JOHN HOOD COLUMN: Should today’s teens be optimistic?
Published 9:21 am Friday, September 30, 2022
RALEIGH — The North Carolina of my childhood had an economy very different from that of the average state. Today our economy remains distinctive, though not by as much.
When I started my first paid job in 1979 — teaching 4-year-olds how to tap dance — manufacturing accounted for fully a third of North Carolina’s gross domestic product, 10 points higher than the national average of 23%. On the other hand, our financial sector had not yet vaulted into national significance. Banking, insurance and real estate accounted for 11% of North Carolina’s GDP in 1979, vs. the national average of 15%.
Forty years later, in 2019, our state’s manufacturing base was still larger than that of the average state: 16% vs. 11%. (That’s the last year for which a clean comparison is possible. The onset of COVID skewed the 2020 figures, and we don’t yet have granular data for 2021.)
If you work out the ratios, you’ll see that the relative contribution of manufacturing to GDP in North Carolina and in the nation as a whole didn’t change much during this period. But the actual shares of GDP are much lower. That’s not because manufacturing cratered. Output went up significantly. In inflation-adjusted terms, the output of manufacturing businesses in North Carolina was about $64 billion in 1979. It was $98 billion in 2019.
What really happened is that service industries exploded. Look at the aforementioned financial sector. Banking, insurance and real estate now account for 21% of the country’s GDP. North Carolina’s overall proportion is the same, while our banking share is a bit higher than the national average.
To broaden the story a bit, North Carolina is more populous and prosperous than it was back when I was attempting to corral the rambunctious preschoolers sliding across my dance floor. In 1979, some 5.8 million lived in the Tar Heel State. Their average personal income was an inflation-adjusted $26,665. By 2019, our population totaled 10.5 million and personal income averaged $48,261. Over those four decades, then, North Carolina’s per-capita income rose about 81% in real terms, somewhat outpacing the regional (77%) and national (71%) averages.
I think these statistics are useful for level-setting. They are difficult to square with the extreme claims of partisan activists, professional boosters or professional worrywarts.
For example, contrary to what you may have heard, North Carolina has not seen its manufacturing base disappear or the formerly sunny prospects of its “working people” fade into a depressing dusk. These are gross exaggerations. Mainstay industries such as textile, apparel, and furniture did shed lots of employees — primarily because of technology-fueled gains in productivity, not trade deals — but other manufacturing enterprises began or expanded in our state during the same period, as did many other sectors that hire many people to make, sell or deliver many wonderful goods and services.
On the other hand, it is also true that North Carolina has not always outperformed the rest of the Southeast or United States over the past 40 years. It is true that some communities and groups within our state are clearly struggling to make ends meet. It is true that North Carolina’s progress remains hampered by a long list of problems that can sometimes seem intractable. These problems include educational deficits, infrastructure woes, legal and regulatory impediments, declines in family formation, increases in violent crime and rampant substance abuse.
Some of these problems are worse than they were back then. Some are better. When I was a teenager of modest means in 1979, however, I was largely unaware of broader social conditions. I thought primarily, and optimistically, about my own future and that of my peers. I figured we’d live more comfortable lives than our parents or grandparents had. I figured I’d find a fulfilling career that paid enough to support my future family (though even then I suspected that career might not be tap dancing). For the most part, I figured correctly.
Are today’s teenagers so optimistic? Should they be?
John Hood is a John Locke Foundation board member.