A visit to our economic rivals in the Tar Heel State

Sixty years ago, North Carolina (NC) was the second poorest state in the United States, with its economy built on tobacco, textiles, and furniture making. Today, North Carolina’s economy is ranked as high as first, and always near the top, from organizations that rank state economies. Its economy is built on health care, technology, and manufacturing, and North Carolina competes with Massachusetts for venture capital, jobs and economic growth.

The new North Carolina brand is best captured by the state’s Research Triangle— a geographic area anchored by the state capital Raleigh, Chapel Hill (where the University of North Carolina is located) and Durham. It contains a nonprofit industrial park of 7,000 acres (about a quarter of the land area of the city of Boston) called the Research Triangle Park (RTP), which has recruited dozens of large companies which together employ 55,000 people. Fidelity alone has 10,000 workers there, about twice the number of employees they have in Boston, its headquarters. Apple is in the process of moving there from Austin.

Last week, the Boston Chamber of Commerce decided to bring 70 people to the Triangle via one of its programs, City to City, to visit, learn how the area works, and perhaps bring ideas for improvement back to Boston. I was one of the people on that trip.

More than a dozen years ago, I attended a forum at the Boston Federal Reserve Bank that had a presentation by the then head of the North Carolina Department of Education, who explained how their government and academic institutions decided to change their system of education to support what they believed their future economy and jobs could be. At the time, furniture making was one of the largest employers, but the speaker pointed out that it was cheaper to harvest hardwood in Siberia, transport it to China, make the furniture there, and ship it by boat to the US, which resulted in the collapse of that North Carolina industry. By focusing on, and investing heavily in the state’s system of education, especially their community colleges and state universities, they prepared their population for what they hoped their future economy would be.

The Boston Chamber group heard from the Raleigh chamber, the mayor of Raleigh (Mary-Ann Baldwin, originally from Rhode Island), and representatives of academia, business, and government.

The key ingredient to their success, they stressed, was the ability of government, academe from the several colleges and universities in the Triangle, and the business community to collaborate. Together, they have reengineered education to be the economic development tool for the region, by making workforce development the primary purpose of education. Speaker after speaker discussed how academe and business leadership work together to ensure that there are trained workers for the industries they want to move to the triangle. Government plays a major role in keeping the cost of public higher education low (overall cost is significantly lower than public higher education in Massachusetts), connecting K-12 education to higher education via early college programs, and recruiting businesses by incentivizing moves into the area. In addition to a 50 percent cut in property taxes from the local government, Apple received $846 million in tax credits over 39 years from the state to move into the RTP so long as they maintain 3,000 employees there.

You’d have to say that it has been a winning strategy, but is it what Massachusetts needs?

The North Carolina focus was seen to imply that Boston didn’t collaborate well. An often-cited 2004 report on Boston called “Boston Unbound” described Boston as “lacking the collaborative gene.” There is certainly value in getting government, academe and business working together, but it would be hard to make the case that our systems do not currently collaborate. It’s not at the level of North Carolina, but we seem to have sufficient collaboration to ensure a robust economy. Companies relocate to Massachusetts because we have a very educated population, especially from the great number of colleges and universities in our midst. And though we do not have a 7,000 acre RTP, we have nearly as many jobs as the RTP in the few blocks of Longwood Avenue.

But we have other issues which demand attention. As North Carolina gains population, Massachusetts is losing population, not because we don’t have jobs, but because our cost of living is very high, and similar jobs can be had in lower cost places like the Research Triangle of North Carolina. In fact, the RTP has a website workinthetriangle.com with a map indicating how relatively close the RTP is to Boston and a “cost of living calculator” to show you how much further your money will go in the Triangle. A quick click results in “Your salary will go 34% further in the Triangle than Boston, MA.”

The loss of population, combined with our state having a decrease in our birth rate, has resulted in government focusing much more attention on ensuring that more of our local population succeeds in our system of education, with increased support of K-12 via the Student Opportunity Act, programs such as Early College, which allows high school students to get community college credits while in high school, and plans to make Community College free. There is a recognition that we don’t have a burgeoning population, so we need to make sure every child can succeed.

But if we don’t deal with the cost of living issue, we may be enhancing education for the benefit of our competitors with a lower cost of living. The major issue is the cost of housing, which is the largest factor in our high cost of living. The fact that the suburbs around Boston fight the law that requires them to build apartment buildings near public transit is hugely detrimental to the future of our Commonwealth. This is an area of collaboration which must improve.

Bill Walczak lives in Dorchester. His column appears regularly in The Reporter.


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