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The New Media Department of The Post and Courier

SUNDAY, AUGUST 14, 2005 12:00 AM

State seeks elusive key to creating, luring jobs

Unemployment in S.C. stubbornly high

BY MATTHEW MOGUL
Of The Post and Courier Staff

Robin Mack moved to Charleston recently without a job.

She figured it was a bit of a gamble, and so far she's been dealt one losing hand after another.

A 44-year-old single mother, Mack was laid off in March, prompting her to uproot her two school-age children from their Pennsylvania home and relocate to James Island, where she has family.

The entire collections department that Mack worked for at D&B, a global provider of business information, was outsourced to a cheaper location in India. She spent six months out of work before deciding to try her luck in Charleston.

"I have always worked and never been without a job in my life," said Mack, whose unemployment benefits run out next month. "I don't let it get to me. I motivate myself to try and find a job and stay positive."

The bad news for Mack and other displaced workers is that South Carolina's job landscape looks bleak. Widespread layoffs in the manufacturing sector have catapulted the state's unemployment rate to one of the highest in the country.

That makes it tough for everyone in search of a job, from college graduates to out-of-work mid-career laborers. It's especially hard to find a job in rural areas across the state.

And things don't seem to be looking up.

Layoffs and plant closings through the end of July have affected 11,539 workers, figures from the state Commerce Department show. That's almost as many as the 12,995 job losses recorded in all of 2004.

These facts of life haven't gone unnoticed in business and political circles, both of which have criticized Gov. Mark Sanford in recent weeks for doing too little to stimulate job growth.

The good news for Mack is that the Charleston metro area is creating jobs at a faster clip than the rest of the state. In June, the area unemployment rate stood at 5.4 percent, while the statewide average was 6.3 percent. A big reason the Lowcountry is doing better is that the bulk of the area economy revolves around tourism, hospitality and port-related businesses, not manufacturing. But while there may be jobs for Mack to choose from, the bad news is that salaries for a lot of jobs are simply too low for her to accept.

"I'm seeing positions for $7 an hour. How can I take that?" Mack said last week while on a visit to the downtown Employment Security Commission. "I really need something that pays $10 or more."

Low wages have long been a part of the state's bleak jobs' picture. South Carolina workers typically earn 81 cents for every $1 their peers make in other states.

Efforts are under way to change that by attracting outside businesses and creating new ones at home with higher-paying positions. These initiatives are part of a bigger job-creation blueprint aimed at steering the state's economy away from fast-fading industries such as textiles and other old-line manufacturing outfits, toward skilled factory positions and service-sector work.

Despite these endeavors, South Carolina has lost 79,500 manufacturing jobs since 2000. Many of these jobs have been lost to technological advances and overseas competition.

Although other manufacturing-intensive states have suffered similar problems, most have rebounded better than South Carolina.

STUBBORN RATE

The state's persistently high unemployment rate can't be pinned solely on the vanishing factories that once dotted the state, economists say.

Some of the problem, they say, stems from an education system in which half the students don't graduate from high school on time, or at all. Many who do graduate don't have the basic skills companies are looking for, they add. The same goes for longtime factory workers trained on now-obsolete machines.

Another issue job-creation agencies and organizations are wrestling with is a sea change in the way they do business.

For years, the main method of creating jobs was to attract smokestack industries to build their hulking plants here. A low-wage labor force and lack of unions made South Carolina ideal. Today, plants require a more skilled work force, making the state a less attractive destination for some companies.

And while recruitment is still a big part of the job-creation equation, leaps in technology mean factories don't need to employ as many people as they used to.

That has sparked a shift in thinking, with small, homegrown businesses seen as the key to expanding the economy and creating jobs. A raft of legislative initiatives, including tax cuts and tax breaks for mom-and-pop shops, have been rolled out recently to meet those aims.

Whatever the approach, Michael Wald, a regional economist for the U.S. Department of Labor, said South Carolina's unemployment rate remains stubborn.

"Just a few years ago, South Carolina's rate was doing better than the national rate," Wald said from his Atlanta office. "Yes, there have been the layoffs with textiles and apparel, but look at other states in the same situation. They seem to be doing better."

The June unemployment figures speak volumes on the subject.

Not only was South Carolina's 6.3 percent jobless rate far higher than the national average of 5 percent, but the Palmetto State and Michigan were the only two states to see declines in nonfarm employment so far this year.

Concerns over anemic job growth were cited as a reason why Standard & Poor's, one of Wall Street's biggest credit agencies, recently cut South Carolina's bond rating.

But Moody's Investors Service, a competing agency, gave the state its highest rating. It did, however, give a negative outlook for the state

A lower rating means a state will have to pay a higher interest rate to sell its bonds.

Soon after, the criticism began to grow louder.

House Speaker Bobby Harrell, R-Charleston, said previous governors were more effective than Sanford at recruiting industries to the state. U.S. Rep. Gresham Barrett weighed in, saying Sanford wasn't generating enough job growth for his Upstate constituency.

