thus, the PRAC and consulting team opted to explore the use of at least two proprietary data sets. Both benchmarked their estimates to the data provided by the US Bureau of Economic Analysis. Researchers who developed the ReDYN ® model, which provides much of the projections data used in this report, calibrate their individual county- level industry estimates to BEA benchmarks using a combination of data sources, including the US Census Bureau County Business Patterns annual business survey data ( which reports ranges of employment for industries where disclosure issues arise), North Carolina Employment Security Commission and US Bureau of Labor Figure 5 Regional Employment and Average Earnings Region Total Est. Employment 2007 Est. Net New Employment 2007- 17 Average Earnings 2007 United States 179,670,548 30,284,512 $ 44,815 North Carolina 5,152,411 698,247 $ 39,953 METRO Area Counties 3,840,922 573,283 $ 42,784 MICRO Area Counties 969,766 91,029 $ 32,836 RURAL Area Counties 341,723 33,934 $ 27,944 NC Mountains 570,821 70,917 $ 31,561 NC Piedmont 3,290,455 473,629 $ 43,075 NC Coast 1,291,135 152,498 $ 35,706 Source: Regional Dynamics 12 Statistics forecasts, as well as data from the US Bureau of Economic Analysis’s Regional Economic Information Systems data. Figure 5 shows the employment, change in employment, and average earnings for the US, North Carolina and each of the major sub- regions. Several trends clearly emerge. Most of North Carolina’s economic growth is expected to occur in metropolitan counties, especially those in the Piedmont region. Whereas metropolitan areas account for 74 percent of North Carolina’s current employment, they are expected to create 81 percent of the projected new jobs. Similarly, the Piedmont region accounts for 64 percent of current employment, but during the next decade will contribute 68 percent of North Carolina’s projected new jobs. In particular, the Piedmont region’s growth is concentrated in two partnership regions – Charlotte and the Research Triangle. In 2007, 46 percent of employment will be in these two regions, but 55 percent of the state’s new job creation will be there. This demonstrates the Triad’s economic weakness relative to the two other urban regions. While the Triad accounts for 18 percent of state employment in 2007, only 13 percent of new jobs are expected to be created in that region during the next decade. These data are markedly similar to growth prospects in the state’s micropolitan areas. As might be expected, earnings also vary throughout the state. This is particularly true for counties in rural areas where earnings trailed other areas, representing only 70 percent of the state average. Earnings in the Coastal and Mountain counties also trailed the state average. However, the Coastal area outpaced the Mountains in average earnings primarily due to the significant military presence in the Coastal counties. Industry Job Trends and Projections The 2007 projected number of jobs in North Carolina is roughly 5.15 million; the state is expected to add almost 700,000 more jobs by 2017. North Carolina’s economy relies more on government ( especially the military) and manufacturing ( especially textiles, apparel, and furniture) than the rest of the Figure 6 Percent of Jobs in US and NC by Sector ( Projected 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment ( Est. 2007) US NC 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment ( Est. 2017) US NC 2007 2017 13 US. Figure 6 shows that whereas manufacturing accounts for 8.7 percent of all jobs nationwide, it represents 12 percent of all jobs in North Carolina. This reliance on manufacturing is even more pronounced in the state’s micropolitan and rural areas, where manufacturing employment contributes 14.9 percent and 16.5 percent of all employment, respectively. Manufacturing in the Piedmont Triad represents 15.6 percent of all employment. According to both the forecasted data provided here and additional analysis using US Bureau of Economic Analysis data, the military represents about 16 percent of all government employment in North Carolina while the military represents about 8.5 percent of government employment nationally. As North Carolina continues growing, its economy should become increasingly similar to the US economy. Forecasts suggest that service activities will contribute an increasingly larger proportion to both the US and the state’s jobs. As illustrated in Figure 7, the state’s estimated professional and business services employment will likely grow faster than the US average during the coming decade while growth in the manufacturing and government sectors is slower. In urban locations, the state’s economy already looks much like the US economy. For instance, the employment share of finance, insurance and real estate, and professional and business services in the Piedmont region already surpasses the US share in those service sectors. Figure 7 Percent of Jobs in NC by Sector ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment 2007 2017 14 Many of these economic trends become clearer when examining the state’s fastest growing industries. Figure 8 shows the 25 industries that are projected to gain the most net new jobs between 2007 and 2017. 6 These 25 fast growing industries currently account for 39 percent of all North Carolina’s employment, and 57 percent of all the projected net new employment over the next decade. These data reflect the economy’s continued shift toward services. Eight of the 25 fastest growing industries are found in the health and education services sector, and another seven are found in professional and business services industries. One of every ten net new jobs will be in the temporary help services or employee leasing industry, reflecting an increasing reliance on part- time and temporary services as a way to handle short- term cyclical demand for products and services. Twelve of these top 25 industries provide earnings for workers that are less than 80 percent of the state’s overall average. Only five offer earnings to workers that are 120 percent or higher than the state average. North Carolina’s economic mainstay during the past generation has been a variety of manufacturing industries. However, no manufacturing industry is among the state’s 25 fastest growing industries. In fact, only one manufacturing industry— animal slaughtering and processing — is expected to be among the state’s 50 fastest growing industries between 2007 and 2017. At the same time, manufacturing industries are quite prominent among the industries shedding the most jobs. Over the next decade, 21 of the 25 fastest declining industries in terms of projected employment losses are manufacturing- related. 6 The “ Exporting”, “ Locally- Serving” and “ Requires Import” designations are explained in greater detail in footnote 8 on page 19. Figure 8 North Carolina’s 25 Fastest Growing Industries ( Est. 2007 and 2017) Sector Industry Name Employment 2007 Emp Change 07- 17 Avg Earnings 2007 Industry Type Professional & Business Services Temporary Help Services 130,831 63,589 $ 22,964 Exporting Government State and Local Government, NEC 336,792 35,388 $ 44,327 Locally- Serving Professional & Business Services Computer Systems Design and Related Services 46,450 23,531 $ 65,033 Locally- Serving Government State and Local Government, Education 229,249 23,284 $ 44,379 Locally- Serving Education & Health Services Offices of Physicians 64,520 21,808 $ 70,086 Locally- Serving Other Services Religious Organizations 107,698 20,649 $ 18,627 Exporting Leisure & Hospitality Full- Service Restaurants 136,476 19,226 $ 15,373 Locally- Serving Education & Health Services General Medical and Surgical Hospitals 135,009 18,063 $ 47,298 Locally- Serving Leisure & Hospitality Limited- Service Eating Places 126,770 17,096 $ 14,928 Locally- Serving Education & Health Services Community Care Facilities for the Elderly 29,532 14,600 $ 22,815 Exporting Professional & Business Services Management Consulting Services 25,240 12,779 $ 62,929 Locally- Serving Education & Health Services Child Day Care Services 33,813 12,736 $ 17,522 Locally- Serving Education & Health Services Nursing Care Facilities 51,375 12,208 $ 25,995 Locally- Serving Education & Health Services Home Health Care Services 29,464 11,801 $ 32,433 Locally- Serving Wholesale & Retail Trade Supermarkets and Other Grocery ( except Convenience) Stores 94,035 10,762 $ 26,628 Locally- Serving Transportation & Utilities General Freight Trucking, Long- Distance 44,486 10,443 $ 39,648 Exporting Education & Health Services Colleges, Universities, and Professional Schools 35,932 9,391 $ 39,108 Locally- Serving Professional & Business Services Accounting, Tax Preparation, Bookkeeping, and Payroll Services 39,685 8,794 $ 33,275 Locally- Serving Wholesale & Retail Trade Department Stores 71,552 8,015 $ 27,008 Locally- Serving Professional & Business Services Management of Companies and Enterprises 68,988 7,820 $ 80,047 Exporting Leisure & Hospitality Golf Courses and Country Clubs 27,408 7,757 $ 14,140 Exporting Professional & Business Services Janitorial Services 36,346 7,674 $ 19,278 Locally- Serving Education & Health Services Offices of Dentists 20,758 7,011 $ 69,969 Locally- Serving Professional & Business Services Employee Leasing Services 13,116 6,872 $ 27,351 Requires Import Construction Plumbing, Heating, and Air- Conditioning Contractors 55,018 6,828 $ 39,257 Exporting Source: Regional Dynamics forecasts 15 Fourteen of these industries are related to textiles and apparel. Furthermore, industries related to tobacco ( crop production, tobacco product manufacturing, and tobacco stemming and re- drying) and furniture ( logging, sawmills and wood preservation) are also projected to decline, as are many technology- intensive manufacturing sectors ( e. g. semiconductor and other electronic equipment manufacturing). The decline in manufacturing has had significant consequences for many North Carolinians. These industries were typically viewed as paying family- supporting wages for those in the state with relatively low levels of education. As the twin forces of globalization and technology force industries to change the way they do business, companies have eliminated thousands of these jobs during the past decade. In the past four years alone, North Carolina’s economy has shed 72,000 manufacturing jobs, three- quarters of which have been in textiles, apparel, furniture, and computer electronics ( see Figure 9). Today, new challenges face a large segment of North Carolina’s workforce. The state’s industries are creating few jobs that can employ this dislocated workforce without substantial changes in their skill sets. New jobs in knowledge- intensive industries require workers to have far greater levels of education than the current average. Industries that can utilize the existing skills of dislocated workers tend to pay lower wages. In the top 25 industries, those industries that pay less than 80 percent of average earnings represent 43 percent of the new jobs likely to be created in the next 10 years. Temporary help services ranks as the fastest growing of these industries. 7 By contrast, only 11 percent of the new jobs being created among the top 25 industries pay more than 120 percent of the state average earnings. Overall, the average earnings for these top industries are $ 37,728, about 6 percent lower than the average earnings for all industries. This suggests that the resulting growth pattern over the next ten years is likely to continue showing lower than average earnings. It should be noted that manufacturing’s diminishing role in the North Carolina economy is felt unevenly throughout the state because some areas are structurally more dependent on manufacturing than others. For instance, manufacturing accounts for 14.9 percent of employment in micropolitan areas, and 16.5 percent of employment in rural areas. Even within the state’s thriving Piedmont region, the Piedmont Triad area remains heavily dependent on manufacturing. Whereas in 2007, manufacturing accounts for an estimated 13 percent of Charlotte’s employment and 9.5 percent of Research Triangle’s 7 Although it includes a wide variety of activities, the temporary help services industry consists largely of occupations paying below the US median wage of $ 18.21 per hour, according to the most recent data from the US Bureau of Labor Statistics ( May 2005). The BLS reports that 75.6 percent of temporary help workers are employed in occupations that earn, on average, less than 80 percent of the US median hourly wage. Only 9.2 percent of temporary help workers are employed in occupations that earn more than 120 percent of the US median wage. Figure 9: NC Employment in Selected Manufacturing Industries North Carolina Employment 2002 2005 Δ Employ, 2002- 05 % Change Textile and textile product mills 99,091 68,580 - 30,511 - 30.8% Apparel 35,697 26,426 - 9,271 - 26.0% Furniture & related products 67,695 59,280 - 8,415 - 12.4% Computer & electronic products 46,741 39,215 - 7,526 - 16.1% NC MFG Industries 662,354 590,346 - 72,008 - 10.9% Source: US Bureau of Economic Analysis 16 employment, this sector still represents 15.6 percent of the Piedmont Triad’s total industry employment. Of course, these manufacturing jobs are not all in the traditional manufacturing industries of tobacco production, textiles, apparel, and furniture. However, even excluding those industries, the Piedmont Triad still has a greater proportion of manufacturing- related employment than any other area in the state. Structurally, the Piedmont Triad’s economic sectoral composition closely resembles many of the state’s micropolitan areas, and not surprisingly the area is enduring many of the same transitional challenges as smaller manufacturing- dependent communities. Appendix 2 lists North Carolina’s 200 fastest growing industries. Some of these industries have a higher concentration of employees in North Carolina than nationally. 8 These highly concentrated industries are said to have enough workers to produce more than enough of their goods or services to serve the state’s needs so it is expected that they export beyond the state boundaries. These “ exporting” industries are particularly interesting for economic development purposes because their relatively high concentration is a sign that the state may have a competitive advantage in attracting and retaining companies in those economic sectors. In selling their goods or services outside the state, exporting industries bring new money into the state. North Carolina’s exporting industries include those related to animal slaughtering and processing, as well as pharmaceutical and medicine manufacturing. Slightly more than 26 percent of the 2007 projected jobs in the top 200 industries are categorized as export- oriented. This group is expected to grow faster than other parts of the economy, accounting for 29 percent of the new jobs created during the next decade. Exporting oriented industries offer above average earnings at $ 43,029, but the fastest growing exporting industries offer average earnings of only $ 37,427. Most of this discrepancy is driven by the anticipated growth in temporary help services, religious organizations, and elderly care facilities. Other industries leak wealth because so few workers are involved in them that state businesses and consumers are expected to have to “ import” the industry’s goods or services from elsewhere. Economic developers are concerned about these industries because they represent potential increased economic activity that could improve the competitiveness of local firms or serve local businesses or residents. Industries that seem to be particularly underdeveloped in North Carolina include employee leasing services; outpatient care centers; vocational rehabilitation services; data processing services; services for the elderly and persons with disabilities; machinery equipment rental; and telephone call centers. These industries are growing at some of the fastest rates, sometimes to meet the growing demand of the local population as well as to capture leakages from the state’s economy. These and similar industries account for about 3 percent of the top 200 jobs, but will represent about 5 percent of the new jobs being created during the next decade. On average, these jobs are projected to pay about $ 45,735 in 2007 estimated earnings, but the fastest growing industries tend to pay much lower with average earnings expected to be $ 36,127. A third category of industry, designated as “ locally serving,” generates employment as a share of the total economy at a ratio that resembles the national share. Locally serving industries create employment, but they are more apt to capture existing money recycling through the economy than to bring new money 8 These industry concentrations are frequently referred to as “ location quotients” or LQs. LQs represent a ratio of each North Carolina industry as a share of the state’s employment compared with a similar ratio of that same industry’s national employment total as a share of all US employment. An LQ of 1.2 or higher was used to designate “ exporting” industries and an LQ of 0.6 was used to designate “ requires importing” industries. Industries with LQs between 0.6 and 1.2 represent the group identified as “ locally serving.” Each of the top 200 industries is categorized in Appendix 1. 17 into the state. In addition, their growth tends to be most closely correlated to population growth. Activities such as healthcare and retail are frequently considered locally serving industries. However, on occasions, these sectors may differ in certain communities. For instance, large factory outlet malls or retail targeted to tourists such as Concord Mills may attract shopping dollars from people who live outside the region. Specialized healthcare facilities or advanced hospitals like the Duke or UNC medical centers may provide very specialized care and therefore attract patients from across the nation. On the whole, however, these examples represent exceptions to the norm. Locally serving industries account for 71 percent of all jobs in the top 200 industries, but only about two- thirds of the jobs being created during the next decade. These industries are sizable and many are growing at a moderate pace, driven by the state’s population growth rather than by any comparative economic advantage. Not surprisingly, the state’s locally serving industries tend to grow most and fastest where the population is large and growing fastest— mainly the metropolitan areas and the Piedmont region. Overall, average earnings for locally serving industries are slightly below average at a projected $ 38,077 for 2007. This approach to categorizing the industries of the economy into three broad areas is useful as a way to help economic and workforce developers better understand their respective differences. From the workforce perspective, the interest is in finding a large number of jobs that require moderate skills or moderate training to improve the skills of the workforce, no matter the industry. Thus, their efforts frequently focus on supporting locally serving industries where the number of jobs being created is higher, and the pay for new jobs is expected to be slightly higher. From the economic development perspective, the efforts focus on identifying the largest and best paying sectors that export goods and services or that replace goods and services currently being imported into the state. The job numbers associated with these industries may well be relatively small because the focus is on new wealth creation or retention. Due to their differing goals, the industries and occupations of interest to economic and workforce developers are not always the same. Occupational Employment Trends and Projections The occupational data mirror many of the trends illustrated in the industry data. Notably, the projections show strong growth in healthcare and services- related occupations and steep declines in the occupations related to traditional manufacturing industries such as textiles and apparel. These data also show a strong relationship between educational attainment and earnings. To demonstrate these trends, we organized the occupational data according to the 11 different categories used by the US Bureau of Labor Statistics ( BLS). These categories identify the most common educational attainment requirements for each of several hundred occupations. 9 Seven of these categories involve formalized postsecondary education, while the other four categories are based on work experience and on- the- job training ( OJT). In some cases, high school completion is a pre- requisite for training while in others high school completion is not required to receive training. For our purposes, however, eleven categories were too many. Consequently, we collapsed the 11 BLS categories into six different ‘ education bands’ designed to allow us to make comparisons with available labor supply categorizations made by the Census Bureau. Census gathers data on educational attainment for potential workers among citizens age 25 and older. The bands used for analyzing occupational trends and projections are: 9 For more detail about these 11 occupational education requirements see: http:// www. bls. gov/ emp/ optd/ optd004. pdf. 18 • Band 1: Advanced Degree — Occupations requiring advanced degrees ( e. g., Ph. D., MA/ MS) or professional degrees ( e. g., MD, JD) • Band 2: Four- year College Degree — Occupations requiring either a baccalaureate degree or a bachelor’s degree plus experience • Band 3: Tech- Some Post — Occupations requiring either an associate degree or some kind of postsecondary vocational award or certification as well as those that typically require some college but may not require a degree • Band 4: High School Diploma/ GED and Some Experience — Occupations requiring at least a high school diploma or a general educational development ( GED) degree and significant work experience and more than a year of on- the- job training ( OJT) • Band 5: High School Diploma/ GED Entry Level — Occupations requiring at least a high school diploma or GED plus moderate- term OJT ( typically more than one month, but less than one year) • Band 6: Below GED — Occupations requiring short- term OJT ( less than one month); few of these occupations require a high school diploma The first two bands are considered the best, high wage jobs. These bands include the knowledge-intensive jobs associated with an economy increasingly driven by high- end business services. Conversely, the jobs in the last band ‘ Below GED’ are those that require little skill or training and often pay well below average. Therefore, workers often face difficulty earning a family- sustaining wage while working one of these jobs. Bands 4 and 5— GED- Some Experience and GED Entry Level— have traditionally been the occupations that were the backbone of North Carolina’s workforce. These ‘ Traditional Middle Jobs’ typically provided decent wages for people with relatively limited levels of educational attainment. Unfortunately, many of these occupations are found in mature industries such as textiles, apparel and furniture manufacturing. They continue to be important to the state, but globalization and technological changes have reduced the demand for jobs in these occupations significantly. Consequently, growth is occurring rapidly among the higher end jobs and those in occupations in Band 3. Combined, the occupations in Band 3 and 4 constitute what one might describe as the ’ New Middle Jobs.’ These occupations increasingly require advanced skills so workers need more training to attain and keep their jobs. For instance, the growing prevalence of advanced manufacturing techniques demands more technology skills and knowledge for people in production occupations. Similarly, the use of just- in- time delivery systems requires workers in logistics and distribution occupations to increase their math and IT skills. New middle jobs requires workers who may be currently employed in traditional middle jobs to invest in significant up- skilling to retain their employment or to move into the new middle jobs. Those that do not make the investment or whose companies do not adapt, run the risk of falling behind. Increasingly, those that do not adapt are losing their jobs and settling for re- employment opportunities in one of the low skill occupations in Band 6— Below GED. Key Occupations by Employment Band By allocating occupations to each of these six bands, workforce professionals can project which types of occupations will need to be filled, the level of compensation likely to be available, and the number of workers that will be required over the next ten years at each educational level. Figure 10 provides a snapshot summary of the proportion of the state and national workforce found in occupations at each of these educational bands. 19 About 34 percent of the jobs currently available in North Carolina do not require a high school diploma, slightly below the average for the US job market. These jobs typically require a month or less of on- the- job training. However, when compared with the US, a larger share of North Carolina jobs, about 25 percent, require between one month and one- year of training and typically demand a high school degree or equivalent. Unfortunately, these jobs are concentrated in industries and occupations that are being squeezed by globalization and technological change. Skill requirements are increasing for the jobs in these occupations. Among those occupations projected to increase, employers are also demanding more education and training from their workers. Examining the occupational data through the lens of these education bands reveals several key trends. Trends for each of these educational bands and examples of key occupations in each band are highlighted below. Advanced Degree Occupations Many of the fastest growing occupations require advanced degrees and reward workers with high pay. Lawyers, post- secondary health specialties teachers, and pharmacists are among the fastest growing occupations in this education band, and all have average earnings over $ 100,000 annually. Clergy is another fast growing occupation in this education band, but though it pays less—$ 47,704 in average annual earnings— it is still 20 percent higher than the state average earnings. Four- Year Degree Occupations Almost one in four new jobs projected to be created in North Carolina over the next ten years will require workers to have at least a four- year degree. The fastest growing occupations that require a bachelor’s degree include general and operations managers, elementary school teachers, business operations specialists, accountants and auditors and computer software engineers. Much like other occupations requiring an advanced degree, most of these jobs offer compensation well above the state Figure 10 US and NC Employment by Required Education ( est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of Total Employment ( 2007) USA NC Source: Regional Dynamics forecasts 20 average. Although the growth of Charlotte’s financial sector adds to the number of accountants and auditors and Research Triangle’s information technology industry boosts the number of software engineers, employment growth for occupations like managers and teachers will depend on the state’s continued population growth. Technical Degree and Some Post- Secondary Education Degree Occupations Given the healthcare industry’s rapid growth, it should surprise no one that many of the fastest growing occupations in this education band relate to that industry. For instance, Registered Nurses ( RNs) represent the fastest growing occupational category among those requiring at least a two- year degree or some kind of postsecondary vocational award. 10 Currently, the state employs an estimated 90,916 RNs and will need to add another 24,308 over the next decade to meet its projected demand. To put this in context, these forecasts suggest that registered nurses will account for 3.5 percent of the state’s net new jobs between 2007 and 2017. With average earnings of $ 61,347, RNs are also one of the best paying occupations within this education band. The growing demand for healthcare workers includes a call for new RNs and Licensed Practical and Licensed Vocational Nurses ( LPN/ LVNs). There are currently an estimated 20,147 LPN/ LVNs working in the state, with a demand for 4,430 more LPN/ LVNs over the next decade. Healthcare- related occupations are not the only fast growing occupations in this education band. In addition to health care workers, North Carolina will need more than 13,000 new preschool teachers. The state will also require more than 5,300 net new computer support specialists. It will also require roughly 5,300 automotive service technicians and mechanics and 2,200 bus and truck mechanics and diesel engine specialists. Moreover, there will be a growing demand for many workers— such as electrical and electronic engineering technicians-- necessary to support the state’s increasingly sophisticated manufacturing industry. These occupations represent a significant component of the state’s new middle jobs. High School Diploma/ GED and Some Experience The occupations within the three education bands described above all require workers to possess some kind of postsecondary training. The next three education bands require varying degrees of work-related experience and on- the- job training ( OJT). The fastest growing occupations that fall in this “ GED/ Some Experience” education band include team- supervisor or skilled- trades occupations. Four of the six fastest growing occupations in this education band are supervisors and managers in areas such as construction, retail, food preparation, and maintenance. Construction trades supervisors ( at an average of $ 53,210 in 2007) earn nearly two- thirds more than food service supervisors ( at an average of $ 31,652). In addition, two other fast growing occupations are carpenters and electricians. The state will need an estimated 6,428 net new carpenters and 3,688 net new electricians over the next decade. These trades occupations typically require long- term work experience and they represent, much like the jobs requiring a 2- year degree, a large segment of the state’s new middle jobs. The workers in these occupations are vital for the state to maintain its current pace of growth as well as preserving many workers’ standard of living. That said, this band also includes many of the fastest declining occupations, 10 This represents the minimum degree required for many nursing positions. According to a 2005 US Bureau of Labor Statistics survey, 58% of nurses aged 25- 44 have a bachelor’s degree or higher. In addition, many employers are increasingly requiring four- year nursing degrees of their job applicants. 21 and most are expected to continue their decline into the next ten years. Corresponding with declines in the state’s textile industry, one occupation alone – textile knitting and weaving machine setters, operators, and tenders – is projected to lose another 38,000 jobs in the next ten years. High School Diploma/ GED Entry Level Unlike the majority of the occupations described above, most of the occupations falling within the GED/ Entry Level education band pay below the state average earnings. One notable exception is heavy and tractor- trailer truck drivers. North Carolina now has an estimated 78,832 truck drivers and will need another 19,029 net new truck drivers over the next ten years. The average earnings for truck drivers are $ 40,659 per year, roughly $ 1,000 more than the state average. Other fast growing occupations in this educational band include customer service representatives, general installation and repair workers, and team assemblers. In fact, team assemblers comprise the state’s fastest growing production- related occupation, as represented by the increased hiring for major facilities like Dell in the Triad area. Not surprisingly, certain occupations within the “ High School/ GED Entry- Level” education occupation band are projected to decline. North Carolina manufacturers are expected to shed another 56,000 of the 155,000 remaining machine operator and tender jobs in the textile and apparel industries during the next ten years. Below GED Occupations Occupations within the “ Below GED” education band are among the state’s fastest growing. Many of these jobs are found in retail occupations, where the state will add roughly 25,000 net new salespersons between 2007 and 2017. Food service employees are also high growth occupations. Healthcare employment growth will also be responsible for generating a large number of new low- skill jobs. For instance, the state will add approximately 21,150 home health aides and 13,115 nursing aides, orderlies, and attendants over the next decade. There are also several occupations in this education band that are expected to decline, again related to losses in the manufacturing sector. The anticipated losses in these occupations are not nearly as dramatic as the textiles- related losses anticipated in the two bands discussed earlier. Instead, occupations such as utility meter readers or order clerks are losing jobs as a direct result of automation. In general, the majority of America’s and North Carolina’s jobs can be found in the last two educational bands (“ High School/ GED Entry- Level” and “ Below GED” occupations), but a growing number of jobs require formal college experience or long- term job training. The greatest job losses are occurring among jobs that do not require formal college education. When compared with the United States, North Carolina has a higher concentration of its workforce in these occupations. The evidence suggests that new jobs being created are more likely to require higher education and will demand more from their workers in terms of education levels. Appendix 3 provides more detail about the fastest growing and declining occupations. 22 Occupational Trends by Employment Band An examination of these education bands at a greater level of aggregation begins to reveal some important issues facing the changing nature of North Carolina’s workforce. Figure 11 compares the education requirements for projected new jobs being created during the next decade in both North Carolina and the United States. One key pattern that emerges is that a smaller proportion of North Carolina’s jobs are being created in occupations that require a post- secondary degree than in the overall US job market. Nationally, 28.6 percent of all jobs require workers to have at least a two- year college degree, but in North Carolina, only 23.6 percent of all jobs require this level of education. Conversely, North Carolina has a greater proportion of jobs that require significant OJT. Whereas 35 percent of all jobs nationally require at least a GED and some experience, for North Carolina that figure is 41 percent. These ‘ middle jobs’ are often found in production or skilled trades occupations, many of which are serving the manufacturing sector. These jobs have traditionally represented the backbone of North Carolina’s employment. As noted earlier, the data show that manufacturing- related occupations will continue growing more slowly ( if at all) than the rest of the economy and will decrease as a percentage of total employment. This trend will continue to affect the state’s occupational profile significantly as more jobs require post-secondary education and many of those who do not have technical skills slip into the only jobs they will be able to do — lower wage, lower skill jobs. As shown earlier in Figure 11, nationally there will be a shift towards occupations requiring more skills and training. There will be fewer ‘ middle jobs’ and a slight increase in the number of low- skill jobs. North Carolina’s middle jobs associated with manufacturing are disappearing quickly. In their place, the projections show an increase both in the number of jobs requiring Figure 11 US and NC Net New Jobs by Required Education ( Estimated Change 2007- 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of Total New Employment ( 2007- 17) USA NC ‘ Disappearing’ Traditional Middle Jobs ‘ New Middle’ Jobs NC Net New Jobs Total = 700K Source: Regional Dynamics forecasts Note: Gray areas indicate 2007 proportion of NC employment within the traditional middle educational bands. 23 post- secondary degrees and those lower paying jobs that require just short term OJT. The projected new employment will place a growing premium on higher education. In 2007, roughly 17 percent of North Carolina’s jobs are expected to require workers to possess at least a bachelor’s degree; nationally, that figure is 20 percent. In the coming decade, 26 percent of all new US jobs will need workers with at least a bachelor’s degree while 25 percent of North Carolina’s new jobs will require a bachelor’s degree. Similar trends hold true for jobs requiring a two- year degree or postsecondary vocational training. Nationally, an estimated 8.4 percent of the workforce will be in occupations requiring an associate’s degree or technical training in 2007, but in North Carolina that share is slightly lower at 7.7 percent. However, during the next ten years, 13.1 percent of the new jobs created in North Carolina will require an associate’s degree compared to 11.1 percent nationally. For North Carolina, this requires an increase of almost 90,000 net new jobs in this one education band. Given these projections, the state’s community colleges will play a vital role in preparing workers for future jobs. While North Carolina’s ongoing economic transformation will require more knowledge intensive jobs, these economic shifts also are expected to increase the state’s share of jobs that require low skills and offer low wages. Nationally, occupations requiring short- term OJT will account for 36 percent of US employment in 2007, but only 34 percent of new jobs between 2007 and 2017. Similarly, these low- skill occupations represent 34 percent of North Carolina’s 2007 jobs, but will constitute more than 40 percent of the state’s projected new employment created between 2007 and 2017. While nationally, the share of low skill jobs will decline slightly, North Carolina’s current industry mix suggests that it will actually demand MORE low skill workers as a share of total employment, working to drive down average earnings relative to the US average. The jobs losses among traditional middle jobs and the continued growth in high- end and low-skill occupations are creating an increasingly polarized workforce. This shift is occurring nationally, but the patterns are more pronounced in North Carolina. As companies continue to shed many traditional semi- skilled and low- skilled “ middle jobs,” there will be fewer opportunities for low- skilled workers to gain upward mobility. This polarization becomes readily apparent when examining the average estimated earnings for each education band. Figure 12 shows that the returns to individuals on their education can be significant. North Carolina’s average earnings in occupations that require a four- year degree is $ 77,005. For those workers in occupations requiring an advanced degree, the average earnings are $ 83,785. Figure 12 NC Net New Jobs and Earnings by Required Education ( Est. 2007 and 2017) Educational Band Emp 2007 Net New Jobs ( 07- 17) Average Earnings 2007 % Total Emp ( 2007) % New Jobs ( 07- 17) Advanced Degree 160,572 36,560 $ 83,785 3.2% 5.3% 4- year College Degree 687,536 134,808 $ 77,005 13.7% 19.7% Tech- Some Post 386,614 89,452 $ 46,774 7.7% 13.1% GED Some Experience 801,703 58,980 $ 42,952 15.9% 8.6% GED/ Entry 1,263,563 88,085 $ 34,123 25.1% 12.9% Below GED 1,732,747 276,598 $ 24,405 34.4% 40.4% Total 5,032,734 684,484 $ 40,598 100.0% 100.0% Source: Regional Dynamics North Carolina 24 Occupations requiring a two- year degree or long- term OJT pay above average wages, indicating a payoff from investment in education and training. These above average earnings also demonstrate the importance of moving people from the traditional middle jobs into the new middle jobs. Occupations requiring two- year degrees have average earnings of $ 46,774, and those requiring long- term OJT pay $ 42,952 per year. However, the majority ( roughly 60 percent) of North Carolina’s jobs continue to be in occupations that require moderate or short- term training and pay below average wages. For the large share of North Carolinians with little more than short- term OJT, the average earnings— at $ 24,405 per year— are only 60 percent of the state average. Regional Differences by Education Band Within the state, several key regional differences emerge. Most of the new jobs created over the next decade will be in the state’s more urban regions. Metropolitan counties account for 74 percent of the projected employment in 2007. More importantly, these counties are expected to be the location of 81 percent of all the projected new jobs created between 2007 and 2017. Meanwhile, micropolitan counties represent about 19 percent of total employment and only 14 percent of new jobs being created during the next decade. The remaining rural counties represent about 7 percent of total statewide employment, but only 5 percent projected new employment growth in the state. While the educational requirements for occupations in the state’s metropolitan areas run close to the state averages, the counties in the rural and micropolitan areas differ significantly. Figure 13 illustrates the current workforce composition in the state’s metro, micro and rural areas by education band. The micropolitan and rural areas have traditionally relied on employment in the manufacturing sectors so the traditional middle jobs ( i. e., occupations that require GED/ Some Figure 13 Metro, Micro and Rural Jobs by Required Education ( Est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of TOTAL Employment ( 2007) Metro Micro Rural 2007 Source: Regional Dynamics forecasts 25 Experience and GED/ Entry) are more predominant than in the metro areas. Higher end occupations are somewhat more concentrated in the metropolitan areas. Figure 14 illustrates the educational requirements of occupations that will create the most new jobs during the next decade. The percentage of traditional middle jobs in all three areas ( metro, micro, and rural) will decline significantly as a share of total employment. This decline is most notable in the state’s micropolitan and rural areas. The number of low- wage, low- skill jobs will grow rapidly at the same time that more jobs will require two- and four- year college degrees. During the next decade, almost 50 percent of the new jobs created in micropolitan and rural areas will require only short- term OJT and those projected new jobs come with pay well below the state average. Average earnings for these low-skill jobs are only about half ( 51 percent) of the overall average earnings for workers in micropolitan areas and below half ( 45 percent) of average earnings for workers statewide. Clearly, the growth of these jobs will have significant consequences for the economic well- being of the citizens in the state’s more rural areas. Examining the state’s geographic regions reveals additional differences in the demand for educated and trained workers. Figure 15 and 16 illustrate the current workforce composition in the Mountain, Piedmont and Coastal regions by education band as well as the educational requirements for the projected new jobs created between 2007 and 2017. The Piedmont region more closely resembles the state and national averages than does the Coastal and Mountain regions. As might be expected, the Research Triangle has a higher proportion of jobs requiring a four- year degree. While roughly 16 percent of all jobs in North Carolina in 2007 will require at least a bachelor’s degree, more than 20 percent of the jobs in the Research Triangle require similar qualifications. Figure 14 Metro, Micro and Rural Net New Jobs by Required Education ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Bands Percent of NET NEW Employment ( 2007- 17) Metro Micro Rural Net New Jobs, 2007- 2017 Source: Regional Dynamics forecasts 26 However, the state’s golden crescent has a weak middle: the education requirement for employment and new employment growth in the Piedmont Triad more closely resembles the state’s micropolitan and rural areas. More so than the Charlotte or Research Triangle regions, the Piedmont Triad has been more dependent on mature manufacturing industries like textiles, tobacco, and furniture. As these industries have declined, so too has the proportion of middle jobs available to lower- skilled workers. Workers Figure 15 Mountain, Piedmont and Coastal Region Employment by Required Education ( Est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of TOTAL Employment ( 2007) Mountains Piedmont Coast 2007 Source: Regional Dynamics forecasts Figure 16 Mountain, Piedmont and Coastal Region Net New Jobs by Required Education, ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of NET NEW Employment ( 2007- 17) Mountains Piedmont Coast Net New Jobs, 2007- 2017 Source: Regional Dynamics forecasts 27 dislocated from jobs in these industries and occupations that have not been prepared to move toward higher skill employment are left with only lower skill, lower paying jobs as the only employment alternative. Moreover, these jobs are available because so many of the new jobs in the Piedmont Triad are being created in low- skill, low- wage occupations. To illustrate, almost 46 percent of the new jobs created in the Piedmont Triad region will require no more than short- term on- the- job training. This certainly represents a recipe for a vicious cycle in which low skill job creation begets the creation of even more low skill jobs. Although slightly more skewed toward lower wages and lower skilled jobs, the Coastal region also closely resembles the state and national trends. Some parts of the Coastal region are struggling more than others. For example, very much like Piedmont Triad and the state’s micropolitan regions, 45 percent of the new jobs created in the Coastal area will require just short- term OJT. Offsetting this trend, the southern part of the Coastal region benefits from a significant military presence that buoys the economy and raises the area’s average