Report: Economic shadows continue to darken many Southern towns

Posted 8:00AM on Monday 2nd September 2002 ( 22 years ago )

RALEIGH, N.C. - The 1990s brought a tale of two Souths - one metropolitan and prosperous, the other rural and in serious trouble - according to a new report on the economic health of the region. There are fast-growth and slow-growth communities, high-tech metro areas and backwater rural counties. Coastal towns have emerged as vacation havens, while older textile towns are searching for a place in the new economy. "The recession that ushered in the 21st century served to speed up the change and churning in the economy. It hastened the collapse of traditional Southern industries," a nonprofit research group says in a new "State of the South" report. "The current recession will end - perhaps the turnaround is already in progress. But recession aside, structural changes only intermittently visible in 1986 continue to propel the economic dynamics of the South." The report was drafted by MDC Inc., a Chapel Hill-based think tank that has studied changes in the South since 1967. With help from a panel of Southern community leaders, including former Mississippi Gov. William Winter and Jesse White Jr., federal co-chairman of the Appalachian Regional Commission, the group analyzed conditions in the South since MDC's 1986 report and offered recommendations for change. The report covers Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia. If nothing else, the report shows that divisions that existed 16 years ago in the South have only widened in the new economy. "The economy has shifted so fast and so dramatically in the last couple years that we didn't know the half of it in 1986," said Ferrel Guillory, a co-author of the study. "There were deep structural changes and divisions going on. The fast collapse in the textile and furniture industries all stems from this economic change." --- The 1990s were a Golden Age in many ways for the South's metropolitan areas. The region outpaced the nation in job and population growth. It narrowed the income gap with the rest of the nation, the historic migration of blacks out of the region reversed and a strong black middle-class thrived. The sleepy Southern stereotypes no longer applied to fast-paced metropolitan areas. Charlotte became a national banking center, and Austin, Texas, became a center of the computer industry. Atlanta, home to Coca-Cola and CNN, accounted for more than half of the population in Georgia. But while big cities thrived, many Southern towns were overwhelmed by globalization and technological changes worldwide, the report said. Sparsely populated and low-income communities were invariably the last to get telecommunications infrastructure. More than 60 percent of the zip codes in the Mississippi River delta areas of Mississippi, Louisiana and Arkansas still have no broadband provider. According to the 2002 report, telecommunications now has the potential to help rural areas overcome one of the biggest barriers to participation in the global economy: isolation. "The Internet and communications revolution is a prime example as to how fast these things move and how ill-equipped many parts of the South have been in keeping up," White said. "This is especially true in the Appalachian Mountains." Studies show Southern states still rank low on preparedness for information technology industries. Only one Southern state - Virginia - ranked among the top 10 in the New Economy Index prepared by the Progressive Policy Institute, a centrist Democratic research organization. The index uses 21 economic indicators, including information technology jobs, to assess a state's progress. Seven Southern states were ranked in the bottom 10. The gap between cities and rural areas was further defined in the last decade by the rural South's dependency on low-wage, low-skill manufacturing jobs. In the recent recession, the report said, decades-old plants closed, diminishing the tax base of communities and the job prospects of older workers. _ When Stonecutter Mills in Spindale, N.C., closed in 1999, the town lost 42 percent of its property tax base. _ In Stonewall, Miss., Burlington Industries closed its denim plant in early 2002, laying off 800 workers in a town of 1,200. _ In the spring of 2002, unemployment in Marion County, S.C., stood at 14.3 percent. Over three years, plant closings and layoffs cost the county nearly 2,600 jobs for a work force of 16,000 people. The economic slowdown of 2001-2002, along with the devaluation of Asian currencies, led to further layoffs and plant closings. Southern states reported a loss of more than 375,000 jobs in 2001, and most were in rural counties. "In decades past, the impact of recession was temporary - workers would be called back to the plant floor when inventories had been worked off and demand picked up. This time, however, national recovery won't bring jobs back to the rural South," the report said. --- Education and entrepreneurship may be the solution to the South's woes, the report suggests. And some states have already caught on. Mississippi's Winter, former North Carolina Gov. Jim Hunt and other New South governors have won arguments for funding education based on its role in economic development, White says. "There is a lot of good news in the South, but it will be a long time before we see dividends paid off," he said. Other recommendations in the report include: _ Modernizing tax systems so that states have the capacity to provide good education, job training and necessary infrastructure. Most Southern states have reported revenue shortfalls for the 2002 fiscal year. _ Encourage associations of Southern governors and legislators to re-examine the incentives-driven recruitment strategies.

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