Job Loss in North Carolina

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of
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ISSN 1542-6300


Editorial Board:
Editor:
George H. Conklin,
 North Carolina
 Central University

Board:
Richard Dixon,
 UNC-Wilmington

Chien Ju Huang,
 North Carolina
 Central University

Ken Land,
 Duke University

Miles Simpson,
 North Carolina
 Central University

Ron Wimberley,
 N.C. State University

Robert Wortham,
 North Carolina
 Central University

®
Volume 2, Number 2
Fall 2004

The Economic and Social Impact of Job Loss in Robeson County, North Carolina
1993-2003
by
Leslie Hossfeld
University of North Carolina at Pembroke
Mac Legerton
Center for Community Action
Gerald Keuster

Introduction

As a result of manufacturing job loss from Robeson County, NC 1993-2003, over $713 million in jobs, income, and business taxes were lost

    United States manufacturing has undergone intensive economic restructuring over the last thirty years. This has had a profound effect on rural areas, especially in the Southeast where textile, apparel, and furniture manufacturing have been based. North Carolina, in particular, has been dependent on traditional manufacturing supplying most of rural counties’ employment (Scott 2001).
    Throughout the 20th century, manufacturing jobs provided economic stability for individuals and communities in North Carolina. Yet since the mid-1990s, this stability has eroded. With the implementation of General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA), the impact has meant displacement for thousands of North Carolina rural workers. North Carolina job loss between 1994 and 2000 reached more than 100,000 (The Rural Center 2002).
    Rural areas have been the hardest hit. Robeson County, North Carolina has felt the brunt of economic restructuring. Between 1997 and 2000, Robeson County lost 41% of its manufacturing jobs (Estes, Schweke, and Lawrence, 2002). This predominantly rural county has seen significant increases in unemployment, bankruptcies, and substantial reductions in household income and business taxes.
    The impact of job loss is far-reaching: individuals, families and the entire community have all been negatively touched. Distress extends not only from the loss of jobs, but also from the more profound loss of an entire way of life.
    Research on the social and economic impact of job loss in Robeson County, N.C. is one of the main goals of the Jobs For the Future Project of the Center For Community Action.
    The Jobs For the Future Project was created in 2002 in order to develop comprehensive strategies of economic relief and reconstruction in Robeson County, N.C.
    Along with formal and participatory research, the Jobs For the Future Project utilizes the following strategies in its program: community organization, engagement, and problem-solving; multi-sector collaboration; faith-based involvement; service learning; program and proposal development and support; and policy development and advocacy.
    The project’s research design and its comprehensive approach to development provide a model for other rural communities across N.C. and the nation that are facing significant economic and social challenges as those in Robeson County, N.C.
    This report provides preliminary research findings. A more extensive research report will be published in October 2004.
    Policy and program recommendations for rural economic relief and reconstruction are also available through the Jobs For The Future Project.

Robeson County, N.C.

    Robeson County, N.C. is a large, rural county located in the Coastal Plains of Southeastern N.C. Based on the 2000 Census, its multiracial population of 123,339 is 38 Native American, 32% European American, 25% African American, and 5% Latino/Hispanic. The Asian population is less than 1%. Robeson County is home to the Lumbee, the largest Native American tribe east of the Mississippi River.
    Robeson County’s highly diverse population earns it the distinction of being the most ethnically diverse rural county in the U.S. Its present poverty rate of 24% and illiteracy rate of 38% are indicators of low economic and social well being that have persisted for generations.
    While the people of Robeson County have made major advancements in improving political governance and equitable racial representation, the county’s contrasting decline in economic and social conditions reveals the significant nature of its present and most serious economic and social crisis in the last 75 years.
    On the one hand, Robeson County has advanced further in the past 20 years than most, if not all, N.C. counties in achieving racial inclusion and representation in all levels of government. On the other hand, its economic and social conditions have significantly declined in the last 10 years, more than most, if not all, N.C. counties.
    Because of both its racial diversity and massive loss of jobs, Robeson County is a microcosm of the present experience of many U.S. communities and counties, particularly across rural America.

Ten-Year Change in Robeson County Manufacturing, 1993 to 2003

    Based on NC Employment Security Commission data, Robeson County has lost approximately 8,708 manufacturing jobs since 1993. The peak years of plant closures in Robeson County were 1998 to 2003, with nine plant closings reported in 2003. In 1993, manufacturing accounted for 31% of all jobs in the county.
    Ten years later, manufacturing accounts for only18% of jobs in Robeson County. Figure 1., below, shows the percent of jobs in manufacturing and the decline in Robeson County’s manufacturing jobs in the past 13 years.

Figure 1.
Percentage of Jobs in Manufacturing, Robeson County, NC, 1990-2003.

Source: US Census Data 1990-2003.

    Figure 2., below, captures the decline in manufacturing employment and manufacturing payroll in Robeson County.   Manufacturing work declined significantly from 17,430 in 1993 to 6,832 in 2003, with a corresponding decline in manufacturing payroll.

Figure 2.
Number of Manufacturing Employees and Manufacturing Payroll, Robeson County, NC, 1994-2003.

Source: County Business Patterns 1994-2003.

Economic Impact of Manufacturing Job Loss

“As I said right now, our organization is running a deficit, in our budget, we’re providing more services to our clients than we are receiving reimbursement for. So, what we’re trying to do right now is to see if there are any additional grant dollars out there because our county has been so hard hit by the textile losses. We have to see if there are any additional resources out there we can tap into, actual dollars that we can tap into to help offset the deficit we’re running right now because of the services that we’re providing the patients.”
Robeson County hospital administrator

    The impact of manufacturing job loss is not isolated to the individual worker or the individual plant closing. Workers’ salaries flow back into the community when they purchase goods and services. Similarly, a manufacturing plant uses utilities and services from the community, and generates considerable property tax for the county. When these salaries and taxes are gone, the ripple effect is tremendous.

Ripple Effect of Job Loss

    To understand the ripple effect, we examined the loss of manufacturing activity and employment in Robeson County over a ten-year period, from 1993 to 2003. We wanted to understand the regional economic impact of the decline in manufacturing activities on regional employment, household income, and indirect business taxes.
    Using economic input-output model analysis (IMPLAN), we estimate that the loss of 8,708 manufacturing jobs in Robeson County resulted in a total reduction in regional employment of 18,345 jobs over ten years. These employment impacts refer to the total (net) employment effects of the loss of both part-time and full-time jobs. We looked at: initial manufacturing layoffs, and all “multiplier effects”-- including both indirect “ripple” effects and induced, household-spending “feedback” effects.   Figure 3 below shows the ‘multiplier effect’ of losing 8,708 jobs from 1993-2003. The net result is a ‘ripple effect’ of 18,345 jobs lost.

Figure 3.
Employment Impacts from Manufacturing Job Loss in Robeson County, NC, 1993-2003.

Source: Dumas 2004

Ripple Effect on Loss of Household Income

    By 2004, regional household income had been reduced by $674 million per year due to the manufacturing job loss in Robeson County. The region is defined in this study as the adjacent commuting counties (Scotland, Hoke, Columbus, Bladen, Cumberland and Dillon, SC).   Household income is defined here as the total of employee compensation (wages, salaries, insurance and retirement benefits), proprietors’ income (self-employment income including private business owners, doctors, lawyers, etc.) and “other property type income” (property rents, corporate dividend payments and retained earnings, and royalties).
    The reported household income impacts are total (net) household income impacts. These include the initial reductions in household income that result directly from manufacturing layoffs. They also take account of all “multiplier effects” reductions in household income-- including both indirect, “ripple” effects and induced, household-spending “feedback” effects.

Figure 4.
Household Income Impacts Due to Manufacturing Job Loss in Robeson County Over 10 Years.

Source: Dumas 2004. Income loss over ten years from 2004 should jobs not be replaced.

Ripple Effect on Loss of Indirect Business Tax

    By 2004 regional governments were collecting $39 million less per year in indirect business taxes due to the manufacturing job loss in Robeson County.
    Indirect business tax (IBT) impacts include sales taxes, business taxes (but not residential property taxes), federal customs duties and excise taxes, severance taxes, and business motor vehicle licenses fees (but not personal motor vehicle license fees).
    IBT do not include federal income taxes, corporate profits taxes, estate taxes, gift taxes or Social Security/Medicare taxes. IBT do not include state income taxes, corporate profit taxes, estate taxes, gift taxes, fish/game license fees, or state social insurance program taxes.
    The reported IBT impacts are total (net) impacts. These refer to the initial reductions in IBT resulting directly from manufacturing layoffs, and all “multiplier effect” reductions in IBT, including both indirect, “ripple” effects and induced household-spending “feedback” effects. Figure 5. below shows the ripple effect of loss of indirect business taxes to Robeson County from 1993-2003.

