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Report: Region Sees Growth In Productivity, Still Weak In Pay And Traded Sector

By Johanna Cano, posted Dec 5, 2018
Adam Jones, professor of economics at UNCW, presented the area's economic performance Wednesday morning. (Photo by Johanna Cano)
The Wilmington-area economy has had a slight overall growth in productivity and quality of place in the span of a year; however, annual pay growth, business services employment and the traded sector continue to be weak areas for the tri-county region. 
The area’s economic performance was presented Wednesday at the Wilmington Chamber of Commerce’s fourth annual Regional Economic Development Scorecard event.
Adam Jones, associate professor of economics at the University of North Carolina Wilmington, presented the findings, noting that there have been improvements in many economic indicators.

Jones and UNCW's Swain Center conducted the scorecard's research.
“We've seen some progress in some important areas and some of the negative trends have at least slowed if not reversed,” Jones said. “I think the news is good this time around. On the employment side, one of the big concerns last year was that we have lost ground in knowledge and technical employment within the region. That slide has stopped and actually is going in the right direction.”
This year’s scorecard does not show the impact Hurricane Florence had on the area because the data was drawn from 2017. The economic impacts from the storm will not be seen in the scorecard until its 2019 or 2020 publication, Jones said.
The scorecard compares Wilmington to similar cities including Asheville; Chattanooga, Tennessee; Mobile, Alabama; Myrtle Beach, South Carolina; Pensacola, Florida; Roanoke, Virginia; and Savannah, Georgia. It also compares the region to aspirational cities: Charleston, South Carolina, and Raleigh. 
The 2018 scorecard uses 2016 and 2017 data from the Wilmington region, which includes New Hanover, Pender and Brunswick counties, and from the Wilmington MSA, which does not include Brunswick County. 
The scorecard ranks the Wilmington area using human capital, innovative activity, entrepreneurial environment, quality of place and traded sector employment indexes.
The Wilmington region scored better in all indexes as compared to last year’s scorecard, except for in the entrepreneurial environment index.
In that index, the concentration of small- to mid-size businesses and total establishments decreased. 
Employment in the local business service sector, which includes lawyers and accountants, had the largest decrease in that index.
“The problem with not having as many medium and large-sized businesses is that it doesn’t provide enough demand to support the business service industry,” Jones said. “As companies grow into those medium-sized firms then they can start to afford to hand off these service tasks to folks that are experts and focus on their core business.”
It is important to try to figure out how to get small businesses to grow into medium-sized ones that can support business services, he said.
Compared to data from 2010, the Wilmington region scored worse in all of the overall indexes except for the quality of life index, which increased by 12 points.
The quality of place index gathers data including employment in arts, entertainment and recreation, travel times, crime rate, air quality and health care access. 
The area fared better on crime in 2016 compared to 2014, according to that index.

The Wilmington area’s gross regional product growth, employment growth and per capita income growth had slight increases as compared to data from last year’s scorecard. 
Gross regional product per capita, which measures the region’s productivity, had the most notable growth from last year, going from 12 percent to 45 percent.
The Wilmington area ranked the lowest among the comparable and aspirational cities for average annual pay growth. Since 2010, salary has increased 10 percent for the area, at a slower pace than the other cities listed.
“Where we struggle a little bit is on the average annual pay growth side,” Jones said. “What drives productivity, which is highly correlated with wages, is social capital. That means we need to get more folks involved in groups like this [Chamber of Commerce].”
The innovative activity index, which measures innovation in businesses and products, had a slight increase in the number of workers in technical positions, science-related graduate students and the amount of science, health and art funding.
In last year’s scorecard presentation, the traded sector, which represents goods produced in the Wilmington region but consumed outside the local area, was highlighted as a section that needs improvement in the region. 
Jones noted that the region had a slight increase from last year and some smaller businesses, such as Bitty and Beau’s Coffee, are expanding to other markets.
“What’s awesome about Bitty and Beau’s is we think about them doing great things in the community for marginalized workers ... but they are going from a local coffee shop to becoming a trading sector business,” Jones said.  
Two new traded sectors were introduced in the region: upstream chemical products and marketing, design and publishing.
While most indexes showed a slight growth as compared to last year’s scorecard data, the region has had an overall point loss in all indexes except the quality of place since 2010. 

Jones said this is due to 2010 being an exceptional year for the region.

“If you look at the change over seven years ago, we're losing out on funding and bringing in money … we just happened to compare it to our best year ever, so don't sweat that one so much,” Jones said.
Local leaders should work on finding ways to attract skilled workers and retain them to promote a healthier economy, Jones said.
“It’s the opportunities that tend to bring folks to town, but it's Wilmington that keeps them here,” Jones said. “So you're always trying to figure out if people follow the jobs or the jobs follow the people, and the data's starting to point in the direction of people follow the jobs and then the quality of place and quality of life keep people in those regions.” 
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