North Carolina’s struggling economic recovery and sluggish job creation have been dramatically slowed by a decade of offshoring, according to a new report by the NC Budget & Tax Center. Offshoring -- the movement of production and jobs away from relatively high-wage, advanced economies like those in United States to less-developed countries with lower wages and weaker labor standards -- has become an increasingly common reality for communities across North Carolina since the mid-1990s, leaving shuttered mills, dislocated workers, and long-term unemployment in its wake.
According to the report, new technological breakthroughs like the Internet, just-in-time inventories, and flexible production techniques, coupled with national trade policies like the North American Free Trade Agreement (NAFTA) in 1994 and China's accession into the World Trade Organization (WTO) in 2001, have spawned an intensely competitive global marketplace, in which firms can search the world for the most cost-effective locations for various parts of their operations. While many firms may pursue lower labor costs by locating overseas, they are missing the benefits of a trained workforce and an economy that is supported by rules and public investments.
Over the past decade, the results for North Carolina’s economy have been largely negative, the report finds, with more than 107,000 in job losses directly attributable to offshoring to China from 2001 to 2010. Additionally, offshoring to Mexico cost the state 26,500 jobs in 2010 alone. Absent these job losses, the North Carolina would have almost completely returned to its employment levels before the Great Recession by 2010.
"While offshoring has certainly contributed to record corporate profits over the past decade, the consequences for North Carolina have been the most sluggish economic recovery in 30 years, and the emergence of a two-tier labor market with low-wage jobs and high-wage jobs, but little in between," said Allan Freyer, Public Policy Analyst with the North Carolina Budget & Tax Center. "Without the job losses from a decade of offshoring, North Carolina would not face the massive jobs deficit it does today."
To read the full BTC report, click here.
(Photo from NC Policy Watch.)