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North Carolina’s Promising Experiment

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North Carolina’s Promising Experiment

One state’s focus on creating a skilled labor force led to a revival in manufacturing jobs. March 29, 2018
Economy, finance, and budgets

Policymakers and economists alike have long struggled with the challenge of reversing deindustrialization. North Carolina is showing that innovative education policies can help. In the 1990s, the state’s furniture and tobacco industries were in decline, but its biotech and pharma industries needed a broader pipeline of potential workers with specific skills. Looking to promote job opportunities in these burgeoning fields, the state-funded North Carolina Biotechnology Center worked with industry to identify gaps in worker skills. The center partnered with the state community college system to create a standardized curriculum that could teach these skills in short-term programs, leading to a certificate.

Recruiters focused on candidates working in declining, legacy manufacturing industries, and who had only a high school degree. “The idea was that manufacturing workers in other industries, who knew how to follow a process, could learn enough biology to competently operate in a bio-manufacturing facility,” says Robin Deacle, the center’s communications director.

The curriculum provided the basic knowledge needed for bio-manufacturing so that factory workers, regardless of their educational background, would be able to compete for job openings. “The state and NIH were providing research dollars to universities,” says Bill Bullock, the Center’s head of economic development. “We had a unique opportunity to solve the talent gap in bio and pharma manufacturing. In advanced manufacturing, the skills don’t take care of themselves; people need to be trained.”

The creation of a sizeable, skilled workforce made companies more comfortable building factories in North Carolina. The state also had a tradition of active economic development—and a new source of money to spend on it. The $60 million start-up cost of the 128-hour program and its supporting facilities were fully funded by proceeds from the state’s Master Settlement Agreement with tobacco companies.

This modest program suggests a way forward for states that have suffered deindustrialization. The primary focus of America’s innovation and development today is not manufacturing, but university-based advanced research and development. The assumption is that commercialized spinoffs from this work will lead to local economic growth, but aside from the experience of Silicon Valley, little evidence supports this idea. Most new jobs go to where the product is actually made, which is usually elsewhere, including offshore. Local university-affiliated entrepreneurs benefit from this model; local blue-collar workers do not.

Nichola Lowe, a UNC Chapel Hill professor of regional and city planning, has researched the Biotech Center project and concluded that North Carolina’s policies led to robust growth in biotech and pharma manufacturing jobs. Manufacturing employment increased by 11 percent and total bioscience employment increased by 24 percent. The state’s experience stands in stark contrast with that of the Northeast, where economic-development dollars—including direct public investment in high-tech manufacturing in upstate New York—have not translated into employment in good-paying manufacturing sectors. Lowe’s research shows that Pennsylvania, a pharmaceutical hub, saw drug manufacturing employment drop by a quarter in the decade or so after 2000.  In New Jersey, manufacturing employment dropped by a third over that period. In New York, an increase in research jobs offset a decline in manufacturing positions, but overall bioscience employment was largely flat. “The case of North Carolina complicates the policy assumption . . . that policy actors can do little to keep production jobs in the United States or any particular region,” Lowe writes, along with her collaborator from Hunter College, Laura Wolf-Powers.  The North Carolina Biotech project, they maintain, “positioned workers with technical knowledge, but not necessarily advanced degrees, to obtain these jobs.” The authors term the state’s approach “inclusive development.”

Conventional wisdom still holds that blue-collar factory workers should go to college to get a B.A. if they want to escape dead-end jobs. But the value of a college degree is far from certain for many. Workforce intermediation—such as what the Biotech Center promotes—opens up alternate pathways, and with them, the chance of a better job. As workforce intermediation goes beyond life sciences, it can support manufacturing growth in other industries, in a variety of locales, including rural communities.   

North Carolina’s experiment can’t necessarily be replicated in the high-wage, high-cost states of the Northeast, though. And other factors are driving U.S. deindustrialization besides lack of skills, such as the growth of China and the impact of its mercantilist trading practices. But the North Carolina story still carries lessons for New Jersey, Connecticut, and New York, which have radically deindustrialized. Connecticut was once America’s most industrialized state, but it risks becoming a New England version of the Rust Belt, with little economic dynamism outside of Fairfield County. New Jersey was once known for its pharma industry, but no longer.

The only tool that these states apparently have to attract industry is lavish tax breaks for corporations to get them to stay in state or to move in. New Jersey offered Amazon $7 billion in tax credits to build a second headquarters in Newark. But as the industrial base withers and public unions continue to exercise political power, states must keep raising taxes to pay the soaring costs of entitlements and retirement benefits. Each tax hike prompts more businesses to leave. The result is self-defeating and unsustainable. 

American workers who lose their jobs are essentially on their own. Workforce intermediaries provide structure and curricula for experienced workers whose skills are out-of-date. The North Carolina example suggests that other, more cost-effective policy options exist to address deindustrialization besides just using tax policies, the primary lever of today. North Carolina may still offer tax incentives to attract companies, but a skilled workforce is the best incentive of all.

Photo: traimak_ivan/iStock

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