Earlier this month, reports surfaced that South Carolina business leaders may back a candidate against Sanford in next year's gubernatorial election. These leaders cited the state's slow job growth and failed efforts to recruit big-time projects to the state.

In June, for example, the U.S. subsidiary of European aeronautics giant Airbus chose Mobile, Ala., over North Charleston as a site to build an engineering center. The decision could ultimately translate into $600 million in new investments and more than 1,000 new jobs.

In response to critics, Sanford has dispatched Commerce Secretary Bob Faith to handle damage control. Faith points out that South Carolina recruited roughly 13,500 jobs and $2.8 billion in capital investments last year. Also, the average wage for those jobs is $34,773, about 30 percent higher than the state's per capita income, according to Faith.

One of those big recruitment wins was Global Aeronautica, a new joint venture that will build fuselage components for Boeing Co.'s new 787 passenger jet and, it is hoped, create about 650 jobs during the next few years at a plant being built at Charleston International Airport.

But none of that changes the hard fact that South Carolina's unemployment rate is still one of the nation's worst.

APPLES TO APPLES?

The Labor Department's Wald said one way to examine what South Carolina might be doing wrong is to take a look at what Alabama might be doing right.

Both Southeast states are manufacturing-based and both enjoy a healthy tourism business along their coasts, making it possible to do a good "apples to apples" comparison, Wald said.

In 2000, before the onset of the recession, South Carolina's unemployment rate stood at 3.5 percent, beating out the 4 percent national average. Alabama's rate was 4.1 percent that year.

Fast-forward to the end of 2004, and South Carolina jobless rate had soared to 6.8 percent. At the same time, Alabama posted a 5.6 percent rate, close to the national average of 5.5 percent.

"What did one state do better than the other?" Wald asked. "It's tough to say, but worth a look to see if maybe one was helping retrain its laid-off workers better, or was more successful at recruiting companies."

Two economic features separate the states in ways that may make the difference, Wald noted.

First, Alabama has lured four major automakers -- Mercedes, Honda, Toyota and Hyundai -- to establish assembly plants in the state, earning it a new nickname: "Detroit of the South."

South Carolina, by contrast, has recruited one automaker, BMW, to build in Spartanburg County, and that was more than a decade ago.

The second difference is the top-notch biotech hub that Alabama has built around its state university in Birmingham. A host of drugmakers and related industries are drawn to the area looking to tap the academic research and, they hope, commercialize it for profit.

The knowledge-based cluster concept is in its infancy in South Carolina. And while the passage of the Life Sciences Act earlier this year shows state lawmakers have recognized biotech as a potential job creator, South Carolina is years behind states such as Alabama.

Mike Fields, state director of the National Federation of Independent Business, said he understands the frustration associated with high unemployment but thinks Sanford-backed bills that became law this year will go a long way toward making the state a more attractive place for businesses.

"2005 has been a historic year for small business in this state," said Fields, referring to new business-friendly tax cuts and laws that make it tougher for people to sue companies. "These will pay tremendous dividends, and I think help these (unemployment) numbers turn around."

Don Schunk, a research economist at the University of South Carolina's Moore School of Business, said he's more concerned with the here and now, and what's going to happen in the state's high-unemployment rural areas, such as Marion, Marlboro and Williamsburg counties.

"Clearly, if no jobs are created in some of these areas, the people will have to move to the cities for work or school to find a different set of skills," Schunk said. "It's definitely troubling, but high unemployment doesn't mean we aren't adding jobs. I keep telling people we are making gains in some sectors and losing out in others."

That may be, but Schunk has revised his 2005 economic forecast to better reflect the harsh economic reality. In December, he had projected the state economy would grow 1.5 percent and whittle its unemployment rate to 5.5 percent. Schunk now sees the state ending the year with 0.4 percent growth and an unemployment rate of 6.5 percent.

Regardless of where the jobless rate ends up, Robin Mack is optimistic she'll be offered a job soon. She recently interviewed for a position at Roper Hospital in the medical billing section and is keeping her fingers crossed.

"It's just a matter of time," Mack said. "I'll be back in a job soon and this will all be forgotten."

For her, at least.

LOOKING FOR WORK

-- Nonfarm employment has increased in 48 states and the District of Columbia so far this year, while decreasing in only two states, Michigan and South Carolina.

-- Through the end of July, layoffs and closings in South Carolina this year have affected 11,539 workers. That's almost as many as the 12,995 reported for all of 2004.

-- South Carolina has shed 79,500 manufacturing jobs in the last five years. Nationwide, the tally stands at 3 million manufacturing jobs.

SOURCE: Bureau of Labor Statistics, South Carolina Department of Commerce


This article was printed via the web on 8/15/2005 12:43:14 PM . This article
appeared in The Post and Courier and updated online at Charleston.net on Sunday, August 14, 2005.