Healthy State, Worried Workers:
North Carolina in the World Economy
Edward Gresser
In effect, Hamilton believes America can succeed as a manufacturer, despite its high wages, by
producing goods with fewer workers than its rivals. In this thesis we see, 206 years later,
America’s recent global-economy experience in manufacturing industry. We are making more, but
using constantly fewer people to do it. In general, therefore, fears of a broad deindustrialization
are mistaken. And when we do find ourselves fundamentally unable to compete in particular
industries - even those very important to particular regions - it seems that new inventions and
industries emerge, sometimes with support from government, sometimes not, to replace the old.
But change comes with a high human cost - in direct dislocation and job losses, in high levels of
anxiety for people whose jobs are less secure, and especially in the very high financial price
American workers and their families can pay for job loss. American government support and
adjustment policies, in particular the Trade Adjustment Assistance program developed in the
1960s by John F. Kennedy, ease these costs only to a small and incomplete extent.
North Carolina’s experience dramatizes the dilemma with special force. The state relies more
heavily on factories for employment than does the United States as a whole. And the emblematic
manufacturing industries of North Carolina’s 20th century - textile mills, garment factories,
furniture factories - are precisely those facing the most powerful challenges from developing
Asia. Its efforts to redesign itself and move into new areas has been remarkably successful; the
efforts of the state and national governments to help individuals, however, have been less so.
The experience may be most powerfully dramatized by the recent experience of the Cannon Mills
workers portrayed in the film and the Kannapolis community.
I. North Carolina and its Industrialization
First, a few introductory remarks for those not intimately familiar with our politics and geography.
North Carolina is a state on the Atlantic seaboard of the United States. Originally settled as a
British colony in 1655 - it is named for then-King Charles II of England - it was one of the
original 13 colonies that joined to form the United States in 1776. To the north it borders on
Virginia, to the west Tennessee, to the south, its sibling South Carolina. The state’s nine million
people spread across 139,000 square kilometers of land, making it geographically a bit larger,
and demographically slightly smaller, than Portugal.
As of 2006, the state’s economy is valued at $374 billion. The low value of the dollar these days
means the figure is about 50% larger than the Portuguese economy, roughly equal to Poland,
and slightly behind Belgium. The total includes $74 billion in manufacturing output, or roughly
19% of the economy. For the US as a whole, the manufacturing figures are $1.6 trillion and
12.9% of GDP. North Carolina also counts $4 billion in agricultural production, a $40 billion
professional and technical field, centered on an area known as the Research Triangle around the
universities at Raleigh and Durham (roughly 160 kilometers from Kannapolis) and a $17 billion
information industry. This audience will be aware that North Carolina is a film center, apparently
ranking third in the United States behind only California and New York.
Just as manufacturing is a larger share of North Carolina’s economy than that of the US as a
whole, factories employ a larger share of North Carolina’s workers. The state has about 550,000
factory workers, accounting for 16% of the state’s 4.1 million workforce. By comparison, the US
as a whole has 14 million manufacturing workers, or about 11% of the nation’s 138 million
workers. North Carolina’s light industry are especially heavy employers - the states’s textile mills,
for example, employ a sixth of America’s textile workers.
This reliance on manufacturing is not an eternal phenomenon. Like the South generally, North
Carolina was slower to industrialize than the northern and western United States. In its early
history, the state relied on foreign markets for its agricultural products, in particular tobacco. Its
industrialization dates to the early 20th century, when the textile industries born in New England
and New York began migrating toward lower-cost parts of the United States. Pietra Rivoli, an
economics professor and student of the textile industry at Georgetown University, explains: