The hunt for jobs

Editorial by Greensboro News-Record, November 10, 2013.

North Carolina’s plunge from first to second in Site Selection magazine’s 2013 national business climate rankings is cause for disappointment but not panic.

Our state has fallen to even greater depths — third place in 2011! — and recovered.

There’s something about this survey that suits North Carolina, which earned the top position every year from 2004 to 2010 and again in 2012. The criteria are:

Workforce skills; transportation and utility infrastructure; taxes; land and building prices and supply; ease of permitting and regulatory procedures; incentives; union activity; and higher education resources.

Yet that’s not the whole story because, despite the stellar ratings, North Carolina’s unemployment rate stands fifth-highest in the country. This prompted Gov. Pat McCrory to propose a significant change. Instead of leaving the state’s primary economic development work to the N.C. Department of Commerce, he plans to give the job to a publicly funded private organization called Partnership for Prosperity. It’s supposed to be up and running by early next year.

The governor wants a more nimble agency that can work as quickly as businesses on the lookout for new locations.

A dozen other states have done this — although some of the top-rated states for economic development have not. Those include Georgia, which tops this year’s Site Selection list.

As Richard M. Barron reported in last Sunday’s News & Record, two recent studies found serious problems in public-private economic development agencies in some states. Issues included lack of transparency, exaggerated claims of job creation and links between the private board members and companies receiving taxpayer-funded incentives.

North Carolina leaders say that won’t happen here. Assurances are fine; the question is whether mechanisms will exist to make sure the new agency gets results and is accountable to taxpayers.

Some observers also wonder why any change is necessary.

“Nobody’s ever shown me something that says North Carolina doesn’t know how to do economic development,” Greg LeRoy, an author and director of a watchdog group called Good Jobs First, told Barron. “What’s being fixed here?”

The governor’s answer is that a poor economy is being fixed. A high ranking by Site Selection magazine does not come with paychecks for unemployed North Carolina workers. The state’s good business climate still isn’t producing enough fruit.

The unknown is whether the fault lies with the Department of Commerce or other factors.

The criteria used by Site Selection magazine might point to other weaknesses. Is North Carolina providing workers with the right job skills? Is it meeting infrastructure needs? Is its state and local tax structure competitive (simply shifting tax burdens from the state to local governments may not help)? Does it use incentives productively? Are state universities maintaining their value, despite budget cuts?

When North Carolina gets all those equations right, its business climate might produce more jobs. Until then, merely restructuring the economic development apparatus may not be good enough — and it could be worse.