earnings. The Mountain’s job creation trends closely resemble the trends found in the state’s rural areas. The region’s economy was once dominated by manufacturing jobs in textiles and furniture, but jobs in many manufacturing- related occupations are disappearing rapidly. As a result, the relatively high proportion of middle jobs is diminishing and many of those workers now must accept the growing number of low- skill, low wage jobs being created. More than 44 percent of projected new Mountain- area jobs created during the next decade will require only short- term OJT. Summary of Key Demand Analysis Jobs are currently concentrating in the state’s urban areas, especially in the Piedmont metro areas of Charlotte, the Triad, and the Triangle. While 70 percent of people live in metro North Carolina, 74 percent of the state’s jobs are found there. Furthermore, the trend is expected to continue with 81 percent of new jobs located in the state’s metro areas. Not only are most jobs located in the metro areas, but also most good jobs are located there as well. Average earnings are nearly $ 10,000 ( or 30 percent) higher in metro areas than micro areas and nearly $ 15,000 ( or more than 50 percent) higher in metro areas than in rural areas. This is due in part to higher wages offered but also to the mix of emerging new job opportunities available at higher skills. It should come as no surprise that the state’s metropolitan counties drive economic and job growth. The Piedmont region, which is made up of the state’s three largest metro areas, represents the core of that job growth. It represents 64 percent of the state’s population and 68 percent of its workforce. Average earnings in the area are slightly higher than the overall average for the state’s metropolitan areas. The wage differential between the Coastal and Mountain regions is significant, but that difference would probably be even greater without 140,000 people working in the Coastal region’s military installations. The state’s employment is expected to grow by 14 percent during the next decade. More than half of that employment growth is anticipated among the 25 fastest growing industries. Fifteen of those industries are in healthcare, education, and professional and business services. Only a few of these industries pay significantly higher than average, and the average earnings of the fastest growing industries is about 6 percent below the current average earnings. Given current employment projections, 28 average earnings are likely to decline in real terms during the next ten years unless the state is able to create a significant shift in the mix of jobs available. The reason that average earnings are likely to decline is that the state is creating low- wage, low- skill jobs at a faster pace than it is creating higher paying, high skill jobs. Four of ten new jobs being created during the next decade will not require a high school degree, increasing from the current job mix ( in which 36 percent require only short- term on- the- job training). This increased number of low skill jobs is significantly higher than the US trends in low skill job creation. The problem is further exacerbated because the proportion of jobs requiring a minimum two- year degree is increasing at a faster rate in North Carolina than in the US as a whole. The bifurcation of the job market means that employers seeking increasingly skilled workers will have fewer job opportunities for workers that are high school drop- outs and that once could find employment in the state’s factories and farms. These trends are intensified in the state’s lagging areas ( e. g., micropolitan and rural areas as well as in the Mountain and Coast regions) where relatively fewer employment opportunities will be available. Thus, the projected new employment trends will create a demand for workers with post- secondary education and training, and the wage gap between those who have an education and those who do not could potentially deepen the social, political, and economic challenges facing the state. Workforce Supply The previous section provided an overview of the demand for workers, based on the state’s current mix of industries and occupations as well as the projected future mix of industries and occupations. This analysis includes a summary of the key occupations to be filled. The following section examines the supply of potential workers. Then, the report looks at the population and demographic shifts anticipated in the coming decade. The study also examines the current and potential workforce to better understand the state’s existing skill sets and challenges. Demographic Analysis Population Growth The amount, rate, and patterns of population growth in North Carolina can significantly affect the state’s economy as well as its needs for infrastructure, services, and supportive social institutions. From 1990 to 2000, the population increased by 21 percent ( or 2 percent annually), making it the United States’ 9th fastest growing state. The 1990s saw an increase of 1.4 million North Carolinians. While the growth rate slowed during the early 2000s to 1.5 percent annually, the state maintained its 9th place ranking and continued adding people at a rate nearly 50 percent faster than the nation. Between 2000 and 2007, the state population increased by roughly 800,000 and is projected to increase by another 1.4 percent annually or 900,000 in the decade to come. Looking ahead, the state’s population growth is expected to be far from uniform. Between 2007 and 2017, the Piedmont region will drive much of the growth, increasing by 13.5 percent as illustrated in Figure 17. Population increases in the Research Triangle and Charlotte areas are growing fastest of all seven partnership regions. The Coastal and Mountain regions are expected to lag considerable behind the state and Piedmont region, adding 4.7 percent and 3.9 percent, respectively, more people. 29 Populations grow or shrink as a result of natural increase ( births minus deaths) combined with shifts in net migration ( people moving into the state minus people moving out of it). From 1995 to 2000, North Carolina had the fourth highest rate of net domestic in- migration behind Nevada, Arizona, and Georgia. The total net migration to North Carolina was 337,900 between 1995 and 2000, and an estimated 389,000 more people moved to the state between 2000 and 2005. Migration came from both the Northeast and the South with states in those regions contributing most of the 919,000 new residents to North Carolina. There were nearly equal numbers from New York and Florida, and smaller numbers from California, South Carolina, and Virginia. These new residents tended to settle in the state’s cities as illustrated in Figure 18. Between 2000 and 2005, the Piedmont region added a net of 311,000 residents as a result of in- migration. As Figure 19 illustrates, a recent Census Bureau study indicated that the two metropolitan areas, Charlotte and Raleigh- Durham, ( and especially Wake and Mecklenberg Counties) were more likely to attract new young, single, and educated residents – a critical group of skilled workers. 11 11 US Census Bureau, “ Migration for the Young, Single, and College Educated for the United States, Regions, States, and Metropolitan Areas: 2000,” ( PHC- T- 34), April 2004. The young are those who were aged 25 to 39 in 2000; the single are those who were never married, or were widowed or divorced in 2000; and college educated are those people who had at least a bachelor's degree in 2000. Figure 17 Population Growth Projections, 2007 to 2017 3.9% 13.5% 4.7% 12.3% 6.5% 4.7% 3.9% 14.5% 2.3% 4.4% 7.3% 17.5% 7.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Mountains Piedmont Coastal Metro Micro Rural Advantage West Charlotte Eastern Region Northeast Piedmont Triad Research Triangle Southeast Source: AGS Demographics Projected Growth North Carolina Growth Rate= 10.2% 30 The moderate growth that occurred in the Mountain region is almost solely due to in- migration, but of a different kind. From 2000 to 2005, 93 percent of the region’s population growth was due to existing North Carolina residents moving into the area. The in- migration was to the Asheville metropolitan area’s two largest counties— Buncombe and Henderson. Although the Asheville MSA was also the only metro area outside the Piedmont region to add young, single and educated people through in- migration between 1995 and 2000, most of Asheville’s increase was due to the influx of retirees. Without the positive net migration to the Asheville MSA, the Mountain region actually runs the risk of population decline. Figure 18 Source: US Census Bureau Center for Regional Economic Competitiveness Net Migration in North Carolina Counties ( 1995- 2000) Counties with positive net new migration Counties with negative net new migration * Circles shown only for counties with positive or negative net new migration greater than 1,000 + 5K + 15K + 30K - 5K - 15K - 30K Net New Migration Miles 0 70 31 The Coastal region added 39 percent to its population as a result of net in- migration. The biggest contributor to that increase has historically been military families. The region is much more heavily Figure 19 Net Migration of Young, Single, College Educated People to North Carolina Metropolitan Areas, 1995- 2000 - 1,157 - 946 - 462 - 393 - 143 45 71 558 2,194 10,091 - 3,000 - 1,500 0 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 Greenville Greensboro- Winston- Salem- High Point Fayetteville Wilmington Rocky Mount Hickory- Morganton- Lenoir Goldsboro Asheville Raleigh- Durham- Chapel Hill Charlotte- Gastonia- Rock Hill Net Number of Young, Single, College Educated In- migrants ( 1995- 2000) Source: US Census Bureau Figure 20 Distribution of Population by Race, 2007 Estimate 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% White Black American Indian Asian Other % Non- White Population Source: U. S. Census Bureau, AGS Demographics % of Population U. S. North Carolina Mountains Piedmont Coastal 32 dependent on existing residents and natural population increases than other parts of the state. While in-migration occurred at modest rates in the region, five counties within North Carolina’s Eastern Region economic development partnership region ( representing the central counties of the Coastal region) actually experienced a net out- migration of more than 1,000 people between 1995 and 2000. Population Diversity North Carolina’s racial and ethnic changes are having a significant impact on the labor market today and will likely continue to do so as the future make- up of the workforce changes. Figure 20 shows that the state’s population is diverse in terms of more people from a variety of ethnic backgrounds. Rapid growth in some ethnic and minority groups is changing the composition of the workforce. Assimilating this new demographic mix of workers will likely require parallel changes in the workplace, educational institutions, and communities as a whole. In particular, rapid growth among minority populations has been and will continue to be marked by an increasing diversity in language and culture. North Carolina is somewhat more diverse than the nation, but not uniformly and not in the same ways. In the state as a whole, the ethnic composition of North Carolina’s residents is 72 percent White, 21.6 percent Black, 1.4 percent Asian, and 1.2 percent American Indian. In addition, about 6.9 percent of the state’s people are Hispanic. While the ethnic composition of the Piedmont resembles the state as a whole, the Mountains and Coastal regions vary significantly. The Mountain population is the least diverse with Whites constituting nearly 92 percent of area residents. The Coastal region is much more ethnically diverse, with Blacks making up more than 30 percent of the population and other non- white groups composing an additional 9 percent of the population. The diversity is greatest in the Northeast partnership region, where the Black population accounts for more than 40 percent of the population. Emerging Importance of Hispanics As North Carolina enters the 21st century, it was already more ethnically diverse than the nation as a whole in large part because it has a significantly larger Black population than does the rest of the nation. North Carolina’s growing Hispanic population is making the state even more diverse. Figure 21 illustrates that the proportion of Hispanics in North Carolina is lower than the nation as a whole. Demographics projections from the US Census suggest that the Hispanic population as a proportion of all North Carolinians will to continue to climb at a rate that far exceeds the national average. In 2005, North Carolina was ranked 11th for total number of Hispanic residents; the 2007 population estimate put that number at more than 600,000. Recent research suggests that the state’s 2005 Hispanic population may be as much as 300,000 to 400,000 more people than official Census estimates as a result of unauthorized or undocumented migrants. 12 If these estimates are correct, the actual estimated Hispanic population could be as high as 900,000 or 1 million ( between 9 and 11 percent of the state’s total population). 12Pew Hispanic Center, “ Estimates of the Unauthorized Migrants for States,” April 2006. Data are based on the March 2005 Current Population Survey and are found at http:// pewhispanic. org/ files/ factsheets/ 17. pdf. 33 Before 1990, Hispanics were dispersed across the state, filling many agricultural jobs in rural areas. During the 1990s, the Hispanic population increased, but the greatest concentration of new in- migrants was in the Piedmont and Coastal regions. During that period, the Hispanic population typically migrated to the state’s urban crescent. The Hispanic population density maps in Figure 22 illustrate the early concentration in certain parts of the state, and the more recent density analysis of 2000 data confirms the Hispanic population has increased and expanded across the state. In the 1990s, the Mountain region had a net increase of Hispanic residents, but the growth was much slower than the significant growth levels in the Piedmont and Coastal regions. The 600,000 Hispanic residents in the state are younger, poorer, and more likely to be male than the rest of the state. For instance, 25 percent of the state’s population is between the ages of 18 and 34, while 46 percent of the state’s Hispanics are in this age range. Sixty percent of Hispanics in the state are men while overall women slightly outnumber men. The estimated median household income of Hispanic families was about $ 31,773 in 2005, about 78 percent of the state average of $ 40,729.13 13 Source: US Census Bureau, American Community Survey, 2005. Figure 21 Hispanics as a % of Total Population, by Region, 2007 15.5% 6.9% 4.0% 8.5% 4.4% 7.6% 5.0% 6.2% 4.0% 8.1% 5.0% 1.7% 8.1% 9.2% 4.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% U. S. North Carolina Mountains Piedmont Coastal Metro Micro Rural Adva
Object Description
Description
Title | State of the North Carolina Workforce : an assessment of the state's labor force demand and supply, 2007-2017 |
Other Title | Assessment of the state's labor force demand and supply, 2007-2017 |
Contributor | North Carolina. Commission on Workforce Development. |
Date | 2007-01 |
Subjects |
Labor market--North Carolina Labor supply--North Carolina |
Place | North Carolina, United States |
Description | Cover title.; "January 2007." Final report |
Publisher | North Carolina Commission on Workforce Development |
Agency-Current | North Carolina Department of Commerce |
Rights | State Document see http://digital.ncdcr.gov/u?/p249901coll22,63754 |
Collection |
North Carolina State Documents Collection. State Library of North Carolina |
Type | Text |
Language | English |
Format | Reports |
Digital Characteristics-A | 3346 KB; 88 p. |
Digital Collection | North Carolina Digital State Documents Collection |
Digital Format | application/pdf |
Related Items | http://worldcat.org/oclc/663901253/viewonline |
Audience | All |
Pres File Name-M | pubs_statencworkforce200701.pdf |
Full Text | State of the North Carolina Workforce An Assessment of the State’s Labor Force Demand and Supply 2007 – 2017 The North Carolina Commission on Workforce Development January 2007 The North Carolina Commission on Workforce Development procured the services of the following organizations to conduct this research Table of Contents Members of the Commission .................................................................................................. i Executive Summary................................................................................................................ ii Following are the eight key trends identified in the report:...................................................... iii Many Traditional NC Manufacturing Industries Are Shedding Jobs ....................................... iii North Carolina’s Traditional “ Middle Jobs” Are Disappearing ................................................. iv New Job Creation Is Concentrating in Fast- growing Urban Areas ......................................... v Many Areas Are Not Prospering ............................................................................................. v Future Prosperity Depends on Achieving Higher Educational Attainment Levels .................. v Baby- boom Retirements Will Deplete Labor Force Talent...................................................... vi High Skill In- migrants Can Help Close the Skills Gap............................................................. vi Low Skill In- migrants Present Opportunities and Challenges................................................. vii Call to Action................................................................................................................. ......... vii Introduction ............................................................................................................................. 1 Defining Sub- state Units of Analysis....................................................................................... 2 Identifying a Rural- Urban Hierarchy.............................................................................. ......... 3 Defining North Carolina’s Three Primary Geographic Regions .................................... ......... 6 The Piedmont Region ............................................................................................................. 7 The Coastal Region ................................................................................................................ 8 The Mountain Region ............................................................................................................. 9 State Workforce Demand and Supply .................................................................................... 9 Workforce Demand................................................................................................................. 9 About the Data........................................................................................................................ 9 Industry Job Trends and Projections ...................................................................................... 12 Occupational Employment Trends and Projections ................................................................ 17 Summary of Key Demand Analysis ........................................................................................ 27 Workforce Supply.......................................................................................................... ......... 28 Demographic Analysis ............................................................................................................ 28 Summary of Key Supply Analysis ........................................................................................... 42 Employer Demand & Workforce Supply Gap Analysis ........................................................... 44 Conclusions ............................................................................................................................ 