By Garrison Clark
North Carolina in many ways is a posterchild for neoliberalism in America. A state that once was sustained by thriving textile and furniture industries forced to face the new economic order of post-NAFTA and the end of history. Only Michigan lost more jobs in the neoliberal turn than North Carolina to trade and automation. Yet the workers of the state, turned out from the mills and shop floors, would find greener pastures in the booming tech industry of the Triangle, buoyed by the retraining and education opportunities found in our world class colleges and universities. Or so the story goes. Peel back the layers and underneath you’ll find a much different reality than what was sold. Hunger and poverty have increased at alarming rates, while more North Carolinians find themselves evicted or incarcerated than they did at the end of the Clinton era.
Much of the misery inflicted on the working class in state has been attributed to the rise of an ultra-reactionary NC GOP, who took power in both houses of the state legislature in 2010 and were led by the disastrous governorship of Pat McCrory, father of the “bathroom bill.” While the NC Republican Party has led a particularly egregious and deadly class war on the working peoples of the state, the neoliberal turn occurred mostly under the watchful eyes of Democratic Party governors and legislatures.
Neoliberalism in its most basic form is a return to the laissez-faire economic policies that characterized liberalism in its early stage. Standing in contrast to the Keynesian model of state intervention in capitalist economies, neoliberalism preached privatization and deregulation of industry to spur growth. This economic school of thought took hold after the stagnant growth and high inflation of the early 1970s, which the Keynesian economist were unable to account for, and culminated in the neoliberal administrations of Reagan in the US and Thatcher in the UK. While Keynesian ideas had found a home in the Democratic Party for a large portion of the 20th century, the loss in three consecutive presidential elections in the 1980s pushed the party to embrace the free market as the solution to the nation’s economic and social ills. This gambit seemed to pay off with the 1992 election of Democrat Bill Clinton, who pursued a policy of market liberalization in both the United States and abroad, through the shrinking of the welfare system in 1997 with TANF and the opening up of trade policies through NAFTA in 1994 and successive free trade deals. With an ascendant US economy throughout most of the 1990s fueled by a booming tech industry and a lack of alternative economic systems with the collapse of the USSR in 1991, it appeared that the embrace of free market had won out as the sole economic path. The consequences of this turn in economic thought did not show themselves immediately and proved to have a much different result for the working class of both the US and North Carolina.
The story of the decline of North Carolina’s textile industry, the core of the manufacturing base of the state, is very much the story of US trade policy. The industry began to see layoffs and consolidation in the 1980s, but with the signing of NAFTA in 1994 and other free trade deals the once thriving textile sector went into freefall. With China entering the World Trade Organization in 2002, there was little to be done to save the textile factory as a source of lifelong employment for the state’s working class. It is hard to overstate the painful degree to which the industry contracted- between 1997 and 2002 alone, North Carolina lost 100,000 textile jobs and a further 70,000 in the apparel industry. Median income fell by nearly 9% in the same period, as laid off workers struggled to find jobs to replace the ones they thought they would be working for life. Retraining, the miracle tool held up during the free trade debates by neoliberal politician and economists, could only manage to place workers into lower paying and more precarious sectors- it could not recreate the employment opportunities that the manufacturing industry provided. In 1999, even as this process of deindustrialization was taking its toll, North Carolina had a lower unemployment rate and less families in poverty than the national average. Only 6 years later, nearly 12% of NC families were impoverished and 1 in 14 workers unemployed. Over the same period the state GDP increased 15% to 447 billion dollars in 2005.
The policy decisions that brought North Carolina to this point had less to do with Raleigh and more to do with Washington and New York. Political leaders at the state level spoke out against trade policy that would very clearly lead to a decline in NC jobs and our elected representatives in Congress voted against free trade deals in large numbers. Stopping here would give you the standard line in the debate about trade policy- that politicians at the federal level sold out the American worker with bad deals and if we didn’t sign onto NAFTA, if we didn’t allow China into the WTO, all the manufacturing jobs would have remained. This analysis does not paint the full picture.
The free trade deals that decimated the textile and overall manufacturing industry of North Carolina were not deals that failed or bets that were poorly placed- they worked exactly how they were designed to. Cone Mills and other textile manufacturers, like thousands of other US firms, simply moved their operations to countries where they could pay their workers less and where workers were provided less protection for hours and condition. This so called “race to the bottom” is a primary feature of capitalism, one in which firms maximize the productivity of workers while keeping their wages as low as possible. This is an inherent mechanism of market based competition and one that exerts a strong force in prying open labor markets for exploitation. While it is certainly possible that trade policy could have been kept more protective for a few years more, it seems unlikely that the levers of power would have been unable to resist the power that capital can bring to bear.
It is also clear that while little could be done to stop or blunt the initial blow to North Carolina’s economy done by NAFTA and similar deals, the misery that followed could have been dampened by state level intervention. Yet those who suffered found themselves completely ignored by policymakers in Raleigh or found their suffering to be a new market for capitalization by the very same forces that had eliminated their jobs in the first place. In the immediate aftermath, workers who were previously in the manufacturing sector had to take jobs that paid less than their previous ones and this new group of workers increased the labor pool for sectors like the retail industry or service sectors jobs, giving firms in these sectors more power over their existing workforces. Firms had more power to keep wages low, to ignore worker protection laws, and to extract as much surplus value as they possibly could. This shift also affected and continues to affect all of the workers entering the workforce after- the manufacturing jobs that could have possibly offered a livable wage are no longer there and were not replaced by jobs offering comparable incomes.