Figure 5.
Annual Reduction in Regional Business Taxes Paid Due to Job Loss in Robeson County from 2004
Forward Should Jobs Not Be Replaced.

Source: Dumas 2004
What Happens When Jobs Disappear?

    Job loss affects not only the immediate worker who loses their job, but other workers in the community. Figure 6., below, gives a sample of the ripple effect in Robeson County when manufacturing jobs disappeared.

Figure 6
Sample of Ripple Effects on Other Industries of Manufacturing Job Losses.

Sample of Trade-Related Job Losses 1993-2003 Lost Jobs Lost Income in Dollars

Banking -148 -13,680,181

Eating and Drinking -637 -9,245,275

Wholesale Traders -495 -22 ,567,266

Motor Freight -475 -17,466,318

Gov. Education -637 -20,660,867

Gov Non-Education -411 -16,450,228

US Postal Service -51 -2,349,769

Hospital -100 -4,427,898

Source: Dumas 2004. Loss estimated using IMPLAN system.
    Due to manufacturing job losses from 1993-2003, Figure 6 demonstrates that banking jobs were also affected with a net loss of 148 jobs and a $-13,680,000 in income. The US Postal Service was affected with a net loss of 51 jobs and income loss of $-2,349,769. Hospital jobs, eating and drinking establishment jobs were also affected, as were many other jobs in the county. The ripple effect in an area when work disappears is substantial.
    Figure 7 shows the total loss of jobs, income and indirect business taxes from the disappearance of manufacturing jobs from Robeson County in a 10-year period.

    Figure 7.
Total Loss of Jobs, Income and Indirect Business Taxes from the Disappearance of Manufacturing Jobs in Robeson County 1993-2003.

Lost Jobs 18,435

Lost Income $674,000,000

Lost Business Taxes $39,000,000

Total Per Year $ Loss to Robeson County from 1993-2003 $713,000,000

Source: Dumas 2004

Unemployment Rates and Unemployment Insurance

“Well, I was drawing unemployment up until the first of December, and all unemployment was cut out, no more extensions or whatever, and I’ve had not one dime coming in since then. Not one thing, I’ve been staying at mama’s, taking care of her, trying to come to school, taking my grandchildren to school, going back to get them. It’s just been constant schedule every day. But it’s took a toll on my health. And, I’ve gotten to the point where I’ve just really been really nervous and worried because I didn’t know where I was going to get another job to be able to, there’s taxes, there’s um, I can’t buy food…, I’ve gained so much weight from my health problems and now I can’t even afford my medicine. I can’t afford to go to the doctor.
57 year-old displaced worker

Unemployment
    Annual unemployment rates have steadily increased for the state and Robeson County since 1994, with peak years of 2001 and 2002 corresponding to increased plant closings. The county’s rates have remained double that of the state’s unemployment level.

Figure 8.
North Carolina and Robeson County Unemployment Rates, 1994-2003.

Source: North Carolina Employment Security Commission 1994-2003.

    According to data collected in 2002 by the NC Rural Economic Development Center, in 1999 North Carolina had the 12th lowest unemployment rate in the United States. However, by December 2001, North Carolina was 46th out of the 50 states in terms of unemployment—only four states had more unemployment than ours.
    The state’s unemployment rate had the greatest increase of any state in the nation from 2000-2001. North Carolina lost more textile and apparel jobs during this time than any other state in the country. Sixty-nine percent (69%) of all textile layoffs in North Carolina occurred in rural counties (The Rural Center, 2002).