48 Appendix 1: Summary of Existing Economic and Workforce Developments Studies and Plans II Regional Vision Plans................................................................................................... ......... II Vision Plan Strategies for Workforce, Education and Training ............................................... III Selected Workforce Development Strategies Already in Place .................................... ......... VII Appendix 2: 200 Fastest Growing Industries in North Carolina ............................................. X Appendix 3: NC Selected Occupational Employment Projections ......................................... XVII i North Carolina Commission on Workforce Development Members Sylvia Anderson Guilford County Schools Greensboro, NC Dr. June Atkinson NC Department of Public Instruction Raleigh, NC Commissioner Cherie Berry NC Department of Labor Raleigh, NC Lonnie H. Blizzard Education Consultant Kinston, NC Ronnie Bugnar Person County Schools Roxboro, NC Marianna Clampett Clampett Enterprise Raleigh, NC H. Lee Clyburn Grubbs & Ellis/ Thomas Linderman Raleigh, NC Paul Combs Paul Combs Enterprises Boone, NC Ray Deane William Barnet & Son, LLC Kinston, NC Charley Donohoe LifeSteps LLC Winston- Salem, NC Bill Downey L. A. Downey & Son Durham, NC Sandy Drum Nash- Rocky Mount Public Schools Nashville, NC Secretary Jim Fain NC Department of Commerce Raleigh, NC Bill Farmer Time Warner Cable Charlotte, NC Ken Gregory Durham Exchange Club Industries, Inc. Durham, NC Phrantceena Halres Aelmings Human Resources Corp. Raleigh, NC Scott T. Hamilton Henderson County Partnership for Economic Development Hendersonville, NC Jim Henderson Castle Worldwide Inc. Morrisville, NC Meredythe Holmes Monarch Services Durham, NC Earl Jaggers AFL- CIO ( BCT- 317- T) Burlington, NC Edward W. Kelly III Greensboro, NC President Martin Lancaster NC Community College System Raleigh, NC Susan Lassiter Roanoke- Chowan Hospital Ahoskie, NC Helga Mattei Consultant Raleigh, NC Martha Matthews Biogen Idec RTP, NC David McCune McCune Technology Fayetteville, NC MaryBe McMillan NC State AFL- CIO Raleigh, NC Sec. Carmen Hooker- Odom NC Dept. Health & Human Services Raleigh, NC Michael Okun NC AFL- CIO Raleigh, NC Chairman Harry Payne Employment Security Commission Raleigh, NC Juanita Pilgrim County of Cumberland Fayetteville, NC Bill Ragland Ragland Electrical Supply Brevard, NC Alex Rankin Concord Engineering & Surveying Concord, NC Chris Rolfe Duke Energy Corporation Charlotte, NC Chip Roth International Brotherhood of Teamsters Greensboro, NC Mark Sorrells Golden Leaf Foundation Rocky Mount, NC Terry A. Wethington B. R. Retried, Union New Bern, NC ii State of the North Carolina Workforce An Assessment of the State’s Labor Force Demand and Supply 2007 - 2017 Executive Summary The North Carolina economy is transforming in many ways and on many levels. One key transformation involves the State’s shift from an economy based on traditional manufacturing to a new economy driven increasingly by knowledge- intensive, business services activities. In response to this transformation, many firms are changing their products or production processes and offering expanded services as they adapt new technologies and build closer ties with suppliers and customers. Just as important is continued service sector growth, which is creating a large demand for both jobs requiring high skills and offering high wages and jobs requiring minimal skills, leaving a significant gap in the demand for jobs in the “ middle.” When viewed in the aggregate, economic and occupational shifts are having dramatic impacts on the state’s workforce. This “ State of the North Carolina Workforce” report seeks to shed light on statewide trends and to unmask significant regional patterns in job creation and its impact on the demand for workers. In particular, the study examines economic and workforce development patterns in the state’s urban areas, small towns, and rural communities as well as North Carolina’s geographic regions– the Mountains, Piedmont, and Coast. Based on an in- depth quantitative analysis of the current and projected labor market supply and demand, the goal of the study is to describe North Carolina’s progress to date and the challenges and opportunities for completing a successful economic transformation. Important caveats should be noted related to this analysis. First, this analysis uses data calibrated to the US Bureau of Economic Analysis ( BEA) definition for employment. The BEA combines employment data from the North Carolina Employment Security Commission’s unemployment insurance administrative records ( the most commonly used data source in counting jobs) with data on proprietors, farm workers, and government workers. Second, the forecasts are based on both past trends and assumptions about anticipated future developments, assuming no changes in policy or economic conditions. Thus, these forecasts should be used in the spirit in which they are provided, as a tool for assessing likely future growth patterns in the event that no policy action takes place to change that future and there are no major unforeseen economic upheavals. Third, other analyses may differ slightly in their outlook for certain industries or occupations. These differences come from using different projection tools and models. However, the core predictions hold true across methodologies and represent an accurate picture of the future, assuming current trends do not change. iii Following are the eight key trends identified in the report: • Many of North Carolina’s traditional manufacturing industries continue to shed jobs as part of an on- going economic transition. • North Carolina’s traditional “ middle jobs”— those that paid a family- sustaining wage and required minimal formal education or training— are disappearing as part of this transition. • New job creation is concentrating in certain fast- growing metropolitan areas. • Many areas of North Carolina are not prospering from the economic transformation. • The future prosperity of all North Carolinians depends on achieving higher educational attainment levels for all citizens. • Impending baby- boom retirements will exacerbate an emerging skills gap among experienced, skilled workers. • High- skill in- migrants will help fill part, but not all, of this skills gap. • Low- skill in- migrants present both opportunities and challenges in meeting the state’s workforce needs. This report reviews each of these trends, identifies key issues and challenges for North Carolina, and examines both industry’s demand for labor and the supply of workers available to meet those needs. It should be noted that while these trends are presented separately, many are integrally linked and are only presented discretely for ease of assimilation. Policy actions should take into account the whole of the picture and the relationship among the trends. Following is a brief discussion regarding the eight key trends from the study. Many Traditional NC Manufacturing Industries Are Shedding Jobs Mature manufacturing industries still account for a sizable portion of the North Carolina economy, and many are expected to continue shedding jobs during the next decade. For instance, certain industry sectors— such as elements of textiles, apparel, furniture, and computer/ electronics— are shedding a large number of jobs, offsetting employment gains in other industries. Losses in these industry sectors are occurring throughout the state, but their greatest impacts are being felt in smaller communities that once relied almost entirely on recently down- sized or closed manufacturing facilities. Executive Summary Figure 1: NC Employment in Selected Manufacturing Industries North Carolina Employment 2002 2005 Δ Employ, 2002- 05 % Change Textile and textile product mills 99,091 68,580 - 30,511 - 30.8% Apparel 35,697 26,426 - 9,271 - 26.0% Furniture & related products 67,695 59,280 - 8,415 - 12.4% Computer & electronic products 46,741 39,215 - 7,526 - 16.1% NC MFG Industries 662,354 590,346 - 72,008 - 10.9% Source: US Bureau of Economic Analysis iv Executive Summary Figure 2: US and NC Net New Jobs by Required Education ( Estimated Change 2007- 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Percent of Total New Employment ( 2007- 17) USA NC ‘ Disappearing’ Traditional Middle Jobs ‘ New Middle’ Jobs North Carolina’s Traditional “ Middle Jobs” Are Disappearing The tragedy of the state’s manufacturing jobs loss is that many semi- skilled workers are finding they do not have the skills to compete for jobs in high demand occupations. The difficulties facing these workers are exacerbated by two facts: ( 1) those high demand jobs are disproportionately being created in a few urban areas while the losses are occurring in other parts of the state, and ( 2) the level of skills needed to be competitive for good paying jobs is rising dramatically with time. The lost manufacturing jobs represented many of the ‘ traditional middle jobs’ that offered family- supporting wages but did not require extensive education and training. Many of the state’s dislocated workers did not have a high school education because manufacturers did not require a diploma. Dislocated or unprepared workers who do not have the resources or inclination to obtain the skills required from significant investments in education often must settle for low- skill jobs. Yet, available jobs offering middle- income pay now demand more formal education, often beyond a high school degree. To compete for these ‘ new middle jobs,’ workers must invest years in more education or re- training. At the same time, the economy is creating many new high- skill, high- wage jobs but they are now concentrated in a few major urban hubs. Creating opportunities for workers in less populated areas of the state will take new and innovative approaches to economic development. It is clear, however, that education levels must increase for these new approaches to gain any traction. There simply are not enough skilled workers to fill the high- skill, high- wage jobs in the occupations where they are now growing. Those being squeezed from their traditional middle jobs are not ready to compete for available opportunities. Furthermore, few opportunities are available within easy commuting distance of many displaced workers. Thus, it becomes even harder for the unprepared to gain access to higher income jobs leaving them to compete primarily for low- skill, low- paying wages. The result is an increasingly polarized workforce – those who have skills and access to good- paying jobs and those without skills and only access to primarily lower- paying jobs. Note: Gray areas indicate 2007 proportion of NC employment within the ‘ traditional middle’ educational bands. v New Job Creation Is Concentrating in Fast- growing Urban Areas As North Carolina’s traditional economic base declines, the data reveal that the state’s overall economy is becoming more diverse and more similar to the rest of the country. The state’s services sector is expected to grow more rapidly in the coming decade, as a combination of high- skill, high value- added services and low- skill, low value- added services replace the jobs lost in mature goods- producing sectors. Whereas the state’s traditional manufacturers are often located in small towns, we see that the bulk of these emerging new activities, particularly those that require higher skills and thus have higher pay are concentrating in the state’s larger metropolitan areas. Many of the metropolitan counties of the Piedmont region, for instance, enjoy the most dynamic economies. The companies in the Piedmont account for 64 percent of current jobs and 68 percent of new jobs projected to be created in the next decade. Statewide, metropolitan counties have 74 percent of current jobs while 81 percent of projected new jobs are expected to be created in these metropolitan areas. Many Areas Are Not Prospering In contrast to the success in the Piedmont, especially around Charlotte and the Research Triangle, relatively slower growth has occurred throughout much of the rest of the state, especially in the Mountains and Coastal regions. While many of the largest metropolitan areas are growing rapidly, smaller urban ( or “ micropolitan”) areas and rural counties are creating fewer jobs, many of which include lower wage consumer services or temporary jobs. In addition, the Piedmont Triad has also not yet gained traction in finding a new economic base to replace its declining manufacturing industries. Overall, about 40 percent of the state’s new jobs will require little more than short- term training ( see “ Below GED” in Executive Summary Figure 2), but in the micropolitan and rural areas, that figure is closer to 50 percent. Unfortunately, these low- skill jobs pay approximately 60 percent of the state’s current average earnings. The metro areas are enduring labor supply shortages even though they offer higher average wages. Increasingly, they are tapping the workforce in nearby micropolitan and rural labor markets for the best and brightest talent, requiring either relocation or extended commuting patterns. Quite simply, the state’s micropolitan and rural economies are not creating enough high- and middle-income jobs to meet all of their local employment needs. For some workers, the option is to settle for underemployment or no employment. Future Prosperity Depends on Achieving Higher Educational Attainment Levels Even in the most successful regions, North Carolina’s earnings trail the rest of the country. Not only is this true statewide, but also in the state’s high earning metro counties and Piedmont region where average earnings trail the US by 4 percent. Based on the mix of industries and occupations projected to grow the fastest in North Carolina, this relative earnings pattern will not change during the coming decade. To close that gap, the future prosperity of North Carolinians relies heavily upon further enhancing workers’ education and skills. Simply put, the more education that an occupation demands, the higher the average earnings. Workers with no post- secondary education or certification are finding it increasingly difficult to compete for jobs in vi high wage occupations. The highest wage occupations require an advanced degree and pay 106 percent greater than the state average. Those requiring a bachelor’s degree pay 90 percent greater than the state average. Those occupations requiring some college or an associate’s degree offer earnings 15 percent higher than the state average. Even jobs that required some college or at least one year of training and experience paid about 5 percent above average. The good news is that, overall, the state’s educational attainment levels are rising. In 1990, 70 percent of North Carolina adults aged 25 and older held a high school degree, increasing to 84 percent by 2005. Likewise, in 1990, only 17 percent of adult North Carolinians held a bachelor’s degree or higher, but this rate increased to 27 percent by 2005. Even with this significant progress during the past 15 years, the state continues to trail the nation in educational attainment and still has far to go to ensure that workers without a formal post- secondary education, especially those without access to or the resources to take advantage of education opportunities, do not fall farther behind. Baby- boom Retirements Will Deplete Labor Force Talent Global demographic shifts will create additional challenges in meeting North Carolina’s future workforce needs. Perhaps most pressing is the impending retirement of the first wave of the baby- boom generation ( those born between 1946 and 1955). If this segment of the workforce is lost en masse, it could create tremendous upheaval in the workplace. While the boomers are retiring, the state is projected to add about 30,000 new adults each year as potential workers, enough to replace the retirees but not enough to fill the new jobs being created. With 70,000 new jobs being created each year during the next 10 years, 40,000 net new jobs could go begging for workers annually. The retirement of one- quarter of the workforce, especially many of the state’s most experienced workers, in just 13 years has the potential to leave a gaping hole in the supply of workers during the next two decades. High Skill In- migrants Can Help Close the Skills Gap Fortunately, new in- migrating workers are helping to mitigate the state’s current labor shortages. New North Carolinians represent several key cohorts – including highly- prized college- educated, young adults ( especially those aged 20- 29). In addition, Hispanics, Asians, and foreign- born residents are also common in- migrants to North Carolina. While the state’s overall age structure is relatively similar to the US, in- migrants are, on average, about seven years younger. In- migrants provide potential solutions to the demand for workers for both high- skill and low- skill occupations. Attracting young talent is not the only solution for closing the state’s skill gap. The state is also attracting retirees and, importantly, ‘ pre- retirees’ ( aged 50- 64). These pre- retirees are often looking for their eventual retirement destination, but they are not yet ready to leave the workforce. Nearly one in four retirement and pre- retirement age in- migrants chose to move to Charlotte during the last decade. The Raleigh- Durham area has also served as a major destination for pre- retirees. Certainly, Asheville has also benefited from in- migrations among this group, with 9 percent of all 50- and- older in- migrants to North Carolina choosing the Asheville metropolitan area as their new home. vii Low Skill In- migrants Present Opportunities and Challenges Just as experienced in- migrants help in closing the state’s skills gap, the state is also attracting a large number of unskilled or semi- skilled in- migrants. One of the largest cohorts within this group of in-migrants is Hispanic workers. This cohort of new North Carolinians poses new challenges for the state’s workforce development leaders. Growth in the state’s Hispanic population continues to far outpace the national average. In 2005, North Carolina was ranked 11th for total number of Hispanic residents, and official estimates put that number at over 600,000. However, recent research on unauthorized at the Pew Hispanic Center ( www. pewhispanic. org) of unauthorized migrants suggests that the total may actually be as high as 1 million ( or 11 percent) North Carolinians are of Hispanic origin. The large scale influx of low- skill Hispanic workers provides a significant source of workers for many industries, including construction, agriculture, food processing and a number of other services. Nevertheless, this population also poses several real challenges for the state’s education, workforce and social services providers. Many low- skill workers, especially persons whose first language is not English, could inhibit growth of the state’s standard of living. Efforts to acculturate this new in- migrant community will be critically important to the state’s economic success. Call to Action North Carolina’s changing economy will demand an adaptable workforce. During the past decade, jobs losses in traditional manufacturing sectors have resulted in significant economic hardship across the state. Many of those dislocated workers settled for lower paying, low- skill jobs because they did not qualify for the new jobs that offered better wages, but demanded higher skills or better education. Furthermore, many dislocated workers lacked access to educational resources, could not afford to take advantage of those educational opportunities, or simply were not inclined to disrupt their lives any further by going back to school. These issues continue in those basic sectors as certain manufacturing industries shed more jobs in the future, but North Carolina’s future economy will look very different. New industries are emerging, many of which offer high wages to those with the most skills. Consequently, North Carolina finds itself with a widening gap: on one end is a growing shortage of high skill talent needed to fill emerging well paying jobs and on the other end are many low skill workers settling for jobs that do not offer a family- sustaining wage. The state’s workforce and education system faces the challenge of preparing an increasingly larger proportion of North Carolinians for better- paying, higher skill jobs. This challenge is made more daunting by the large existing pool of workers that lack the most basic skills or credentials ( e. g., a high school degree or post- secondary training and education) necessary for these new higher quality jobs. As a result, North Carolina must seek to provide the state’s existing workforce with better access to longer-term training and education to meet the needs of its fast- growing industries. Importantly the State must also create opportunities throughout all of North Carolina. As leaders review the key trends facing the state, North Carolina must consider the implications for state policy. How do we respond most effectively to the painful transitions caused by worker dislocations in our traditional industries? How do we prepare workers for emerging, fast- growing industries? How do we help the entire state to prosper while encouraging the state’s fast- growing urban economies to continue operating at their fullest capacity? How do we help our citizens to value education more highly viii to ensure that they are fully prepared for the opportunities that fast- growing new industries offer? These are some of the questions raised key challenges facing our state. State and local policy makers and practitioners involved in workforce development, education, and economic development must all participate fully in developing the solutions to address these challenges effectively. The responses from these existing networks and the state’s multi- billion dollar investment in education, workforce development and economic development should be directed to efforts that create an environment in which the economy continues to develop and allows all citizens to contribute as valued members of that economy. These solutions must recognize that North Carolina is no longer a source for low- cost, low- skill labor for global markets. Our success will be based on innovation, new ideas, entrepreneurial behaviors, and continuously advancing education levels. How we achieve these ideals and create a more integrated system of life- long learning are at the heart of whether North Carolina can continue to prosper and truly become “ The State of Minds.” To access the complete State of the Workforce Report electronically, please visit: http:// www. nccommerce. com/ workforce/ swr 1 North Carolina State of the Workforce: An Assessment of the State’s Labor Force Demand and Supply Introduction North Carolina’s economy is undergoing a critical economic transformation. For decades, the state depended on agriculture and manufacturing industries for its middle- income, family- sustaining jobs. Increasingly, North Carolinians are finding those jobs subsumed by an economy that is much more globally oriented, knowledge- driven, and service- based. During the past several years, numerous studies and strategies have characterized these challenges and identified potential policy responses. Appendix 1 summarizes several of the state’s key regional economic development plans, as well as representative workforce studies conducted in various state regions. The transformation occurring in North Carolina has significant implications for the state’s businesses and workers, changing what they do and how they compete in a globally integrated economy. This analysis explores how far North Carolina has traveled in the transformation process and looks to the future to identify the jobs that will provide family- supporting wages. Not only is the goal of this analysis to examine projections of where jobs will be in the future, but the analysis also explores the readiness of North Carolina’s workforce to fill those jobs. What kinds of jobs can the state expect to be available? Will North Carolina have the workers required to fill these jobs? How might the state’s public education and training system prepare for North Carolina’s economy as it continues this historic shift during the next ten years? In looking to the future, we must rely on economic forecasts, which are, at best, educated guesses about what the future holds. Forecasts, such as the one offered in this report, provide users with a sense of the state’s direction as well as information about expected growth patterns should no policy action be taken to change the future. However, it is critical to note that forecasts rely on information about recent trends and assumptions about future behaviors. Furthermore, not all economists agree on what these trends mean or what assumptions should be made. In addition, these trends are subject to unforeseen events as well as the concerted efforts of policy makers to address the state’s challenges. In fact, the most important reason for examining these past and projected patterns is to help policymakers determine how best to invest resources to change undesirable trends. This study of the state’s workforce is designed primarily to provide policy makers with information about the state’s growth path, in order to help leaders understand what may happen if the economy follows its current trajectory. In making strategic investments or critical policy choices, leaders can, of course, help dramatically redirect economic and workforce development trends. In North Carolina, leaders make many of these strategic choices at the regional and local level without a single statewide vision. Assuming access to resources that can influence development, this approach is appropriate in a state, such as North Carolina, with many regional economies bound together by a single political border. Clearly, the economies of the Piedmont metropolitan areas of Charlotte and Raleigh- Durham are very different from the Mountain or Coastal regions. Policies that will influence growth and development in these fast-growing metropolitan economies should differ substantially from those that create opportunity in 2 stagnating rural areas. Even