Healthy State, Worried Workers: Edward Gresser
North Carolina in the World Economy
Globalization, then, has not meant a broad “deindustrialization” of the United States. Nor does
falling factory employment meant an increase in unemployment. Our job creation rates have
varied, from the weak labor markets of this decade through the strong job growth of the 1990s.
But we now have 116 million private-sector workers and 138 million total workers, where in the
1970s we had about 70 million in the private sector and 85 million overall. Unemployment rates
are about equal to those of the 1950s, varying between 4 percent and 5 percent since 1992, and
much lower than they were in the less ‘globalized’ 1970s and 1980s, when unemployment was
regularly between six and seven percent, and occasionally rose to ten percent.
That said, the decline of American manufacturing employment - even if factories remain
successful - has narrowed a once-broad avenue that earlier generations of less-educated
Americans took to claim a middle-class way of life. And for those individuals among the 8,000 or
so who leave factories each month, the personal toll can be high. America lacks a government
guarantee of health care and relies in part on private firms for pensions; so workers who lose
their jobs routinely lose health insurance. Thus job losses come with massive financial risk, which
in turn deters many unskilled workers from seeking training and community-college degrees
which could help them develop new skills. Pensions are vulnerable as well. Even affluence can
increase risks, since we have few social-insurance policies to help families cover college tuition
and home mortgage expenses during periods between jobs.
And American leaving factory work are often especially vulnerable. The highest rate of
manufacturing job loss, and presumably of trade-related job loss, has been in light manufacturing
industries such as textiles, shoes, toys and furniture. Here we find workers who are often older
than the average, have fewer years in school, and are more likely to live in rural or semi-rural
areas where communities are small and can depend very heavily on one or two large
businesses. In North Carolina, for example, factories employ 19 percent of workers in rural areas
and only 12 percent in cities. For obvious reasons these people have more trouble recovering
from job loss than others. And this brings us back to North Carolina and the Cannon Mills.
III. Plant Closure and its Aftermath
The Pillowtex company went bankrupt in 2003, and shut down its operations nationwide. The
company’s fate seems from a distance avoidable and not wholly a matter of trade competition, as
the debt it had taken during the purchase of the mills from Cannon-Fieldcrest seems to have left
it uncompetitive. On the other hand, it was simply the largest in a very broad wave of retreat for
the industry. The lobbying group National Council of Textile Organizations, an association of
textile and related industries, claims that 341 textile and clothing factories have closed in the
United States since the year 2001. Of this total, 138 closures - two in every five - took place in
North Carolina6.
These 138 closures, according to NCTO, accounted for 23,100 job losses. The Pillowtex closure
accounted for 4,650 all by itself. Given the small size of the community a layoff on this scale is a
quite devastating event.
What happens afterward? One can divide this question into two different parts: does the
community recover? And do the individuals recover?
1. North Carolina and Kannapolis Recover
The answer to the first question is - perhaps surprisingly - positive. North Carolina is managing
the transition successfully, and with considerable help from the state government the Kannapolis
community seems to be doing so as well.
6 http://www.ncto.org/