Unemployment and Race

    One of the key findings from the literature on economic restructuring is that the process of deindustrialization has differential effects on various categories of workers (Johnson & Oliver, 1991). Job loss in manufacturing has had dramatic effects on rural workers, but particularly rural black workers. In Robeson County, annual unemployment rates have increased for all categories of workers between 1990 and 2000, from 7.6% to 9.1%.
    African American unemployment has remained almost three times higher than white unemployment since 1990.
    Latino unemployment levels have increased six times since 1990, and Latino workers are twice as likely to be unemployed than white workers.
    Native American unemployment minimally decreased to 9% between 1990 – 2000, a decrease of .3 of 1% . Many of the manufacturing plants that closed from 2000-2003 employed a large Native American workforce, also increasing the Native America unemployment rate in the county.

Figure 9.
Annual Unemployment Rates in Robeson County by Race, 1990 and 2000.

Annual Unemployment Rates Robeson County 1990 2000

Total 7.6% 9%

White 4.4% 6%

Black 12.6% 16%

Native American 9.3% 9%

Latino 2.4% 12.4%

Source: US Census
Unemployment Insurance

    In January 2002, unemployment payments reached a record high for the state of North Carolina , nearly twice the amount paid in 2000 (North Carolina Budget and Tax Center). In Robeson County, unemployment insurance payments nearly doubled between 2000 and 2001 (North Carolina Budget and Tax Center).

Figure10.
Annual Unemployment Insurance to Robeson County Residents, 1994-2001.

Source: U.S. Bureau of Economic Analysis 1993-2001.

    The drain on the Unemployment Insurance Fund (UIF) has intensified. According to the NC Budget and Tax Center Reports (2003) the tax cuts made in the 1990s, coupled with the record-setting benefit claims of 2001-2003, have dangerously reduced UIF. In June 2003, North Carolina had a negative UIF balance. By October 2003, North Carolina was forced to acquire UI Trust Fund loans to continue benefits (Employment Development Corporation 2003). According to the Center on Budget and Policy Priorities (Jordan 2003), “the number of workers exhausting their regular benefits between March and August 2002 was 225 percent larger — or more than triple — the number exhausting benefits in the comparable six months of 2000.”

Income

    Per capita income for the Robeson County in 2000 was $13,223. The average household income in Robeson County in 2000 was $36,579, as compared to the state’s average of $51,225. When we examine household income closely, we find that 37% of Robeson County households in 2000 had incomes below $20,000 a year; and over half (52%) of Robeson County households earned incomes below $30,000 a year.   Figure 11., below, provides average household incomes by race in Robeson County showing African American and Native American household incomes significantly lower than whites.

Figure 11.
Mean Household Income by Race, Robeson County, 2000.

Source: U.S. Census 2000.

    According to the Federal Poverty Level, 24% of Robeson County households live in poverty (Census 2000). Critics of the federal poverty line are of the opinion that this measure is outdated.
   Today, rising costs in many areas absorb larger portions of families' budgets. These include: housing, transportation, health insurance, medical and childcare costs. Social scientists argue that if current social and economic considerations were utilized in formulating the poverty measure, the official poverty line would be at least 50% higher than the current measure.
    According to the North Carolina Justice and Community Development Center Report Working Hard is Still Not Enough (2003) a more realistic gauge of poverty is the Living Income Standard (LIS). LIS is a basic family income criterion for estimating the standard of living needed by average families in North Carolina in order to meet their basic needs. It covers seven basic items: housing and utilities; food; health care; transportation; miscellaneous expenses like clothing and cleaning products; and taxes.
    LIS does not include: money for savings; consumer, lending company, or mortgage loans; meals out, entertainment, birthday presents, videos, etc. Therefore, the Living Income Standard is a very conservative, low indicator of the actual cost that is needed for a sensible standard of living. Using the LIS measure, 45% of Robeson County
families live in poverty.

Bankruptcies

    The ripple effect of job loss on a community can be seen in the increase in personal bankruptcies. As shown in Figure 12, personal bankruptcies have nearly quadrupled in the region since 1994.

Figure 12.
Personal Bankruptcies Filed in U.S. Eastern NC District Courts, 1994-2002.

Source: U.S. Eastern North Carolina District Court.

   In Robeson County (Figure 13.), bankruptcies steadily increased during the economic downturn from 1999 to 2002.

Figure 13.
All Bankruptcies, U.S. District Court, Robeson County, 1999-2002.

Source: U.S . Eastern North Carolina District Court.