so, this report will define the similarities among those sub- state regional economies, as much as it confirms some of the differences that we expect to find. In the following pages, the report examines both North Carolina’s labor market demand and supply. Labor market demand is determined by assessing which industry sectors are growing and what occupations those industries require. This analysis projects the number of jobs required today and in ten years to meet the state’s economic demands. It also examines the education and training requirements demanded by those industries and occupations. Following this analysis of worker demand, the report explores the labor market supply so as to determine which people are available ( and will likely be available) to fill the jobs being created in the state’s economy. The focus of the discussion is on identifying the skills necessary to meet the market’s need for workers. The study concludes with an analysis of the existing education and training system’s capacity to meet the demand by adapting the supply of workers to meet those needs. It also offers key findings and conclusions that will better allow the State’s Workforce Commission to determine appropriate recommendations for action. In the next section, the report focuses on how and why the state’s economy has been subdivided in the analysis, and provides a glimpse of what kind of data were used in this assessment. Defining Sub- state Units of Analysis North Carolina possesses a significant amount of economic diversity, and therefore the issues facing its workforce differ widely across the state. In places like Charlotte and the Research Triangle, firms require highly- skilled workers to support activities in rapidly growing economic sectors such as financial services, information technology, and biosciences. While the Charlotte and Research Triangle regions are two of the nation’s most economically dynamic regions, other parts of the state struggle to face the challenges of transforming in response to the needs of an increasingly knowledge- driven economy. In western North Carolina, for instance, industries that once employed many of the region’s workers, including textiles, apparel and furniture, no longer provide enough viable employment options. Similarly, in eastern North Carolina, textiles and tobacco no longer drive employment and economic growth. If the regions lack the competitive advantage to support emerging knowledge- driven sectors, they are seeking alternative economic drivers, frequently relying on solutions designed to attract tourists or new residents. However, these new solutions often result in creating consumer service jobs that typically pay workers less than the jobs being shed from declining industries. Clearly, assessing these trends at the state- wide level is necessary but not sufficient for understanding the full range of dynamic change affecting North Carolina. One approach to consider sub-state differences would be to focus at the individual county level. Of course, county level distinctions are an important part of the North Carolina culture; counties often tackle problems independently of the state or one another. However, frequently adjacent counties face many similar political, social, and economic challenges and could equally benefit from opportunities to collaborate regionally. Consequently, the study opts to assess relevant patterns and trends at a multi- county level of analysis. There are several ways to conduct a multi- county analysis – some focus on grouping counties through adjacent geographies while others focus on grouping counties with similar characteristics. One approach, for instance, compares the observed economic dynamism and prosperity in the Piedmont with 3 the identified poverty and unemployment in the Mountains and along the Coast. This is relevant because, at that geographic scale, multiple ( and sometimes disparate) challenges face the different parts of North Carolina. Another approach recognizes that these adjacent counties may not always share common challenges. Why, for instance, is Watauga County doing so well economically while surrounding counties struggle? Why has Durham County not been able to take as much of an advantage of the success of the Research Triangle Park as have Wake and Orange counties? What has caused the economic struggles of the Piedmont’s micropolitan areas while nearby metro areas flourish? Why are several eastern counties, such as Lenoir and Edgecombe, experiencing population declines while nearby counties enjoy growth? The conventional wisdom is that the west and east both are suffering economically while the state’s large metropolitan areas continue to grow. It is important not only to validate this perception, but also to better appreciate the nuanced challenges facing North Carolina’s industries and workforce in different parts of the state. Consequently, this report must look beyond the obvious regional breakdowns to find the key issues that inhibit the state from enjoying more balanced economic development. After detailed assessments of possible regional configurations, the project team collaborated with the state Workforce Commission’s Policy Research and Assessment Committee ( PRAC) to identify several regional distinctions for study. These distinctions focused on the rural- urban nature of the state’s population as well as the traditional view that the state is composed of three major regions – the Coast, the Piedmont, and the Mountains. The analysis also recognizes the critical role for counties as well as the potential role the legislatively defined regional economic partnerships might play in developing greater demand for labor. Thus the analysis is consciously built on units that respect the partnership boundaries. Identifying a Rural- Urban Hierarchy The state’s urban- rural dichotomy explains some of the differences in economic performance. Traditionally, North Carolina has been a state of small towns and rural places. Its agrarian culture was celebrated for generations. The rise of the textile industry in small communities across the state at the turn of the 20th century marked the initial shift of a large portion of the state’s economy toward manufacturing. During the past generation, the state’s growth was concentrated in its larger urban centers. The state may have reached a tipping point with the emergence of three major urban areas with more than one million people– Charlotte, the Piedmont Triad, and the Research Triangle. About half of the state’s population now lives in one of these three regions, frequently called the “ Golden Crescent.” Large cities, small cities, towns, and rural areas all face different kinds of workforce challenges and opportunities. Figure 1 shows North Carolina’s metropolitan, micropolitan and rural counties. 1 The definition established by the US Office of Management and Budget identifies metropolitan counties as those with an urban area of 50,000 people or more. These areas include adjacent counties in which 25 percent or more of the population commutes to the urban center. Micropolitan counties are those with 10,000 to 50,000 people. For the purposes of simplicity, counties that are not classified as either metropolitan or micropolitan are identified as “ rural counties” in this report. Rural counties are defined as 1 Regional distinctions provided by the US Office of Management and Budget, 2003 and updates; Calculations by CREC based on US Census Bureau 2005 population estimates. 4 those without an urban center of 10,000 people or more and in which less than 25 percent of the population commutes to a metropolitan or micropolitan area. There are many varying definitions in North Carolina for “ rural,” and most of the state’s counties contain both urban and rural elements. However, the three designations – metropolitan, micropolitan, and rural – provide a straightforward, useful framework for distinguishing among different types of counties in the state. The distinctions provide a way to group counties together that may not be geographically proximate but may be similar in terms of their population density and their relationship to nearby urban centers. Roughly 6.2 million people, or 70 percent of all North Carolinians, live in the 40 counties that make up the state’s officially designated metropolitan areas. Businesses, governments, and nonprofits in the metropolitan areas offer 3.8 million jobs, about 74 percent of the 5.15 million jobs available. Approximately 2 million people live in the 31 counties in micropolitan areas. These areas are frequently built around North Carolina’s “ small town” growth centers and account for almost 970,000 jobs. The micropolitan areas represent 23 percent of the state’s people, but only 19 percent of the state’s employment. Twenty- nine North Carolina counties are defined for this analysis as part of neither the state’s metropolitan nor micropolitan areas. Unsurprisingly, these counties have relatively few residents and small employment levels. These rural counties have about 600,000 people and approximately 340,000 jobs, representing 7 percent of the population and 7 percent of the state’s employment. Most North Carolinians work in the metropolitan areas, and they also earn more on average than in micropolitan and rural areas. Combined, people in metropolitan counties have projected average Figure 1 Center for Regional Economic Competitiveness Metropolitan and Micropolitan Areas in North Carolina Metropolitan Area Micropolitan Area Rural Area 2005 Population Estimates Metro Area: 6.2 million Micro Area: 2.0 million Rural Area: 0.6 million * Source: US Census Bureau * Hickory- Lenoir- Morganton, NC * Jacksonville, NC * Raleigh- Cary, NC * Rocky Mount, NC * Virginia Beach- Norfolk- Newport News, VA- NC * Wilmington, NC * Winston- Salem, NC * Asheville, NC * Burlington, NC * Charlotte- Gastonia- Concord, NC- SC * Durham, NC * Fayetteville, NC * Goldsboro, NC * Greensboro- High Point, NC * Greenville, NC Metropolitan Statistical Areas * Mount Airy, NC * New Bern, NC * North Wilkesboro, NC * Roanoke Rapids, NC * Rockingham, NC * Salisbury, NC * Sanford, NC * Shelby, NC * Southern Pines- Pinehurst, NC * Statesville- Mooresville, NC * Thomasville- Lexington, NC * Washington, NC * Wilson, NC * Albemarle, NC * Boone, NC * Brevard, NC * Dunn, NC * Elizabeth City, NC * Forest City, NC * Henderson, NC * Kill Devil Hills, NC * Kinston, NC * Laurinburg, NC * Lincolnton, NC * Lumberton, NC * Morehead City, NC Micropolitan Statistical Areas 5 earnings2 for 2007 of $ 42,784 which is about $ 3,000 more ( 7 percent higher) than the statewide average of $ 39,953. Conversely counties in micropolitan and rural counties have below average earnings at $ 32,836 and $ 27,944 respectively. Figure 2 shows industry employment in each of North Carolina’s metropolitan and micropolitan statistical areas. The Charlotte- Gastonia- Concord, NC- SC Metropolitan Statistical Area ( MSA) is the state’s largest with an estimated 938,000 jobs available in the North Carolina counties. The combined MSAs of Raleigh- Cary and Durham are roughly the same size with an estimated 926,000 jobs. The two major metropolitan areas in the Piedmont Triad region — Greensboro- High Point and Winston- Salem — account for a combined 706,000 employment. Outside the core metro counties of the Piedmont, each of several regional metro areas, including Asheville, Jacksonville, Hickory- Morganton- Lenoir and Wilmington, has roughly 100,000 to 200,000 jobs. The state’s largest micropolitan areas include Thomasville- Lexington, Statesville- Mooresville and New Bern. Each of these areas has about 70,000 jobs. As the three major metropolitan areas ( Charlotte, Piedmont Triad, and Research Triangle) continue to grow, it is likely that many micropolitan and small metropolitan areas will become subsumed into adjacent metro areas as more workers opt to commute to relatively higher paying jobs found in those large metro areas. 2 Earnings include not only wages and salaries but also other compensation accrued to workers in the form of supplements such as paid health insurance, day care, transportation, and Social Security taxes, as well as proprietors' income Figure 2 Source: Regional Dynamics Center for Regional Economic Competitiveness Charlotte- Gastonia- Concord, NC- SC Asheville, NC Hickory- Morganton- Lenoir, NC Winston- Salem, NC Greensboro- High Point, NC Burlington, NC Durham, NC Raleigh- Cary, NC Fayetteville, NC Goldsboro, NC Jacksonville, NC Greenville, NC Rocky Mount, NC Virginia Beach- Norfolk- Newport News, VA- NC Wilmington, NC Metropolitan Area Micropolitan Area 50K 200K 600K Industry Employment Industry Employment in North Carolina Metropolitan and Micropolitan Areas ( est. 2007) * Employment for North Carolina counties only ** Only metropolitan areas identified 6 Defining North Carolina’s Three Primary Geographic Regions In addition to metropolitan, micropolitan and rural distinctions, this study also explores differences among the state’s geographic regions. The most traditional way to sub- divide North Carolina is to examine its three major land regions focused around the Appalachian Mountains, the Piedmont and the Coastal Plain/ Tidewater areas. While there are conventional methods for assigning these counties to regions, 3 this study also seeks to align the regional designations with the state’s economic development partnerships as the foundation for drawing economic distinctions and perhaps later for exploring potential policy solutions. Figure 3 illustrates the state’s three primary regions using the partnerships as the basic unit for grouping counties. The 23 counties of the Advantage West Regional Partnership provide the foundation for classifying counties as part of the Mountain region. The 37 counties that comprise the three urban regional partnerships ( the Charlotte, Piedmont Triad, and Research Triangle Regional Partnerships) form the basis for the Piedmont region. Finally, the 40 counties of the three eastern partnerships ( North Carolina’s Northeast Region, North Carolina’s Eastern Region and North Carolina’s Southeast Region) constitute the Coastal region. It should be noted that using the partnership geographies to divide the state creates some minor analytical challenges. None of the three primary regions represents a single natural economic area. Advantage West’s 23 counties encompass an area roughly the size of Maryland and has at least four 3 Dept. of Geography and Earth Sciences, The University of North Carolina at Charlotte, < www. ncatlasrevisited. org> Figure 3 95 95 40 85 77 26 40 40 85 Miles 0 70 Johnston Wilson Clay Swain Macon Transylvania Polk Madison Buncombe Mc- Dowell Mitchell Watauga Ashe Alleghany Wilkes Burke Ruther - ford Cleve - land Lincoln Catawba Alex-ander Iredell Surry Stokes Yadkin Davie Rowan Cabar - rus Mecklenburg Union Anson Forsyth David - son Rock-ingham Guilford Randolph Stanly Mont-gomery Richmond Scotland Cas-well Alam - ance Chatham Lee Moore Dur - ham Wake Harnett Hoke Robeson Columbus Brunswick Bladen Cumber - land Sampson New Hanover Pender Duplin Onslow Carteret Jones Lenoir Craven Gre - ene Pitt Nash Franklin Warren Halifax North-ampton Edge-combe Beaufort Hyde Tyrrell Dare Wash-ington Hertford Chowan Gates Perquimans Pasquotank Currituck Hender - son Mountain region Piedmont region Coastal region 2005 Population Estimates Piedmont: 5.3 million Coast: 2.4 million Mountains: 1.1 million * Source: Estimate based on 2000 Census and 2004 data from AGS Demographics North Carolina’s Primary Regions 7 economic sub- areas. 4 Likewise, the Coastal region includes ten different economic sub- areas, many centered on metro and micro areas. The Piedmont region includes three overlapping economic areas roughly equivalent to the urban partnerships. The map in Figure 4 shows commuting patterns throughout North Carolina, reflecting the most significant commuting flows. The map clearly illustrates the interconnections among the Piedmont’s three large metro areas. In examining the map closely, there are two particular examples where the primary region boundaries split naturally occurring economic areas, in Hickory and Fayetteville. Part of the Hickory area, largely included in the Charlotte partnership area, also includes the Advantage West counties of Burke and Caldwell. A similar division occurs in the southeast where the boundary between the Research Triangle and the Southeast partnership regions separates the Fayetteville metro area’s Harnett County from Cumberland County. Consequently, Harnett is assigned to the Piedmont region while Cumberland is assigned to the Coastal region even though a single labor market unites these two counties. It is also important to note that a significant flow of workers commute from South Carolina counties near Charlotte and these workers are critical components of Charlotte’s workforce although North Carolina’s workforce development organizations and educational institutions may have only a limited role in ensuring that they are appropriately trained and educated for future jobs. The Piedmont Region Each of the three urban partnerships represents a relatively coherent economic region and the communities within those partnership areas enjoy considerable economic interaction. In examining the commuting patterns illustrated in Figure 4, it is difficult to identify where one metropolitan area ends and 4 Advantage West Vision Plan Figure 4 95 1 2 3 4 5 6 7 8 9 12 10 11 95 40 85 77 26 40 40 85 1 Asheville 2 Hickory 3 Charlotte 4 Winston- Salem 5 Greensboro 6 Durham 7 Raleigh 8 Fayetteville 9 Rocky Mount 10 Wilmington 11 Greenville 12 New Bern 40,000+ Commuters 20,000 to 39,999 Commuters 10,000 to 19,999 Commuters 5,000 to 9,999 Commuters 2,500 to 4,999 Commuters 1,500 to 2,499 Commuters Miles 0 70 Source: US Census Bureau, 2000 North Carolina Inter- county Commuting Patterns 8 another begins. Incorporating the state’s largest urban areas, the Piedmont drives much of North Carolina’s economy. Roughly 60 percent ( 5.3 million) of the state’s population resides in the region. About 3.3 million people work in the Piedmont region, representing 64 percent of the state’s workers. The Piedmont’s average earnings are $ 43,077 per year, exceeding the state average of $ 39,953 by almost 8 percent. Even though, the regions’ partnerships are relatively inter- connected, their economies each tend to focus on a different set of activities. The 12- county Charlotte Regional Partnership includes the Charlotte metropolitan area as well as several smaller satellite cities. The region’s economy not only includes declining industries like textiles and furniture, but also advanced and emerging growth segments like financial services and motor sports. The Piedmont Triad includes the Winston Salem- Greensboro- High Point center, but it also includes a number of less urbanized rural counties. The Piedmont Triad area, more so than other parts of the Piedmont region, traditionally relied on mature industries such as furniture, apparel, textiles and tobacco for its economic base. As a result, the Piedmont Triad’s economy has been slower than the other two urban regions in making the necessary economic transformations. Similarly, the Research Triangle region’s center is Raleigh, Durham and Chapel Hill, but there are a number of outlying rural communities that also historically relied on textiles, apparel, and tobacco. The Research Triangle’s economic base has developed so that it now relies heavily on high value- added activities such as biotechnology, information technology and higher education. Raleigh’s role as the state capital also makes government employment and related activities a particularly significant component of the region’s economy. The Coastal Region Roughly 2.4 million people live and 1.3 million people work in the Coastal region. This represents about 27 percent of the state’s population and 25 percent of the workforce. The Coastal region’s average earnings, at $ 35,706 per year, represent only 89 percent of the state average and trail the state average by more than $ 4,000 annually. Tourism represents an important component of the region’s economy, building on assets such as the state’s barrier islands and the Atlantic coast. The tourism industry, however, tends to pay lower than average wages and offers jobs that are typically more seasonal in nature. The Coast has also been one of the state’s leading agricultural regions, relying on tobacco, pork and poultry. Tobacco has historically been one of the region’s leading agricultural products, but livestock production also employs large numbers of workers. Manufacturing and distribution operations, particularly along I- 95, offer another source of regional employment. The northeastern part of the region is especially dependent on tourism and agriculture. The low wages and seasonality of the work are part of the reason why it is one of North Carolina’s poorest regions. The region’s significant military presence plays an important role in its economy. About one in nine workers, or 140,000 people, are employed at one of the Coastal region’s major military installations ( i. e., Fort Bragg, Pope Air Force Base, Seymour Johnson Air Force Base, Cherry Point Naval Air Depot, and Camp Lejeune). The relatively good paying jobs associated with these bases help raise the region’s average earnings. Anecdotal evidence, based on interviews with military leaders, suggest that while some retiring military professionals stay in the area upon their retirement, many others leave the area due to the limited post- military occupational opportunities available for themselves or their spouses. That 9 said, the Coastal region, especially communities near the ocean, is becoming a destination for new residents seeking second or retirement homes. The Mountain Region Of the three main geographic regions, the Mountain region has both the smallest population and the lowest overall average earnings. The region has slightly more than one million residents and 570,821 jobs. Consequently, the area has 13 percent of the state’s people but only 11 percent of the state’s employment. Average earnings in the Mountains are $ 31,561 per year, or 79 percent of the state average. The Asheville metropolitan area is the region’s largest with roughly 400,000 people. Portions of the Hickory- Morganton- Lenoir metropolitan area located in the region also represent an important urban hub for the Foothills. Communities in the Mountains are undergoing a significant economic transformation. Industries such as textiles and furniture manufacturing historically provided much of the region’s economic base, particularly in the Foothills area. These industries are in decline, creating economic hardships for workers and curtailing opportunities for those seeking new careers in the area. Much like the Coast, tourism is one of the Mountain region’s fastest growing industries. Unfortunately, the work’s low wages and seasonal nature do not typically translate into economic prosperity for a large number of people. The area has also proven to be an attractive destination for retirees and second home buyers. These new residents bring money into the region and have contributed to a growing demand for jobs in key industries such as residential construction and retail. State Workforce Demand and Supply Workforce Demand This section examines the current industrial and occupational composition of the North Carolina economy. The goal is to examine detailed geographic differences and long- term projected trends in the demand for new workers. The research focuses on estimated employment for 2007 and net new employment between 2007 and 2017 in order to identify future demand trends. The study also examines relevant geographic differences as well as explores detailed trends in the mix of industries and occupations. About the Data To accomplish the study’s intended goals, data used were developed and provided through the ReDYN economic forecasting model, published by Regional Dynamics. 5 The analysts use this model in lieu of data provided by the North Carolina Employment Security Commission ( NCESC), in part, because the proprietary model defines employment more broadly, projects employment for detailed industries and occupations through 2017, and estimates employment at the five- digit North American Industry Classification System ( NAICS) level for all 100 North Carolina counties. 5 Unless otherwise described, employment estimates and projections were developed using an econometric model developed by Regional Dynamics, an economic forecasting firm. The model was developed by researchers at the University of Georgia for tax, transportation, and economic planning The base data set used in developing the estimates is the US Bureau of Economic Analysis with data estimates calibrated using US Bureau of Labor Statistics and US Census Bureau County Business Patterns ( CBP). The ReDYN model includes employment estimates and projections of wage and salaried employment, proprietorships, military, farm, government, and certain private education institutions. 10 This workforce analysis recognizes the comprehensive definition of employment used by the US Bureau of Economic Analysis ( BEA). The BEA definition builds on NCESC’s very sound snapshot of wage and salary employment and adds other kinds of employment not included in the NCESC reports. Under the US Bureau of Labor Statistics ( BLS)- sponsored national labor market information program, NCESC reports employment using data from its administrative records created for the unemployment insurance program. Each quarter, the NCESC does a census of employees and payroll for companies participating in the program to compare the data against the taxes paid monthly. The Quarterly Census of Employment and Wages ( QCEW) data collection program, sponsored by BLS, provides monthly updates based on firm payroll employment and taxes reports and offers the timeliest snapshot of state employment. Consequently, it is one of the most useful data sources in tracking current NC employment and wage patterns. NCESC does not, however, typically report information about employment for proprietors or other enterprises that do not participate in the unemployment insurance program. Even so, NCESC’s estimates represent about 80 to 85 percent of all employment within nine months of the initial business report to the government. Furthermore, the proportion of employees represented in the QCEW report is particularly high in certain sectors— such as manufacturing— but it is somewhat lower in others like construction, real estate, and government ( especially military employment). NCESC provides the most vital foundation estimate for determining North Carolina’s employment estimates. NCESC data is integral to many other data estimates, but the US BEA measures a larger share of the total employment picture. Annually, approximately 12 to 18 months after the end of the reporting year, the BEA reports all employment by industry using a variety of data sources including labor market information provided by NCESC and its sister agencies in other states, Internal Revenue Service proprietorship tax filings, and a variety of other data sources to develop the employment and earnings data required for calculating the national Gross Domestic Product and other BEA data products. In addition to proprietorships, BEA employment estimates data for farmers and farm workers, railroad workers, military personnel, and certain government agency employees that do not participate in the unemployment insurance program. NCESC data is extremely valuable for describing the patterns and challenges facing many traditional employers. It is also useful in examining large geographic areas or broad industry groupings; however, one of the most significant drawbacks in using this data for this study’s purposes is that NCESC is precluded by law from releasing data at sufficient geographic or industry- level detail to meet the needs of this study. NCESC is legally restricted from disclosing data that could potentially reveal information about a specific firm. Thus, the publicly available information for certain industries with particularly large firms or related to county- level employment includes suppressions designed to protect the confidentiality of reporting firms. This analysis required constructing multi- county data tables that required detailed data be available at an individual county level. Data suppressions in NCESC- provided reports are particularly problematic in obtaining industry detail for most North Carolina counties. Several proprietary enterprises encounter these challenges on a regular basis and have created algorithms designed to estimate the number of workers in a specific county and/ or industry where data disclosure issues arise. The data used for this analysis was derived from one such model. NCESC also provides very useful and soundly developed employment projections that recognize the broader employment definitions described earlier. The data available at the time of this analysis included 11 NCESC’s projections from 2002 to 2012. More recent data, based on 2004 employment estimates and including projections to 2014 were due for release by January 2007. Unfortunately, these NCESC projections also suffer from the data suppression limitations noted earlier. Furthermore, sub- state projections are made only at the workforce development board level. Thus, the projections available were not well aligned with the study’s needs since this analysis was aimed at understanding projected employment changes at the metropolitan, micropolitan, or rural area level as well as the economic development partnership level. The Workforce Commission’s Policy Research and Assessment Committee ( PRAC) and the consulting team felt that the broader US BEA definition of employment was most appropriate for this analysis. This decision was based on recent shifts in the North Carolina economy from its traditional dependence on manufacturing to services, the growing importance of entrepreneurial enterprises as an employment source, and the critical role of military employment as an economic driver. The PRAC and consultants also felt that the projection period for this analysis should be at least 10 years into the future in order to help educational institutions, the State Workforce Commission, and local area workforce boards consider longer- term strategies for adjusting to the state’s changing economic realities. Finally, the PRAC and consultants were very interested in examining patterns and projections in detailed industries and geographies that could not be revealed by NCESC data due to state and federal data disclosure laws. Thus, the PRAC and consultants opted to utilize a data source that builds on NCESC data while also making efforts to address the acknowledged data limitations and concerns. The US BEA does not make industry projections, and the data detail US BEA makes available at the sub- state level is limited. Thus, the PRAC and consulting team opted to explore the use of at least two proprietary data sets. Both benchmarked their estimates to the data provided by the US Bureau of Economic Analysis. Researchers who developed the ReDYN ® model, which provides much of the projections data used in this report, calibrate their individual county- level industry estimates to BEA benchmarks using a combination of data sources, including the US Census Bureau County Business Patterns annual business survey data ( which reports ranges of employment for industries where disclosure issues arise), North Carolina Employment Security Commission and US Bureau of Labor Figure 5 Regional Employment and Average Earnings Region Total Est. Employment 2007 Est. Net New Employment 2007- 17 Average Earnings 2007 United States 179,670,548 30,284,512 $ 44,815 North Carolina 5,152,411 698,247 $ 39,953 METRO Area Counties 3,840,922 573,283 $ 42,784 MICRO Area Counties 969,766 91,029 $ 32,836 RURAL Area Counties 341,723 33,934 $ 27,944 NC Mountains 570,821 70,917 $ 31,561 NC Piedmont 3,290,455 473,629 $ 43,075 NC Coast 1,291,135 152,498 $ 35,706 Source: Regional Dynamics 12 Statistics forecasts, as well as data from the US Bureau of Economic Analysis’s Regional Economic Information Systems data. Figure 5 shows the employment, change in employment, and average earnings for the US, North Carolina and each of the major sub- regions. Several trends clearly emerge. Most of North Carolina’s economic growth is expected to occur in metropolitan counties, especially those in the Piedmont region. Whereas metropolitan areas account for 74 percent of North Carolina’s current employment, they are expected to create 81 percent of the projected new jobs. Similarly, the Piedmont region accounts for 64 percent of current employment, but during the next decade will contribute 68 percent of North Carolina’s projected new jobs. In particular, the Piedmont region’s growth is concentrated in two partnership regions – Charlotte and the Research Triangle. In 2007, 46 percent of employment will be in these two regions, but 55 percent of the state’s new job creation will be there. This demonstrates the Triad’s economic weakness relative to the two other urban regions. While the Triad accounts for 18 percent of state employment in 2007, only 13 percent of new jobs are expected to be created in that region during the next decade. These data are markedly similar to growth prospects in the state’s micropolitan areas. As might be expected, earnings also vary throughout the state. This is particularly true for counties in rural areas where earnings trailed other areas, representing only 70 percent of the state average. Earnings in the Coastal and Mountain counties also trailed the state average. However, the Coastal area outpaced the Mountains in average earnings primarily due to the significant military presence in the Coastal counties. Industry Job Trends and Projections The 2007 projected number of jobs in North Carolina is roughly 5.15 million; the state is expected to add almost 700,000 more jobs by 2017. North Carolina’s economy relies more on government ( especially the military) and manufacturing ( especially textiles, apparel, and furniture) than the rest of the Figure 6 Percent of Jobs in US and NC by Sector ( Projected 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment ( Est. 2007) US NC 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment ( Est. 2017) US NC 2007 2017 13 US. Figure 6 shows that whereas manufacturing accounts for 8.7 percent of all jobs nationwide, it represents 12 percent of all jobs in North Carolina. This reliance on manufacturing is even more pronounced in the state’s micropolitan and rural areas, where manufacturing employment contributes 14.9 percent and 16.5 percent of all employment, respectively. Manufacturing in the Piedmont Triad represents 15.6 percent of all employment. According to both the forecasted data provided here and additional analysis using US Bureau of Economic Analysis data, the military represents about 16 percent of all government employment in North Carolina while the military represents about 8.5 percent of government employment nationally. As North Carolina continues growing, its economy should become increasingly similar to the US economy. Forecasts suggest that service activities will contribute an increasingly larger proportion to both the US and the state’s jobs. As illustrated in Figure 7, the state’s estimated professional and business services employment will likely grow faster than the US average during the coming decade while growth in the manufacturing and government sectors is slower. In urban locations, the state’s economy already looks much like the US economy. For instance, the employment share of finance, insurance and real estate, and professional and business services in the Piedmont region already surpasses the US share in those service sectors. Figure 7 Percent of Jobs in NC by Sector ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% Government Other Services Leisure & Hospitality Education & Health Services Professional & Business Services FIRE Information Transportation & Utilities Wholesale & Retail Trade Manufacturing Construction Natural Resources and Minerals Industry Sector Percent of Total Industry Employment 2007 2017 14 Many of these economic trends become clearer when examining the state’s fastest growing industries. Figure 8 shows the 25 industries that are projected to gain the most net new jobs between 2007 and 2017. 6 These 25 fast growing industries currently account for 39 percent of all North Carolina’s employment, and 57 percent of all the projected net new employment over the next decade. These data reflect the economy’s continued shift toward services. Eight of the 25 fastest growing industries are found in the health and education services sector, and another seven are found in professional and business services industries. One of every ten net new jobs will be in the temporary help services or employee leasing industry, reflecting an increasing reliance on part- time and temporary services as a way to handle short- term cyclical demand for products and services. Twelve of these top 25 industries provide earnings for workers that are less than 80 percent of the state’s overall average. Only five offer earnings to workers that are 120 percent or higher than the state average. North Carolina’s economic mainstay during the past generation has been a variety of manufacturing industries. However, no manufacturing industry is among the state’s 25 fastest growing industries. In fact, only one manufacturing industry— animal slaughtering and processing — is expected to be among the state’s 50 fastest growing industries between 2007 and 2017. At the same time, manufacturing industries are quite prominent among the industries shedding the most jobs. Over the next decade, 21 of the 25 fastest declining industries in terms of projected employment losses are manufacturing- related. 6 The “ Exporting”, “ Locally- Serving” and “ Requires Import” designations are explained in greater detail in footnote 8 on page 19. Figure 8 North Carolina’s 25 Fastest Growing Industries ( Est. 2007 and 2017) Sector Industry Name Employment 2007 Emp Change 07- 17 Avg Earnings 2007 Industry Type Professional & Business Services Temporary Help Services 130,831 63,589 $ 22,964 Exporting Government State and Local Government, NEC 336,792 35,388 $ 44,327 Locally- Serving Professional & Business Services Computer Systems Design and Related Services 46,450 23,531 $ 65,033 Locally- Serving Government State and Local Government, Education 229,249 23,284 $ 44,379 Locally- Serving Education & Health Services Offices of Physicians 64,520 21,808 $ 70,086 Locally- Serving Other Services Religious Organizations 107,698 20,649 $ 18,627 Exporting Leisure & Hospitality Full- Service Restaurants 136,476 19,226 $ 15,373 Locally- Serving Education & Health Services General Medical and Surgical Hospitals 135,009 18,063 $ 47,298 Locally- Serving Leisure & Hospitality Limited- Service Eating Places 126,770 17,096 $ 14,928 Locally- Serving Education & Health Services Community Care Facilities for the Elderly 29,532 14,600 $ 22,815 Exporting Professional & Business Services Management Consulting Services 25,240 12,779 $ 62,929 Locally- Serving Education & Health Services Child Day Care Services 33,813 12,736 $ 17,522 Locally- Serving Education & Health Services Nursing Care Facilities 51,375 12,208 $ 25,995 Locally- Serving Education & Health Services Home Health Care Services 29,464 11,801 $ 32,433 Locally- Serving Wholesale & Retail Trade Supermarkets and Other Grocery ( except Convenience) Stores 94,035 10,762 $ 26,628 Locally- Serving Transportation & Utilities General Freight Trucking, Long- Distance 44,486 10,443 $ 39,648 Exporting Education & Health Services Colleges, Universities, and Professional Schools 35,932 9,391 $ 39,108 Locally- Serving Professional & Business Services Accounting, Tax Preparation, Bookkeeping, and Payroll Services 39,685 8,794 $ 33,275 Locally- Serving Wholesale & Retail Trade Department Stores 71,552 8,015 $ 27,008 Locally- Serving Professional & Business Services Management of Companies and Enterprises 68,988 7,820 $ 80,047 Exporting Leisure & Hospitality Golf Courses and Country Clubs 27,408 7,757 $ 14,140 Exporting Professional & Business Services Janitorial Services 36,346 7,674 $ 19,278 Locally- Serving Education & Health Services Offices of Dentists 20,758 7,011 $ 69,969 Locally- Serving Professional & Business Services Employee Leasing Services 13,116 6,872 $ 27,351 Requires Import Construction Plumbing, Heating, and Air- Conditioning Contractors 55,018 6,828 $ 39,257 Exporting Source: Regional Dynamics forecasts 15 Fourteen of these industries are related to textiles and apparel. Furthermore, industries related to tobacco ( crop production, tobacco product manufacturing, and tobacco stemming and re- drying) and furniture ( logging, sawmills and wood preservation) are also projected to decline, as are many technology- intensive manufacturing sectors ( e. g. semiconductor and other electronic equipment manufacturing). The decline in manufacturing has had significant consequences for many North Carolinians. These industries were typically viewed as paying family- supporting wages for those in the state with relatively low levels of education. As the twin forces of globalization and technology force industries to change the way they do business, companies have eliminated thousands of these jobs during the past decade. In the past four years alone, North Carolina’s economy has shed 72,000 manufacturing jobs, three- quarters of which have been in textiles, apparel, furniture, and computer electronics ( see Figure 9). Today, new challenges face a large segment of North Carolina’s workforce. The state’s industries are creating few jobs that can employ this dislocated workforce without substantial changes in their skill sets. New jobs in knowledge- intensive industries require workers to have far greater levels of education than the current average. Industries that can utilize the existing skills of dislocated workers tend to pay lower wages. In the top 25 industries, those industries that pay less than 80 percent of average earnings represent 43 percent of the new jobs likely to be created in the next 10 years. Temporary help services ranks as the fastest growing of these industries. 7 By contrast, only 11 percent of the new jobs being created among the top 25 industries pay more than 120 percent of the state average earnings. Overall, the average earnings for these top industries are $ 37,728, about 6 percent lower than the average earnings for all industries. This suggests that the resulting growth pattern over the next ten years is likely to continue showing lower than average earnings. It should be noted that manufacturing’s diminishing role in the North Carolina economy is felt unevenly throughout the state because some areas are structurally more dependent on manufacturing than others. For instance, manufacturing accounts for 14.9 percent of employment in micropolitan areas, and 16.5 percent of employment in rural areas. Even within the state’s thriving Piedmont region, the Piedmont Triad area remains heavily dependent on manufacturing. Whereas in 2007, manufacturing accounts for an estimated 13 percent of Charlotte’s employment and 9.5 percent of Research Triangle’s 7 Although it includes a wide variety of activities, the temporary help services industry consists largely of occupations paying below the US median wage of $ 18.21 per hour, according to the most recent data from the US Bureau of Labor Statistics ( May 2005). The BLS reports that 75.6 percent of temporary help workers are employed in occupations that earn, on average, less than 80 percent of the US median hourly wage. Only 9.2 percent of temporary help workers are employed in occupations that earn more than 120 percent of the US median wage. Figure 9: NC Employment in Selected Manufacturing Industries North Carolina Employment 2002 2005 Δ Employ, 2002- 05 % Change Textile and textile product mills 99,091 68,580 - 30,511 - 30.8% Apparel 35,697 26,426 - 9,271 - 26.0% Furniture & related products 67,695 59,280 - 8,415 - 12.4% Computer & electronic products 46,741 39,215 - 7,526 - 16.1% NC MFG Industries 662,354 590,346 - 72,008 - 10.9% Source: US Bureau of Economic Analysis 16 employment, this sector still represents 15.6 percent of the Piedmont Triad’s total industry employment. Of course, these manufacturing jobs are not all in the traditional manufacturing industries of tobacco production, textiles, apparel, and furniture. However, even excluding those industries, the Piedmont Triad still has a greater proportion of manufacturing- related employment than any other area in the state. Structurally, the Piedmont Triad’s economic sectoral composition closely resembles many of the state’s micropolitan areas, and not surprisingly the area is enduring many of the same transitional challenges as smaller manufacturing- dependent communities. Appendix 2 lists North Carolina’s 200 fastest growing industries. Some of these industries have a higher concentration of employees in North Carolina than nationally. 