When the USDA first began regularly reporting on food insecurity in the US in 1995, North Carolina was tied for 25th in the nation with 10.9% of its residents struggling to put food on their tables. The state was faring better than many of its southern neighbors which consistently ranked low in poverty metrics and was also below the national average of 11.9%. Manufacturing jobs were beginning to tick down but the bottom had yet to fall out for the industry. As the large scale layoffs began starting in 1999, food insecurity began to rise for the state up to 11.4%, good for 20th in the country. After the recession of 2001 and the collapse of textile jobs in North Carolina, food insecurity stood at 13.8% for the period of 2002 to 2004, 8th worst in the country. This represented a massive and rapid shift in the quality of life for the working class of the state and one that had occurred in decade in which food insecurity had decreased nation-wide.
While the numbers fluctuated to varying degrees over the intervening years, North Carolina has never recovered from this swift fall. The very deindustrialization and economic restructuring that had pushed the working class families of the state in such a precarious position in the first place continued their cold calculating logic on the United States as a whole and exacted a heavy price. As of 2016, 15.1% of NC families now struggle to secure enough food to eat, which translates to 630,000 households who are grappling everyday with how to secure the most basic necessity of life. The vast majority of these households have children and nearly half regularly skip meals just to survive. The price paid by children facing food insecurity is enormous- higher cognitive problems, poorer general health, higher rates of anxiety, and higher rates of asthma.
In step with the rest of the US, North Carolina has seen its eviction rates increase as families struggle to pay ever higher rents and gentrification entices landlords to push out low income residents. But the degree to which it has risen is stark. According to a 2017 report by Apartment List the national eviction rate stands at 3%, while North Carolina court records show that the state average is 6.8%.
Median income is the best predictor for eviction so it is little surprise that the decline in income in the years between 1997 and 2002 coupled with the stagnant growth in the decade after has led to NC to such a high rate of eviction. North Carolina has seen its rent, mortgage, and utilities costs increase over the same period, in line with national trends, which only further exacerbates working class families’ ability to pay for housing costs and avoid eviction or foreclosure. Between 1997 and 2002, per capita housing and utilities cost in the state increase by nearly 25% while median incomes declined by 9%. From 1997 until 2016, per capita housing and costs increased by 98% while median incomes only increased by 0.5%.
Evictions create feedback loops of impoverishment: they threaten families’ abilities to secure housing in the future, create risk of job loss and make future employment more difficult, and put an immediate strain on families’ overall financial situations. They leave lasting impacts- single mothers who are evicted are two times more likely to report struggling with depression years after. And the children of those mothers are twice as likely to suffer from poor health.
Nationwide, household debt began increasing at a large rate around 1980 due to both deregulation and the need for a method to sustain and grow consumer spending in the face of stagnating incomes. Debt payments as percentage of disposable income reached a high of 13% before declining after the Great Recession. North Carolina, like the rest of the country, increasingly found itself relying on credit to supplement the stagnation of wages and income growth in the face of rising prices of goods and services.
In 1999, NC residents carried a per capita debt of $20,760. By 2005, this had increased by 70% to $35,360. While seemingly a massive growth, this trend was in line with what was happening nationally. However, this increase coupled with the decline in NC incomes over the period created a squeeze on disposable incomes as debt payments grew, evident in the rise of credit card debt in the state. Per capita credit card debt grew 28% between 1999 and 2002. Auto loan and mortgage debt per capita also increased over the same period and followed national trends during the decade after. Student loans per capita, relatively low for NC in 1999, increased 981% by 2016.
Debt, while relatively common as a feature of modern life under capitalism, can make a households economic situation more precarious and more fragile in the face of financial shocks. Large service payments towards debt cut off portions of income that could be used to respond to medical crises, job loss, and other life events that require an immediate use of cash. Increased student loan debt combined with stagnant income growth and poor job prospects results in a tightening budgets to the degree that many individuals cannot save for retirement and cannot purchase a home. Debt service payments as a percentage of income are now at the same point they were at the end of the Great Recession- a massive risk that could have devastating impacts for NC families when the next recession hits.
And for many lower income members of the working class, especially POC, access to credit can be limited in the first place which results in an even more precarious household financial situation, where moderate financial shocks can lead to food insecurity, job loss, and homelessness.
In addition to the steady income provided by the manufacturing jobs of the textile industry, so too did these jobs provide access to health insurance benefits for NC families. As these jobs left and workers found themselves pushed in to other sectors, the working class of the state had an increasingly more difficult time securing affordable healthcare. From a low of 14% uninsured rate for the period between 2000 and 2001, North Carolina saw its uninsured rate climb to a 17% average between 2002 and 2003. The state had gone from having a better rate of coverage than the national average to one of the worst. By 2012, before the implementation of the Affordable Care Act, the rate had reached 17.8%. Parallel to this increase in the uninsured rate, per capita healthcare expenditures in the state increased by 68% between 2000 and 2012.
Loss of access to healthcare can have immediate life or death consequences for those who need extensive health services or individuals who face catastrophic health events. But a sustained and growing lack of healthcare access also results in long term consequences where serious conditions that could have been addressed by that access go unchecked and worsen.
While North Carolina had seen its infant mortality rate decrease steadily since 1980, this trend reversed in around 2012 and the rate began increasing to 7.2 infant deaths per 1,000 live births in 2016, with a rate of 13.4 for black infants in NC. Overall mortality rates, which had decreased over the same period began increasing again after 2012 reflecting a growing national trend- the opioid crisis.
Part 2 will appear in the January issue.
Garrison Clark is an organizer in Greensboro and a member of DSA.