Older Workers Are Disadvantaged

‘I am 45 and I never thought of myself as old. But now that I’m trying to find work, I feel very old.”
                                  Displaced worker

    Rural displaced workers are generally older workers with less education who are tied to home ownership, making it difficult to migrate out of the county for work. Thirty percent (30%) of Robeson County’s population is 35-54 years old. Half (50%) of employed workers are in the 35-54 age category. Research on displaced workers indicates that older workers endure greater hardships with longer periods of unemployment than younger workers (Moore, 1990; Leana and Feldman, 1992; Kodrzycki, 1996). According to the NC Rural Center (2002), older workers are considerably less likely to be reemployed within one to two years of being laid off. And compared to younger workers, older workers’ income is more likely to decline. Many of these workers do not have a high school diploma and are faced with returning to school and then finding training for new skills.

“Sometimes it’s kinda embarrassing for me, I call my grandson, he’ll be in fourth grade. In the fourth, you know, they’ve already learned just a little bit of algebra, well that’s what I’m in algebra now in high school, I never took it. During time I was going to school, so it’s all new to me. On the equations and, with the parentheses you know, and I was at home last night and I was trying to work them problems out and I said, I just can’t get it. So I go over to my daughter’s house toting my school books, it was like, my grandchildren looking at me, here I am 47 years old, coming in the door with school books (laughs).
Displaced worker

Education and Knowledge-Based Work

“We still have a significant number of our kids who are not graduating from high school. We still have a significant number of our kids dropping out of college and not finishing their education. As long as we continue this trend, we’re not going to be able to tap into computer-based, high-tech jobs or high-tech companies are not going to be moving into this area because we don’t have a workforce that’s prepared.”
Robeson County agency worker

    Previous research on displaced workers indicates that college educated workers are more likely to be reemployed compared to workers with a high school diploma. College educated workers also have shorter duration of unemployment periods after displacement (Moore, 1990; Keltzer, 1998).
    Rural North Carolina workers often have not completed their high school degree, and fewer still have associate or bachelor degree. In Robeson County, the public school annual dropout rate has increased from 9% in 1990 to 11% in 2000. Sixty-five percent of the population has a high school diploma and 11% hold a bachelor’s degree or higher. Displaced workers face the dilemma of having little educational attainment when work today is increasingly knowledge-based.

When Family Members Lose Jobs

“We have family members, people, employees of the organization whose families have worked in the textile industries that have lost their jobs. So we actually have families or people working with us who are at the poverty level because they are having to support family members who are out of work… Every time somebody loses their job, they’re losing health insurance for their family.   If they have to choose between going to the doctor or putting food on the table they’re going to put food on the table versus going to the doctor. Families need steady work—job-- and unfortunately that’s something my company can’t provide for them. But I think it’s something you know-- but that’s what they need. They need steady work. They need a paycheck coming into them.”
Robeson County agency worker

    A survey by the North Carolina State Center for Health Statistics in 2002 found that of the sample surveyed in Robeson County, 30% did not have access to health insurance.   As workers are laid off, more and more families are uninsured.
    The infant mortality rate in Robeson County remains high, and has increased since 1990 from 12.1 to 14% in 2000.
    Children are the category of people at greatest risk of being in poverty. In Robeson County in 2000, 31% of children under 18 lived in poverty. Considering race, 45% of African American children live in poverty, 29% Latino children live in poverty, 26% Native American children and 19% white children live in poverty.
    Figure 14., below, provides trends in child well-being for children under 18 in Robeson County. From 1994 to 2001 free-lunch, foodstamps and Medicaid child recipients have increased.

Figure 14.
Trends in Child Well-Being Robeson County.

Source: North Carolina Child Advocacy Institute
‘Child’ refers to people age 0-17

Other Indicators of Distress

“Because we are not honest about what is going on. You know, if it’s NAFTA--which is the national whatever, that policy that they passed which allows companies to move over to other countries or whatever-- I don’t think people were really and truly honest about the impact it was going to have on our country, and it’s had a very negative impact.”
Robeson County agency worker

Figure 15., below, shows the increase in annual income-maintenance benefits payments to individuals by $28 million from 1994 to 2001.

Figure 15.
Annual Income Maintenance Payments to Individuals in Robeson County, 1994-2001.

