What are the key challenges for NC's future?

Published February 29, 2024

By Michael Walden

Long ago, my father told me it was always good to look ahead. Why? Because problems may appear that take a while to solve. If there was no advance planning for dealing with the problems, there may not be enough time to find a solution and avert possible disappointment or even worse.

In my over seven decades of living I’ve tried to follow my father’s advice, and I am thankful for doing so. Yet the idea of looking ahead applies to more than just individuals. Today, I’ll look at how the advice can apply to North Carolina by identifying some of the key challenges for the State’s future.

In no particular order, my top six challenges in North Carolina’s future are energy, skill training, spreading economic prosperity, housing, transportation, and staying competitive. I’ll comment on each and let you decide if my “look-ahead” makes sense.

Like all states and many nations, North Carolina is engaged in adjusting its energy production and usage to be friendlier to the climate. All key participants in the energy market – including those in both the private and public sectors – appear to agree with this goal. But disagreements occur in two ways. First, what should be the components – such as fossil fuels, renewables, and nuclear – of our future energy production? Second, how fast can we move to a more climate-friendly environment and still support the energy needs of North Carolina? 

These energy challenges are actually more difficult for North Carolina for one reason – we are a fast-growing state, and more growth means more energy use. North Carolina’s population is expected to increase almost twice as fast as the nation’s (32% vs. 17%) from 2020 to 2050.  According to some forecasters, this growth could result in a 50% increase in electricity usage by 2050. The growth could be larger if new technologies like artificial intelligence (AI) take hold.

A strong economy obviously relies on a workforce trained for the skills needed in that economy. But the needed skills constantly change over time, and many experts think these changes will accelerate in upcoming decades. One big game-changer will be artificial intelligence. One study predicts 30% of all hours worked today could be eliminated by AI as soon as 2030. Furthermore, unlike the past where job losses from new technology were concentrated in “blue collar” fields, such as manufacturing, AI has the potential to substitute for workers in many “white collar” fields, with many of the displaced workers having college degrees.

We can hope new jobs will be created in other fields, but the question is where? The North Carolina Community College System has already recognized this challenge by committing to a program of following where job growth occurs, and aligning programs with that growth. Four-year universities and colleges will need to do the same. Some also predict a big increase in “on-the-job” training. A new study reports that almost half of college graduates are not working in the field related to their degree.

It has become more expensive to purchase or rent shelter in North Carolina. For example, since 2000, home prices in the State have more than doubled, far outpacing household income gains. Importantly, this number is after adjusting for changes in the size and amenities of shelter. 

The increase in shelter costs is most prominent in metropolitan regions of the State, like the Triangle and Charlotte areas. These regions have experienced rapid population growth, resulting in more people competing for the limited homes and apartments located close to jobs, schools, entertainment, and other amenities. 

 One solution to the high housing costs is to build more structures by increasing density in cities. But even this approach is limited. A second idea is for individuals who can work remotely to live in more moderately priced housing in non-metropolitan regions. And for those who don’t work remotely, a third idea is to encourage developers to construct residences in outer areas of the metro regions where land is more affordable, and then have rapid bus systems transport workers to and from jobs in the big cities.

 There are two challenges with transportation. One is to change our commuting to methods that are friendlier to the climate. This has already started with the push for drivers to switch from gasoline powered vehicles to electric vehicles. The second challenge is financing transportation projects. With North Carolina’s forecasted large population gains, there will likely be a need for additional highways. But how will the roads be financed if gas tax revenues drop as more drivers use EVs? One solution is a mileage fee, which is independent of the fuel used by a vehicle. Another is to finance road and possibly rail projects with general revenues, such as from the State income tax or sales tax.

 A final challenge for North Carolina is staying competitive. By this I mean continuing North Carolina’s ability to attract both in-state and out-of-state investments that will create good-paying jobs, particularly in parts of the State that have lagged in economic development. All states have this same goal, so North Carolina must constantly re-assess its policies and programs against those of other states. 

 I have a simple answer for maintaining North Carolina’s competitiveness. It is to keep our collective eye on the challenges identified above, and to constantly work to confront and succeed in surmounting those challenges.

 In the almost fifty years I’ve called North Carolina my home, I’ve watched the State totally transform its economy and move to the top of the rankings for many economic measures. But there will always be challenges – some old and others new – and I’ve identified many I think will be important in the coming decades. However, you may decide to create your own list of future challenges and solutions. Whichever you ask – mine or yours – you will be following the advice of my father to look ahead.

Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.