Low Wages and Industrial Development: North Carolina's Economic Predicament

Abstract

During the twentieth century, all governors of North Carolina used a variant of contemporary economic theory to justify the state's economic development policy of industrial recruitment. While every governor expressed optimism that this economic development policy would ultimately lead to success in overcoming the unemployment and poverty in the state, they would also express concern about the persistence of low wages. On the one hand, the governors touted the low wages as evidence of how competitive North Carolina could be as a location for branch manufacturing plants. In the next sentence, they would express optimism that eventually the low wages would give way to higher wages. The same economic theory of comparative advantage used to justify the industrial recruitment strategy, and its policy variant of using industrial recruitment incentives to lure industry to the state, can be turned on its head to explain the persistence of low wages and poverty in North Carolina.