8 These highly concentrated industries are said to have enough workers to produce more than enough of their goods or services to serve the state’s needs so it is expected that they export beyond the state boundaries. These “ exporting” industries are particularly interesting for economic development purposes because their relatively high concentration is a sign that the state may have a competitive advantage in attracting and retaining companies in those economic sectors. In selling their goods or services outside the state, exporting industries bring new money into the state. North Carolina’s exporting industries include those related to animal slaughtering and processing, as well as pharmaceutical and medicine manufacturing. Slightly more than 26 percent of the 2007 projected jobs in the top 200 industries are categorized as export- oriented. This group is expected to grow faster than other parts of the economy, accounting for 29 percent of the new jobs created during the next decade. Exporting oriented industries offer above average earnings at $ 43,029, but the fastest growing exporting industries offer average earnings of only $ 37,427. Most of this discrepancy is driven by the anticipated growth in temporary help services, religious organizations, and elderly care facilities. Other industries leak wealth because so few workers are involved in them that state businesses and consumers are expected to have to “ import” the industry’s goods or services from elsewhere. Economic developers are concerned about these industries because they represent potential increased economic activity that could improve the competitiveness of local firms or serve local businesses or residents. Industries that seem to be particularly underdeveloped in North Carolina include employee leasing services; outpatient care centers; vocational rehabilitation services; data processing services; services for the elderly and persons with disabilities; machinery equipment rental; and telephone call centers. These industries are growing at some of the fastest rates, sometimes to meet the growing demand of the local population as well as to capture leakages from the state’s economy. These and similar industries account for about 3 percent of the top 200 jobs, but will represent about 5 percent of the new jobs being created during the next decade. On average, these jobs are projected to pay about $ 45,735 in 2007 estimated earnings, but the fastest growing industries tend to pay much lower with average earnings expected to be $ 36,127. A third category of industry, designated as “ locally serving,” generates employment as a share of the total economy at a ratio that resembles the national share. Locally serving industries create employment, but they are more apt to capture existing money recycling through the economy than to bring new money 8 These industry concentrations are frequently referred to as “ location quotients” or LQs. LQs represent a ratio of each North Carolina industry as a share of the state’s employment compared with a similar ratio of that same industry’s national employment total as a share of all US employment. An LQ of 1.2 or higher was used to designate “ exporting” industries and an LQ of 0.6 was used to designate “ requires importing” industries. Industries with LQs between 0.6 and 1.2 represent the group identified as “ locally serving.” Each of the top 200 industries is categorized in Appendix 1. 17 into the state. In addition, their growth tends to be most closely correlated to population growth. Activities such as healthcare and retail are frequently considered locally serving industries. However, on occasions, these sectors may differ in certain communities. For instance, large factory outlet malls or retail targeted to tourists such as Concord Mills may attract shopping dollars from people who live outside the region. Specialized healthcare facilities or advanced hospitals like the Duke or UNC medical centers may provide very specialized care and therefore attract patients from across the nation. On the whole, however, these examples represent exceptions to the norm. Locally serving industries account for 71 percent of all jobs in the top 200 industries, but only about two- thirds of the jobs being created during the next decade. These industries are sizable and many are growing at a moderate pace, driven by the state’s population growth rather than by any comparative economic advantage. Not surprisingly, the state’s locally serving industries tend to grow most and fastest where the population is large and growing fastest— mainly the metropolitan areas and the Piedmont region. Overall, average earnings for locally serving industries are slightly below average at a projected $ 38,077 for 2007. This approach to categorizing the industries of the economy into three broad areas is useful as a way to help economic and workforce developers better understand their respective differences. From the workforce perspective, the interest is in finding a large number of jobs that require moderate skills or moderate training to improve the skills of the workforce, no matter the industry. Thus, their efforts frequently focus on supporting locally serving industries where the number of jobs being created is higher, and the pay for new jobs is expected to be slightly higher. From the economic development perspective, the efforts focus on identifying the largest and best paying sectors that export goods and services or that replace goods and services currently being imported into the state. The job numbers associated with these industries may well be relatively small because the focus is on new wealth creation or retention. Due to their differing goals, the industries and occupations of interest to economic and workforce developers are not always the same. Occupational Employment Trends and Projections The occupational data mirror many of the trends illustrated in the industry data. Notably, the projections show strong growth in healthcare and services- related occupations and steep declines in the occupations related to traditional manufacturing industries such as textiles and apparel. These data also show a strong relationship between educational attainment and earnings. To demonstrate these trends, we organized the occupational data according to the 11 different categories used by the US Bureau of Labor Statistics ( BLS). These categories identify the most common educational attainment requirements for each of several hundred occupations. 9 Seven of these categories involve formalized postsecondary education, while the other four categories are based on work experience and on- the- job training ( OJT). In some cases, high school completion is a pre- requisite for training while in others high school completion is not required to receive training. For our purposes, however, eleven categories were too many. Consequently, we collapsed the 11 BLS categories into six different ‘ education bands’ designed to allow us to make comparisons with available labor supply categorizations made by the Census Bureau. Census gathers data on educational attainment for potential workers among citizens age 25 and older. The bands used for analyzing occupational trends and projections are: 9 For more detail about these 11 occupational education requirements see: http:// www. bls. gov/ emp/ optd/ optd004. pdf. 18 • Band 1: Advanced Degree — Occupations requiring advanced degrees ( e. g., Ph. D., MA/ MS) or professional degrees ( e. g., MD, JD) • Band 2: Four- year College Degree — Occupations requiring either a baccalaureate degree or a bachelor’s degree plus experience • Band 3: Tech- Some Post — Occupations requiring either an associate degree or some kind of postsecondary vocational award or certification as well as those that typically require some college but may not require a degree • Band 4: High School Diploma/ GED and Some Experience — Occupations requiring at least a high school diploma or a general educational development ( GED) degree and significant work experience and more than a year of on- the- job training ( OJT) • Band 5: High School Diploma/ GED Entry Level — Occupations requiring at least a high school diploma or GED plus moderate- term OJT ( typically more than one month, but less than one year) • Band 6: Below GED — Occupations requiring short- term OJT ( less than one month); few of these occupations require a high school diploma The first two bands are considered the best, high wage jobs. These bands include the knowledge-intensive jobs associated with an economy increasingly driven by high- end business services. Conversely, the jobs in the last band ‘ Below GED’ are those that require little skill or training and often pay well below average. Therefore, workers often face difficulty earning a family- sustaining wage while working one of these jobs. Bands 4 and 5— GED- Some Experience and GED Entry Level— have traditionally been the occupations that were the backbone of North Carolina’s workforce. These ‘ Traditional Middle Jobs’ typically provided decent wages for people with relatively limited levels of educational attainment. Unfortunately, many of these occupations are found in mature industries such as textiles, apparel and furniture manufacturing. They continue to be important to the state, but globalization and technological changes have reduced the demand for jobs in these occupations significantly. Consequently, growth is occurring rapidly among the higher end jobs and those in occupations in Band 3. Combined, the occupations in Band 3 and 4 constitute what one might describe as the ’ New Middle Jobs.’ These occupations increasingly require advanced skills so workers need more training to attain and keep their jobs. For instance, the growing prevalence of advanced manufacturing techniques demands more technology skills and knowledge for people in production occupations. Similarly, the use of just- in- time delivery systems requires workers in logistics and distribution occupations to increase their math and IT skills. New middle jobs requires workers who may be currently employed in traditional middle jobs to invest in significant up- skilling to retain their employment or to move into the new middle jobs. Those that do not make the investment or whose companies do not adapt, run the risk of falling behind. Increasingly, those that do not adapt are losing their jobs and settling for re- employment opportunities in one of the low skill occupations in Band 6— Below GED. Key Occupations by Employment Band By allocating occupations to each of these six bands, workforce professionals can project which types of occupations will need to be filled, the level of compensation likely to be available, and the number of workers that will be required over the next ten years at each educational level. Figure 10 provides a snapshot summary of the proportion of the state and national workforce found in occupations at each of these educational bands. 19 About 34 percent of the jobs currently available in North Carolina do not require a high school diploma, slightly below the average for the US job market. These jobs typically require a month or less of on- the- job training. However, when compared with the US, a larger share of North Carolina jobs, about 25 percent, require between one month and one- year of training and typically demand a high school degree or equivalent. Unfortunately, these jobs are concentrated in industries and occupations that are being squeezed by globalization and technological change. Skill requirements are increasing for the jobs in these occupations. Among those occupations projected to increase, employers are also demanding more education and training from their workers. Examining the occupational data through the lens of these education bands reveals several key trends. Trends for each of these educational bands and examples of key occupations in each band are highlighted below. Advanced Degree Occupations Many of the fastest growing occupations require advanced degrees and reward workers with high pay. Lawyers, post- secondary health specialties teachers, and pharmacists are among the fastest growing occupations in this education band, and all have average earnings over $ 100,000 annually. Clergy is another fast growing occupation in this education band, but though it pays less—$ 47,704 in average annual earnings— it is still 20 percent higher than the state average earnings. Four- Year Degree Occupations Almost one in four new jobs projected to be created in North Carolina over the next ten years will require workers to have at least a four- year degree. The fastest growing occupations that require a bachelor’s degree include general and operations managers, elementary school teachers, business operations specialists, accountants and auditors and computer software engineers. Much like other occupations requiring an advanced degree, most of these jobs offer compensation well above the state Figure 10 US and NC Employment by Required Education ( est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of Total Employment ( 2007) USA NC Source: Regional Dynamics forecasts 20 average. Although the growth of Charlotte’s financial sector adds to the number of accountants and auditors and Research Triangle’s information technology industry boosts the number of software engineers, employment growth for occupations like managers and teachers will depend on the state’s continued population growth. Technical Degree and Some Post- Secondary Education Degree Occupations Given the healthcare industry’s rapid growth, it should surprise no one that many of the fastest growing occupations in this education band relate to that industry. For instance, Registered Nurses ( RNs) represent the fastest growing occupational category among those requiring at least a two- year degree or some kind of postsecondary vocational award. 10 Currently, the state employs an estimated 90,916 RNs and will need to add another 24,308 over the next decade to meet its projected demand. To put this in context, these forecasts suggest that registered nurses will account for 3.5 percent of the state’s net new jobs between 2007 and 2017. With average earnings of $ 61,347, RNs are also one of the best paying occupations within this education band. The growing demand for healthcare workers includes a call for new RNs and Licensed Practical and Licensed Vocational Nurses ( LPN/ LVNs). There are currently an estimated 20,147 LPN/ LVNs working in the state, with a demand for 4,430 more LPN/ LVNs over the next decade. Healthcare- related occupations are not the only fast growing occupations in this education band. In addition to health care workers, North Carolina will need more than 13,000 new preschool teachers. The state will also require more than 5,300 net new computer support specialists. It will also require roughly 5,300 automotive service technicians and mechanics and 2,200 bus and truck mechanics and diesel engine specialists. Moreover, there will be a growing demand for many workers— such as electrical and electronic engineering technicians-- necessary to support the state’s increasingly sophisticated manufacturing industry. These occupations represent a significant component of the state’s new middle jobs. High School Diploma/ GED and Some Experience The occupations within the three education bands described above all require workers to possess some kind of postsecondary training. The next three education bands require varying degrees of work-related experience and on- the- job training ( OJT). The fastest growing occupations that fall in this “ GED/ Some Experience” education band include team- supervisor or skilled- trades occupations. Four of the six fastest growing occupations in this education band are supervisors and managers in areas such as construction, retail, food preparation, and maintenance. Construction trades supervisors ( at an average of $ 53,210 in 2007) earn nearly two- thirds more than food service supervisors ( at an average of $ 31,652). In addition, two other fast growing occupations are carpenters and electricians. The state will need an estimated 6,428 net new carpenters and 3,688 net new electricians over the next decade. These trades occupations typically require long- term work experience and they represent, much like the jobs requiring a 2- year degree, a large segment of the state’s new middle jobs. The workers in these occupations are vital for the state to maintain its current pace of growth as well as preserving many workers’ standard of living. That said, this band also includes many of the fastest declining occupations, 10 This represents the minimum degree required for many nursing positions. According to a 2005 US Bureau of Labor Statistics survey, 58% of nurses aged 25- 44 have a bachelor’s degree or higher. In addition, many employers are increasingly requiring four- year nursing degrees of their job applicants. 21 and most are expected to continue their decline into the next ten years. Corresponding with declines in the state’s textile industry, one occupation alone – textile knitting and weaving machine setters, operators, and tenders – is projected to lose another 38,000 jobs in the next ten years. High School Diploma/ GED Entry Level Unlike the majority of the occupations described above, most of the occupations falling within the GED/ Entry Level education band pay below the state average earnings. One notable exception is heavy and tractor- trailer truck drivers. North Carolina now has an estimated 78,832 truck drivers and will need another 19,029 net new truck drivers over the next ten years. The average earnings for truck drivers are $ 40,659 per year, roughly $ 1,000 more than the state average. Other fast growing occupations in this educational band include customer service representatives, general installation and repair workers, and team assemblers. In fact, team assemblers comprise the state’s fastest growing production- related occupation, as represented by the increased hiring for major facilities like Dell in the Triad area. Not surprisingly, certain occupations within the “ High School/ GED Entry- Level” education occupation band are projected to decline. North Carolina manufacturers are expected to shed another 56,000 of the 155,000 remaining machine operator and tender jobs in the textile and apparel industries during the next ten years. Below GED Occupations Occupations within the “ Below GED” education band are among the state’s fastest growing. Many of these jobs are found in retail occupations, where the state will add roughly 25,000 net new salespersons between 2007 and 2017. Food service employees are also high growth occupations. Healthcare employment growth will also be responsible for generating a large number of new low- skill jobs. For instance, the state will add approximately 21,150 home health aides and 13,115 nursing aides, orderlies, and attendants over the next decade. There are also several occupations in this education band that are expected to decline, again related to losses in the manufacturing sector. The anticipated losses in these occupations are not nearly as dramatic as the textiles- related losses anticipated in the two bands discussed earlier. Instead, occupations such as utility meter readers or order clerks are losing jobs as a direct result of automation. In general, the majority of America’s and North Carolina’s jobs can be found in the last two educational bands (“ High School/ GED Entry- Level” and “ Below GED” occupations), but a growing number of jobs require formal college experience or long- term job training. The greatest job losses are occurring among jobs that do not require formal college education. When compared with the United States, North Carolina has a higher concentration of its workforce in these occupations. The evidence suggests that new jobs being created are more likely to require higher education and will demand more from their workers in terms of education levels. Appendix 3 provides more detail about the fastest growing and declining occupations. 22 Occupational Trends by Employment Band An examination of these education bands at a greater level of aggregation begins to reveal some important issues facing the changing nature of North Carolina’s workforce. Figure 11 compares the education requirements for projected new jobs being created during the next decade in both North Carolina and the United States. One key pattern that emerges is that a smaller proportion of North Carolina’s jobs are being created in occupations that require a post- secondary degree than in the overall US job market. Nationally, 28.6 percent of all jobs require workers to have at least a two- year college degree, but in North Carolina, only 23.6 percent of all jobs require this level of education. Conversely, North Carolina has a greater proportion of jobs that require significant OJT. Whereas 35 percent of all jobs nationally require at least a GED and some experience, for North Carolina that figure is 41 percent. These ‘ middle jobs’ are often found in production or skilled trades occupations, many of which are serving the manufacturing sector. These jobs have traditionally represented the backbone of North Carolina’s employment. As noted earlier, the data show that manufacturing- related occupations will continue growing more slowly ( if at all) than the rest of the economy and will decrease as a percentage of total employment. This trend will continue to affect the state’s occupational profile significantly as more jobs require post-secondary education and many of those who do not have technical skills slip into the only jobs they will be able to do — lower wage, lower skill jobs. As shown earlier in Figure 11, nationally there will be a shift towards occupations requiring more skills and training. There will be fewer ‘ middle jobs’ and a slight increase in the number of low- skill jobs. North Carolina’s middle jobs associated with manufacturing are disappearing quickly. In their place, the projections show an increase both in the number of jobs requiring Figure 11 US and NC Net New Jobs by Required Education ( Estimated Change 2007- 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of Total New Employment ( 2007- 17) USA NC ‘ Disappearing’ Traditional Middle Jobs ‘ New Middle’ Jobs NC Net New Jobs Total = 700K Source: Regional Dynamics forecasts Note: Gray areas indicate 2007 proportion of NC employment within the traditional middle educational bands. 23 post- secondary degrees and those lower paying jobs that require just short term OJT. The projected new employment will place a growing premium on higher education. In 2007, roughly 17 percent of North Carolina’s jobs are expected to require workers to possess at least a bachelor’s degree; nationally, that figure is 20 percent. In the coming decade, 26 percent of all new US jobs will need workers with at least a bachelor’s degree while 25 percent of North Carolina’s new jobs will require a bachelor’s degree. Similar trends hold true for jobs requiring a two- year degree or postsecondary vocational training. Nationally, an estimated 8.4 percent of the workforce will be in occupations requiring an associate’s degree or technical training in 2007, but in North Carolina that share is slightly lower at 7.7 percent. However, during the next ten years, 13.1 percent of the new jobs created in North Carolina will require an associate’s degree compared to 11.1 percent nationally. For North Carolina, this requires an increase of almost 90,000 net new jobs in this one education band. Given these projections, the state’s community colleges will play a vital role in preparing workers for future jobs. While North Carolina’s ongoing economic transformation will require more knowledge intensive jobs, these economic shifts also are expected to increase the state’s share of jobs that require low skills and offer low wages. Nationally, occupations requiring short- term OJT will account for 36 percent of US employment in 2007, but only 34 percent of new jobs between 2007 and 2017. Similarly, these low- skill occupations represent 34 percent of North Carolina’s 2007 jobs, but will constitute more than 40 percent of the state’s projected new employment created between 2007 and 2017. While nationally, the share of low skill jobs will decline slightly, North Carolina’s current industry mix suggests that it will actually demand MORE low skill workers as a share of total employment, working to drive down average earnings relative to the US average. The jobs losses among traditional middle jobs and the continued growth in high- end and low-skill occupations are creating an increasingly polarized workforce. This shift is occurring nationally, but the patterns are more pronounced in North Carolina. As companies continue to shed many traditional semi- skilled and low- skilled “ middle jobs,” there will be fewer opportunities for low- skilled workers to gain upward mobility. This polarization becomes readily apparent when examining the average estimated earnings for each education band. Figure 12 shows that the returns to individuals on their education can be significant. North Carolina’s average earnings in occupations that require a four- year degree is $ 77,005. For those workers in occupations requiring an advanced degree, the average earnings are $ 83,785. Figure 12 NC Net New Jobs and Earnings by Required Education ( Est. 2007 and 2017) Educational Band Emp 2007 Net New Jobs ( 07- 17) Average Earnings 2007 % Total Emp ( 2007) % New Jobs ( 07- 17) Advanced Degree 160,572 36,560 $ 83,785 3.2% 5.3% 4- year College Degree 687,536 134,808 $ 77,005 13.7% 19.7% Tech- Some Post 386,614 89,452 $ 46,774 7.7% 13.1% GED Some Experience 801,703 58,980 $ 42,952 15.9% 8.6% GED/ Entry 1,263,563 88,085 $ 34,123 25.1% 12.9% Below GED 1,732,747 276,598 $ 24,405 34.4% 40.4% Total 5,032,734 684,484 $ 40,598 100.0% 100.0% Source: Regional Dynamics North Carolina 24 Occupations requiring a two- year degree or long- term OJT pay above average wages, indicating a payoff from investment in education and training. These above average earnings also demonstrate the importance of moving people from the traditional middle jobs into the new middle jobs. Occupations requiring two- year degrees have average earnings of $ 46,774, and those requiring long- term OJT pay $ 42,952 per year. However, the majority ( roughly 60 percent) of North Carolina’s jobs continue to be in occupations that require moderate or short- term training and pay below average wages. For the large share of North Carolinians with little more than short- term OJT, the average earnings— at $ 24,405 per year— are only 60 percent of the state average. Regional Differences by Education Band Within the state, several key regional differences emerge. Most of the new jobs created over the next decade will be in the state’s more urban regions. Metropolitan counties account for 74 percent of the projected employment in 2007. More importantly, these counties are expected to be the location of 81 percent of all the projected new jobs created between 2007 and 2017. Meanwhile, micropolitan counties represent about 19 percent of total employment and only 14 percent of new jobs being created during the next decade. The remaining rural counties represent about 7 percent of total statewide employment, but only 5 percent projected new employment growth in the state. While the educational requirements for occupations in the state’s metropolitan areas run close to the state averages, the counties in the rural and micropolitan areas differ significantly. Figure 13 illustrates the current workforce composition in the state’s metro, micro and rural areas by education band. The micropolitan and rural areas have traditionally relied on employment in the manufacturing sectors so the traditional middle jobs ( i. e., occupations that require GED/ Some Figure 13 Metro, Micro and Rural Jobs by Required Education ( Est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of TOTAL Employment ( 2007) Metro Micro Rural 2007 Source: Regional Dynamics forecasts 25 Experience and GED/ Entry) are more predominant than in the metro areas. Higher end occupations are somewhat more concentrated in the metropolitan areas. Figure 14 illustrates the educational requirements of occupations that will create the most new jobs during the next decade. The percentage of traditional middle jobs in all three areas ( metro, micro, and rural) will decline significantly as a share of total employment. This decline is most notable in the state’s micropolitan and rural areas. The number of low- wage, low- skill jobs will grow rapidly at the same time that more jobs will require two- and four- year college degrees. During the next decade, almost 50 percent of the new jobs created in micropolitan and rural areas will require only short- term OJT and those projected new jobs come with pay well below the state average. Average earnings for these low-skill jobs are only about half ( 51 percent) of the overall average earnings for workers in micropolitan areas and below half ( 45 percent) of average earnings for workers statewide. Clearly, the growth of these jobs will have significant consequences for the economic well- being of the citizens in the state’s more rural areas. Examining the state’s geographic regions reveals additional differences in the demand for educated and trained workers. Figure 15 and 16 illustrate the current workforce composition in the Mountain, Piedmont and Coastal regions by education band as well as the educational requirements for the projected new jobs created between 2007 and 2017. The Piedmont region more closely resembles the state and national averages than does the Coastal and Mountain regions. As might be expected, the Research Triangle has a higher proportion of jobs requiring a four- year degree. While roughly 16 percent of all jobs in North Carolina in 2007 will require at least a bachelor’s degree, more than 20 percent of the jobs in the Research Triangle require similar qualifications. Figure 14 Metro, Micro and Rural Net New Jobs by Required Education ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Bands Percent of NET NEW Employment ( 2007- 17) Metro Micro Rural Net New Jobs, 2007- 2017 Source: Regional Dynamics forecasts 26 However, the state’s golden crescent has a weak middle: the education requirement for employment and new employment growth in the Piedmont Triad more closely resembles the state’s micropolitan and rural areas. More so than the Charlotte or Research Triangle regions, the Piedmont Triad has been more dependent on mature manufacturing industries like textiles, tobacco, and furniture. As these industries have declined, so too has the proportion of middle jobs available to lower- skilled workers. Workers Figure 15 Mountain, Piedmont and Coastal Region Employment by Required Education ( Est. 2007) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of TOTAL Employment ( 2007) Mountains Piedmont Coast 2007 Source: Regional Dynamics forecasts Figure 16 Mountain, Piedmont and Coastal Region Net New Jobs by Required Education, ( Est. 2007 and 2017) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Advanced Degree 4- year College Degree Tech- Some Post GED Some Experience GED/ Entry Below GED Education Band Percent of NET NEW Employment ( 2007- 17) Mountains Piedmont Coast Net New Jobs, 2007- 2017 Source: Regional Dynamics forecasts 27 dislocated from jobs in these industries and occupations that have not been prepared to move toward higher skill employment are left with only lower skill, lower paying jobs as the only employment alternative. Moreover, these jobs are available because so many of the new jobs in the Piedmont Triad are being created in low- skill, low- wage occupations. To illustrate, almost 46 percent of the new jobs created in the Piedmont Triad region will require no more than short- term on- the- job training. This certainly represents a recipe for a vicious cycle in which low skill job creation begets the creation of even more low skill jobs. Although slightly more skewed toward lower wages and lower skilled jobs, the Coastal region also closely resembles the state and national trends. Some parts of the Coastal region are struggling more than others. For example, very much like Piedmont Triad and the state’s micropolitan regions, 45 percent of the new jobs created in the Coastal area will require just short- term OJT. Offsetting this trend, the southern part of the Coastal region benefits from a significant military presence that buoys the economy and raises the area’s average earnings. The Mountain’s job creation trends closely resemble the trends found in the state’s rural areas. The region’s economy was once dominated by manufacturing jobs in textiles and furniture, but jobs in many manufacturing- related occupations are disappearing rapidly. As a result, the relatively high proportion of middle jobs is diminishing and many of those workers now must accept the growing number of low- skill, low wage jobs being created. More than 44 percent of projected new Mountain- area jobs created during the next decade will require only short- term OJT. Summary of Key Demand Analysis Jobs are currently concentrating in the state’s urban areas, especially in the Piedmont metro areas of Charlotte, the Triad, and the Triangle. While 70 percent of people live in metro North Carolina, 74 percent of the state’s jobs are found there. Furthermore, the trend is expected to continue with 81 percent of new jobs located in the state’s metro areas. Not only are most jobs located in the metro areas, but also most good jobs are located there as well. Average earnings are nearly $ 10,000 ( or 30 percent) higher in metro areas than micro areas and nearly $ 15,000 ( or more than 50 percent) higher in metro areas than in rural areas. This is due in part to higher wages offered but also to the mix of emerging new job opportunities available at higher skills. It should come as no surprise that the state’s metropolitan counties drive economic and job growth. The Piedmont region, which is made up of the state’s three largest metro areas, represents the core of that job growth. It represents 64 percent of the state’s population and 68 percent of its workforce. Average earnings in the area are slightly higher than the overall average for the state’s metropolitan areas. The wage differential between the Coastal and Mountain regions is significant, but that difference would probably be even greater without 140,000 people working in the Coastal region’s military installations. The state’s employment is expected to grow by 14 percent during the next decade. More than half of that employment growth is anticipated among the 25 fastest growing industries. Fifteen of those industries are in healthcare, education, and professional and business services. Only a few of these industries pay significantly higher than average, and the average earnings of the fastest growing industries is about 6 percent below the current average earnings. Given current employment projections, 28 average earnings are likely to decline in real terms during the next ten years unless the state is able to create a significant shift in the mix of jobs available. The reason that average earnings are likely to decline is that the state is creating low- wage, low- skill jobs at a faster pace than it is creating higher paying, high skill jobs. Four of ten new jobs being created during the next decade will not require a high school degree, increasing from the current job mix ( in which 36 percent require only short- term on- the- job training). This increased number of low skill jobs is significantly higher than the US trends in low skill job creation. The problem is further exacerbated because the proportion of jobs requiring a minimum two- year degree is increasing at a faster rate in North Carolina than in the US as a whole. The bifurcation of the job market means that employers seeking increasingly skilled workers will have fewer job opportunities for workers that are high school drop- outs and that once could find employment in the state’s factories and farms. These trends are intensified in the state’s lagging areas ( e. g., micropolitan and rural areas as well as in the Mountain and Coast regions) where relatively fewer employment opportunities will be available. Thus, the projected new employment trends will create a demand for workers with post- secondary education and training, and the wage gap between those who have an education and those who do not could potentially deepen the social, political, and economic challenges facing the state. Workforce Supply The previous section provided an overview of the demand for workers, based on the state’s current mix of industries and occupations as well as the projected future mix of industries and occupations. This analysis includes a summary of the key occupations to be filled. The following section examines the supply of potential workers. Then, the report looks at the population and demographic shifts anticipated in the coming decade. The study also examines the current and potential workforce to better understand the state’s existing skill sets and challenges. Demographic Analysis Population Growth The amount, rate, and patterns of population growth in North Carolina can significantly affect the state’s economy as well as its needs for infrastructure, services, and supportive social institutions. From 1990 to 2000, the population increased by 21 percent ( or 2 percent annually), making it the United States’ 9th fastest growing state. The 1990s saw an increase of 1.4 million North Carolinians. While the growth rate slowed during the early 2000s to 1.5 percent annually, the state maintained its 9th place ranking and continued adding people at a rate nearly 50 percent faster than the nation. Between 2000 and 2007, the state population increased by roughly 800,000 and is projected to increase by another 1.4 percent annually or 900,000 in the decade to come. Looking ahead, the state’s population growth is expected to be far from uniform. Between 2007 and 2017, the Piedmont region will drive much of the growth, increasing by 13.5 percent as illustrated in Figure 17. Population increases in the Research Triangle and Charlotte areas are growing fastest of all seven partnership regions. The Coastal and Mountain regions are expected to lag considerable behind the state and Piedmont region, adding 4.7 percent and 3.9 percent, respectively, more people. 29 Populations grow or shrink as a result of natural increase ( births minus deaths) combined with shifts in net migration ( people moving into the state minus people moving out of it). From 1995 to 2000, North Carolina had the fourth highest rate of net domestic in- migration behind Nevada, Arizona, and Georgia. The total net migration to North Carolina was 337,900 between 1995 and 2000, and an estimated 389,000 more people moved to the state between 2000 and 2005. Migration came from both the Northeast and the South with states in those regions contributing most of the 919,000 new residents to North Carolina. There were nearly equal numbers from New York and Florida, and smaller numbers from California, South Carolina, and Virginia. These new residents tended to settle in the state’s cities as illustrated in Figure 18. Between 2000 and 2005, the Piedmont region added a net of 311,000 residents as a result of in- migration. As Figure 19 illustrates, a recent Census Bureau study indicated that the two metropolitan areas, Charlotte and Raleigh- Durham, ( and especially Wake and Mecklenberg Counties) were more likely to attract new young, single, and educated residents – a critical group of skilled workers. 11 11 US Census Bureau, “ Migration for the Young, Single, and College Educated for the United States, Regions, States, and Metropolitan Areas: 2000,” ( PHC- T- 34), April 2004. The young are those who were aged 25 to 39 in 2000; the single are those who were never married, or were widowed or divorced in 2000; and college educated are those people who had at least a bachelor's degree in 2000. Figure 17 Population Growth Projections, 2007 to 2017 3.9% 13.5% 4.7% 12.3% 6.5% 4.7% 3.9% 14.5% 2.3% 4.4% 7.3% 17.5% 7.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Mountains Piedmont Coastal Metro Micro Rural Advantage West Charlotte Eastern Region Northeast Piedmont Triad Research Triangle Southeast Source: AGS Demographics Projected Growth North Carolina Growth Rate= 10.2% 30 The moderate growth that occurred in the Mountain region is almost solely due to in- migration, but of a different kind. From 2000 to 2005, 93 percent of the region’s population growth was due to existing North Carolina residents moving into the area. The in- migration was to the Asheville metropolitan area’s two largest counties— Buncombe and Henderson. Although the Asheville MSA was also the only metro area outside the Piedmont region to add young, single and educated people through in- migration between 1995 and 2000, most of Asheville’s increase was due to the influx of retirees. Without the positive net migration to the Asheville MSA, the Mountain region actually runs the risk of population decline. Figure 18 Source: US Census Bureau Center for Regional Economic Competitiveness Net Migration in North Carolina Counties ( 1995- 2000) Counties with positive net new migration Counties with negative net new migration * Circles shown only for counties with positive or negative net new migration greater than 1,000 + 5K + 15K + 30K - 5K - 15K - 30K Net New Migration Miles 0 70 31 The Coastal region added 39 percent to its population as a result of net in- migration. The biggest contributor to that increase has historically been military families. The region is much more heavily Figure 19 Net Migration of Young, Single, College Educated People to North Carolina Metropolitan Areas, 1995- 2000 - 1,157 - 946 - 462 - 393 - 143 45 71 558 2,194 10,091 - 3,000 - 1,500 0 1,500 3,000 4,500 6,000 7,500 9,000 10,500 12,000 Greenville Greensboro- Winston- Salem- High Point Fayetteville Wilmington Rocky Mount Hickory- Morganton- Lenoir Goldsboro Asheville Raleigh- Durham- Chapel Hill Charlotte- Gastonia- Rock Hill Net Number of Young, Single, College Educated In- migrants ( 1995- 2000) Source: US Census Bureau Figure 20 Distribution of Population by Race, 2007 Estimate 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% White Black American Indian Asian Other % Non- White Population Source: U. S. Census Bureau, AGS Demographics % of Population U. S. North Carolina Mountains Piedmont Coastal 32 dependent on existing residents and natural population increases than other parts of the state. While in-migration occurred at modest rates in the region, five counties within North Carolina’s Eastern Region economic development partnership region ( representing the central counties of the Coastal region) actually experienced a net out- migration of more than 1,000 people between 1995 and 2000. Population Diversity North Carolina’s racial and ethnic changes are having a significant impact on the labor market today and will likely continue to do so as the future make- up of the workforce changes. Figure 20 shows that the state’s population is diverse in terms of more people from a variety of ethnic backgrounds. Rapid growth in some ethnic and minority groups is changing the composition of the workforce. Assimilating this new demographic mix of workers will likely require parallel changes in the workplace, educational institutions, and communities as a whole. In particular, rapid growth among minority populations has been and will continue to be marked by an increasing diversity in language and culture. North Carolina is somewhat more diverse than the nation, but not uniformly and not in the same ways. In the state as a whole, the ethnic composition of North Carolina’s residents is 72 percent White, 21.6 percent Black, 1.4 percent Asian, and 1.2 percent American Indian. In addition, about 6.9 percent of the state’s people are Hispanic. While the ethnic composition of the Piedmont resembles the state as a whole, the Mountains and Coastal regions vary significantly. The Mountain population is the least diverse with Whites constituting nearly 92 percent of area residents. The Coastal region is much more ethnically diverse, with Blacks making up more than 30 percent of the population and other non- white groups composing an additional 9 percent of the population. The diversity is greatest in the Northeast partnership region, where the Black population accounts for more than 40 percent of the population. Emerging Importance of Hispanics As North Carolina enters the 21st century, it was already more ethnically diverse than the nation as a whole in large part because it has a significantly larger Black population than does the rest of the nation. North Carolina’s growing Hispanic population is making the state even more diverse. Figure 21 illustrates that the proportion of Hispanics in North Carolina is lower than the nation as a whole. Demographics projections from the US Census suggest that the Hispanic population as a proportion of all North Carolinians will to continue to climb at a rate that far exceeds the national average. In 2005, North Carolina was ranked 11th for total number of Hispanic residents; the 2007 population estimate put that number at more than 600,000. Recent research suggests that the state’s 2005 Hispanic population may be as much as 300,000 to 400,000 more people than official Census estimates as a result of unauthorized or undocumented migrants. 12 If these estimates are correct, the actual estimated Hispanic population could be as high as 900,000 or 1 million ( between 9 and 11 percent of the state’s total population). 12Pew Hispanic Center, “ Estimates of the Unauthorized Migrants for States,” April 2006. Data are based on the March 2005 Current Population Survey and are found at http:// pewhispanic. org/ files/ factsheets/ 17. pdf. 33 Before 1990, Hispanics were dispersed across the state, filling many agricultural jobs in rural areas. During the 1990s, the Hispanic population increased, but the greatest concentration of new in- migrants was in the Piedmont and Coastal regions. During that period, the Hispanic population typically migrated to the state’s urban crescent. The Hispanic population density maps in Figure 22 illustrate the early concentration in certain parts of the state, and the more recent density analysis of 2000 data confirms the Hispanic population has increased and expanded across the state. In the 1990s, the Mountain region had a net increase of Hispanic residents, but the growth was much slower than the significant growth levels in the Piedmont and Coastal regions. The 600,000 Hispanic residents in the state are younger, poorer, and more likely to be male than the rest of the state. For instance, 25 percent of the state’s population is between the ages of 18 and 34, while 46 percent of the state’s Hispanics are in this age range. Sixty percent of Hispanics in the state are men while overall women slightly outnumber men. The estimated median household income of Hispanic families was about $ 31,773 in 2005, about 78 percent of the state average of $ 40,729.13 13 Source: US Census Bureau, American Community Survey, 2005. Figure 21 Hispanics as a % of Total Population, by Region, 2007 15.5% 6.9% 4.0% 8.5% 4.4% 7.6% 5.0% 6.2% 4.0% 8.1% 5.0% 1.7% 8.1% 9.2% 4.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% U. S. North Carolina Mountains Piedmont Coastal Metro Micro Rural Adva |
OCLC number | 663901253 |