Source: U.S. Bureau Economic Analysis. This data represents payments that include SSI, AFDC, food stamp payments, general assistance, foster home care and adoption assistance, earned income tax credit, and energy assistance.

   Government payment to individuals in Robeson County doubled from 1994 to 2001 (Figure 16.).

Figure 16.
Government Payments to Individuals in Robeson County, 1994-2001.

Source: U.S. Bureau of Economic Analysis.   This data represents estimates for government payments to individuals, which includes medical payments, AFDC payments, Food Stamp payments, general assistance, income tax credits, veterans benefit payments, federal educational/training payments, Bureau of Indian Affairs payments, and disaster relief payments. About half the payments are for medical care and a quarter goes for retirement/disability payments.

Conclusions

“And I’ve begged, I’ve totally begged, you know, for help to get me straightened out so I could go back to work. Find a job and go back to work, but everywhere I went I’ve just been turned away. We can’t help you. And I said, you know, it’s a shame, I’ve worked all my life. Now I need some help and I can’t get it.”
Displaced worker

    The preliminary research findings presented in this research paper demonstrate the negative effect of job loss on one rural county - Robeson County, N.C - that has been significantly negatively impacted by federal trade policies. Both the research model and findings are applicable to a significant number of rural counties across the United States that have experienced massive job loss over the past 10 years.
    The data collected and analyzed in the research report provides the basis and framework for:

valid and reliable research and findings that quantify the total amount of jobs and income that has vanished on a county-level as a result of massive job loss;

more research on the local, state, and national impact of massive job loss in rural America and on effective program and policy models for economic recovery;

an increase in responsible and creative policy discussion, deliberation, and implementation on the national, state, and local level regarding multiple strategies for economic renewal;

development of a massive program of federal, state, and private assistance and support to rebuild and reconstruct the economies of rural, Robeson County, rural N.C., and rural America.

“Federal policy that lowered trade barriers with countries around the world led to an exodus of manufacturers to developing countries where costs are lower and labor and environmental laws are less stringent.”
N.C. Rural Economic Development Center Report on Rural Entrepreneurship

    Since federal policy is a major cause of the problem of massive job loss, more responsible and constructive national policy must be a major part of its solution.
    There is rising concern regarding the lack of a federal policy focus on domestic needs and concerns that address the critical issues facing our nation, including rising unemployment, joblessness, poverty, and health care costs, particularly in rural America.

    The release of October 2004 report will coincide with the research education and training component of the National Conference on Job Loss and Recovery that will be held in Lumberton, N.C. at the Robeson County Agricultural Center on Friday and Saturday, October 1-2, 2004.

References

Dumas, C. 2004. “The Economic Impact of Manufacturing Activity Decline in Robeson County, NC 1993-2003.” Research Report, Center for Community Action.
Estes, C., Schweke, W. and Lawrence, S. 2003. “Dislocated Workers in North Carolina, Aiding Their Transition to Good Jobs,” North Carolina Justice and Community Development Center.
Employment Development Corporation. 2003. Unemployment Insurance Fund Forecast. State of California.
Jordan, E. 2003. BTC Report, June 30.
Keltzer, L. 1998. "Job Displacement" Journal of Economic Perspectives 12:115-136.
Kodryzcki, A. 1996. "Laid Off Workers in a Time of Structural Change" New England Economic Review. July: 3-26.
Leana, Carrie and Danie Feldman. 1992. Coping with Job Loss. New York: Lexington Books.
Moore, Thomas. 1990. "The Nature and Unequal Incidence of Job Displacement Costs." Social Problems 37:230-242.
The Rural Center. 2003. Facing the Facts. Winter 03.
Schmidt, S. and Jordan, E. 2003. Working Hard is Still Not Enough. Raleigh: North Carolina Justice and Community Development Center.

Notes
Funding for research on this project was provided in part by:

The American Sociological Association’s Sydney S. Spivack Program in Applied Social Science Research and Social Policy Community Action Research Award.

Ford Foundation and the Southern Funding Collaboration

Good Work, Inc.

Mary Reynolds Babcock Foundation

North Carolina Council of Churches

North Carolina Union Community Fund of the AFL-CIO

Z. Smith Reynolds Foundation

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