Author: Andrew Berger-Gross
Labor markets in the United States have been fundamentally altered in recent decades by the shift from manufacturing to service-providing jobs and by the increased economic importance of large cities. North Carolina has been no exception, and its various regions have struggled (with varying success) to recover from years of market transformation and to take advantage of the new economic landscape.
The scale of these shifts is illustrated by the changing geographic distribution of workers employed in North Carolina. The central counties of the Raleigh and Charlotte metro areas (Wake and Mecklenburg, respectively) together accounted for 30 percent of all North Carolina workers in the fourth quarter of 2013, up from 22 percent in the fourth quarter of 1993. Every other county in the state saw their share of employment change by less than one percentage point. Workers in the counties — the two largest in the state — earned the fourth- and second-highest monthly wages in the state during this period.
The following graph shows all 100 counties in North Carolina plotted by their change in employment share and their historical average wage:
There is a lot going on in the above graph. The first thing to note is that Wake and Mecklenburg counties, which in recent history have been disproportionately high earning, now employ a much larger share of all workers. The changing geographic distribution of employment in the state — led by these two outliers — can account for a small portion of the average wage growth seen overall in North Carolina since 1993 (and a large portion of growth in average wages seen since 1999.) *
Second, readers should note that these figures are for employment shares, not employment levels. For example, the number of workers employed in Durham County increased 39 percent over the past two decades (while the state as a whole grew 27 percent.) But Durham started out the period small, relative to the largest counties, and thus it still represents a comparatively smaller share of overall employment in the state.
However, what we're seeing in the Triad is another matter entirely. The central counties of the Triad region (Forsyth and Guilford) actually saw their share of employment decline. Over the past two decades, the share of employment in Guilford County declined by more than any other county in the state. Guilford and Wake counties were nearly the same size in the fourth quarter of 1993, representing 8 percent and 9 percent of statewide employment, respectively, and both benefiting through their size from economies of scale that some regional economists say are of increasing importance in driving productivity, wages, and growth in large cities. But by the fourth quarter of 2014, Guilford's share had declined to 7 percent, while Wake's share had jumped to 14 percent.
Or, again, restated in employment levels — although the number of workers employed in Guilford County did increase 14 percent over the past 20 years, this increase was smaller than the average county growth rate of 17 percent and dwarfed by the 104 percent increase in Wake County.
Although the reasons for the diverging fortunes of North Carolina’s large cities are complex, a broader decline in manufacturing employment may be playing a role. In the last quarter of 1993, Guilford County had a higher concentration of jobs in the manufacturing sector (21%) than could be found in Wake (9%) or Mecklenburg (12%). Guilford County was disproportionately impacted by the loss of manufacturing jobs, while Wake and Mecklenburg may have been better positioned to benefit from the growth of service-providing jobs. Despite these losses, Guilford County continued to have a higher concentration in manufacturing (12%) than Wake or Mecklenburg (both 5%) in the last quarter of 2013. **
These trends are not going away anytime soon. The populations of Raleigh and Charlotte are each expected to grow 72 percent by 2030, and manufacturing is expected to represent ever-declining shares of job growth nationwide over the next decade. The various regions of North Carolina may face challenges in adapting to this new growth environment. LEAD will continue to report on the causes — and consequences — of these economic shifts in order to help our partners in the economic development community navigate these changes.
General disclaimers:
Estimates from the Quarterly Workforce Indicators (QWI) program are based on both survey and administrative data, and are subject to sampling and nonsampling error. Note that the QWI estimates are not directly comparable to official employment or wage estimates from the Current Employment Statistics (CES) program due to differences in methodology and coverage. Any mistakes in data management, analysis, or presentation are the author’s.
Footnotes:
*This analysis is accomplished by separating changes in real average monthly wage into two components: 1) changes in the county composition of the workforce, and 2) wage changes within each county, as follows: (WAGEall / #WORKERSall) = Σ(#WORKERScounty / #WORKERSall) * Σ(WAGEcounty / #WORKERScounty). I performed this decomposition using Fisher’s “ideal” index, which permits a perfect multiplicative decomposition of change over time without a residual.
** Industry data are from Quarterly Census of Employment and Wages (QCEW), 1993(q4) and 2013(q4).