History has a habit of turning the tables on us. Economic strengths can become liabilities, and forces that once harmed communities can become necessary to those same communities’ economic survival. Connections to the outside world first created North Carolina’s rural manufacturing base, then destroyed much of it, and have now come back around to being essential to rural communities’ economic future.
In living memory, the first encounter with globally integrated commerce did not go so well for most rural communities in our state. As textile, furniture, and other manufacturing companies moved to countries where they could pay workers pennies an hour, rural North Carolina took it on the chin. Factories that had sustained families for generations shuttered, and entire communities collapsed, all so consumers could get T-shirts for a few dollars cheaper. North Carolina is still a manufacturing powerhouse, but the number of jobs has never recovered to where it was in the 1970s and 1980s.
The experience was profoundly painful for many communities, but it happened, and that horse isn’t going back in the barn. We live in an increasingly connected economy, and nothing short of another world war or planetary economic collapse is going to change that. Today, connections to the outside world are increasingly important to rural communities’ economic survival.
Physical and digital connections open up economic potential. Rural counties where more people have access to vehicles, and commute to another county tend to have lower rates of unemployment, less poverty, and higher incomes. The same holds for internet access. As we do more of our commerce and communication online, rural communities that lack reliable broadband are going to get left out.
Perhaps more profoundly, human connections can reinvigorate rural communities, bringing new workers, entrepreneurs, and consumers to bolster local economies. Rural communities with more residents born outside of North Carolina, and with more people who were born in another country, tend to be more prosperous. For example, a five percent increase in the share of local residents who were born outside the United States is associated with an average half-percent decrease in a county’s unemployment rate, a one percent reduction in poverty, and a nearly $4,000 boost in median income. Turns out, welcoming new neighbors isn’t just good manners, it’s good for business.
We can look to earlier times in North Carolina’s economic past for examples of how public investments in connectivity open up opportunities for private commerce. North Carolina first developed a rural manufacturing base, in large part, because of public investments in transportation infrastructure. In 1849, the state legislature authorized the construction of the North Carolina Railroad, a transportation backbone that created a string of manufacturing communities from Wilmington to Charlotte. State investments made it possible for goods manufactured across the state to reach markets along the eastern seaboard and, ultimately, customers around the world. The North Carolina Railroad was followed by state investments in highways and internet infrastructure that allowed more rural communities to reach economic opportunities beyond their immediate neck of the woods.
We have failed of late to continue this legacy of knitting North Carolina together, as recent state tax cuts have prevented us from investing in the economic future of rural North Carolina. Tax cuts that primarily benefit wealthy residents of North Carolina’s cities and corporate shareholders outside of the state have left years of backlog in transportation projects and underfunded rural classrooms, and they have pulled back much of the economic development assistance that used to be available to rural communities. All of this could get even worse if the proposed constitutional amendment to lower the income tax cap is not defeated on this fall’s ballot.
Even where the state has stepped up to the plate recently, we’re still not swinging for the fences. Last year, the General Assembly appropriated $10 million for rural broadband grants, the first significant investment of its kind in years. It was a good first step, but we’ll need much more. Indiana directed 10 times that amount to rural broadband in 2018, and it would take years of that level of investment in North Carolina to keep rural communities from falling fatally behind their more connected urban neighbors.
However fondly many people may think of bygone eras in North Carolina’s economic history, we can’t turn back the clock to a time when communities could keep to themselves and let the outside world work itself out. We live in a deeply connected economy, and the only path to prosperity for most of us is to build deeper connections in the physical world, in cyberspace, and with our fellow human beings.
Patrick McHugh is an Economic Analyst with the Budget & Tax Center, a project of the NC Justice Center.