August 3, 2017
In May, North Carolina won Site Selection magazine’s 2017 Prosperity Cup, earning recognition once again for its economic appeal and ability to attract new investments while offering a climate that supports growth. On the heels of this significant achievement, John Skvarla, Senior Government Relations Advisor for Nexsen Pruet and former Secretary of the North Carolina Department of Commerce (2015–2016), offers his observations on the current commerce climate and the key factors influencing the state’s economic future.
Site Selection maintains a significant archive of economic data and commerce statistics, including everything from state tax climate rankings by the Tax Foundation, to job creation figures, to the number of new and expanded facilities, to capital investments. The publication uses this information to generate a range of notable rankings throughout the year, one of them being the Prosperity Cup.
North Carolina has been a top recipient of the award over the last three years, ranking No. 1 this year, tying for first place with Texas in 2016, and placing fourth in 2015. The listing is significant because it’s based on pure numbers – no opinion polls or professional reviews, just data. And the statistics tell a particularly compelling story for North Carolina.
The Numbers Behind North Carolina’s Economic Success
In 2016 the state faced what many perceived to be a significant economic hurdle – House Bill 2, also known as the “bathroom bill.” Although HB2 ostensibly created business resistance until a compromise bill was passed in March 2017, it didn’t deter capital investments appreciably.
That’s because North Carolina’s $500 billion economy has been on a path forward for the last several years and had taken a number of strategic steps to build its competitive position in the national and international markets.
The impact of multiple aggressive moves to support a business-friendly climate – including billions invested in infrastructure, venture capital, and transit commitments – became increasingly evident last year. And as a result, North Carolina welcomed nearly 300 new and expanded facility constructions in 2016.
Significant brands, such as NovoNordisk, Metropolitan Life and even the Tryon Equestrian Park, were attracted to the region creating thousands of jobs. The unemployment rate continued to fall from its peak in 2010, and the total labor force exceeded 4.9 million by the year’s end.
The Factors Pointing to Prosperity
Although a range of issues can impact commerce, economic success in North Carolina has been rooted in three primary categories: workforce, costs, and access.
North Carolina’s robust education system of 58 community colleges and 36 public and private universities has helped the state build a solidly educated workforce, with a significant share of the population who are over the age of 25 earning a high school diploma or more advanced degree.
North Carolina also has one of the lowest unionization rates in the nation – a major contributor to the state’s reputation for a low-cost operating environment. According to 2016 data from the U.S. Department of Labor, the Tar Heel State has the second smallest unionized workforce in the country, at just 3 percent of the total workforce, and it is one of only nine states with a union membership rate below 5 percent.
Beyond that, North Carolina is home to one of the lowest corporate income tax rates in the eastern United States at 3 percent and proudly boasts a cost of living that is well below the national average.
In terms of geographic access, the state’s mid-Atlantic location is ideal, offering a comfortable climate, robust highways and railways, two coastal ports, and two international airports. The accessibility of experienced, talented professionals working to support business growth also adds to North Carolina’s appeal, thanks to the strategic efforts that have been made to build a top financial center and world-renowned research parks.
These factors – combined with the full spectrum of state resources that have been devoted to incentivize economic development – have positioned North Carolina well for supporting business relocation and growth objectives.
North Carolina is at the top of everyone’s list for internal and economic growth. It’s a happy place to be!
John Skvarla is a Senior Government Relations Advisor and a member of Nexsen Pruet’s Economic Development Team. He can be reached at 919.653.7829 or JSkvarla@nexsenpruet.com.