Economic Trends

What is Economic Development?

Economic development is a sustainable increase in living standards that implies increased per capita income, better education and health as well as environmental protection. The main goal of economic development is improving the economic well being of a community through efforts that entail job creation, job retention, tax base enhancements and quality of life. Within mainstream economics, job creation most effectively occurs in the free market and economic development considers job creation as a means to create wealth and to develop the community. Its practice promotes the public interest by facilitating community development that supports business development and has been characterized as the intersection of public policy and private enterprise.

Emerging from the practice of industrial developers in the 1950s and 1960s, economic developers seek out new economic opportunities and retain their existing business wealth while balancing the social costs of growth. There is intense competition between communities, states and nations for new economic projects and the creation and retention struggle is further intensified by the use of many variations of economic incentives to the potential business. The measurement of success within this industry is normally expansion and relocation project announcements, economic growth and increased or retained tax base.

To increase understanding, in future editions of this newsletter, other concepts, tools and practices of economic development will be discussed. More detailed information on the theory and practice of economic development can be found in the book Understanding Local Economic Development by Maliza and Feser and the website of the national economic development professional association, IEDC (www.iedconline.org).

Statistics and Analysis

Rowan County’s overall labor force remains strong with growth at the end of 2006 but the unemployment rate outpaced the rest of the state.

As illustrated in the Labor Force Chart (Figure 1), through November 2006 (latest figures available from the Bureau of Labor Statistics) about 2,400 people joined the local labor market for the year. Of those additions, almost all were employed and the number of unemployed was basically unchanged from 2005’s annual number. There were some anomalies within this positive trend, though, with a spike in unemployment in June but an overall decrease in the labor market. While no mass lay-off or closure occurred this year, the ending of severance packages for former GDX employees and their subsequent movement to the unemployment roles may account for the change in unemployment. Additionally, the dramatic increase in total labor force size in July and again in November may be legacies of the 2005 closure of GDX and these values are not seasonally adjusted, so seasonality is a factor. Regardless, the Rowan County labor market appears to have a good ability to absorb excess availability and the statistics for 2006 are positive.

Figure 1: Labor Force Chart

Contrasting the Rowan County unemployment rate with the overall rate for the State of North Carolina and the Charlotte Combined Statistical Area provides further insight in the local economic health. As illustrated in Unemployment Rate Chart (Figure 2), Rowan County’s unemployment rate follows a similar pattern as the region and State. As previously discussed, the spike in unemployment in June and the subsequent absorption and employment growth appears to have not been unique to Rowan. It is positive that Rowan’s unemployment rate curve is similar to the region’s and State’s curves and implies that the County’s economy is integrated within the region and State. So, the rising tide can be reasonably expected to proverbially raise Rowan’s boat.

Figure 2: Unemployment Rate Chart

The core message of these statistics and analysis is that Rowan has a strong local economy that continues to grow and develop. While unemployment is higher locally, it is neither disproportionate nor anomalous.