By Simmons Fentress

The Charlotte Observer

(December 17, 1956)

The greatest single need of the Southern economy is industry.

The South is clearly aware of the fact.

But the economist, weighing his statistics, would go further. He would say that the South's greatest need is 'selective' industry.

The South is only beginning to recognize that fact.

The drive for industry--almost any industry, but preferably Yankee--is at its peak. The competition is keen.

There are tax write-offs, free land and free plants. There is a built-in guarantee of cheap labor.

Wage scales are unquestioned. Towns draw ordinances "licensing" labor organizers so heavily as to outlaw them.

A polluted stream can be considered part of the price, and cheap at that. Industrial odors are said to smell like roses on pay day.

The South is fishing, and it is landing some big ones. And who is to say that, in the South's position, even a poor industry is worse than none?

This is a region of small farms in a day when the curtain is dropping slowly on the small farm. There is a desperate need to balance the economy.

Per capita income must be brought up from the bottom. The outward migration must be stopped in areas where farms are "disappearing" in the trend to mechanized bigness and where there is little else to do but farm.

But industry--any industry--does not entirely answer the question.

North Carolina is a perfect case in point. It has a good bit of industry, gathered mainly in a traditional "Big Three" of textiles, furniture, and tobacco. Yet it ranks 47th among the states in average manufacturing wages, and that figure is reflected heavily in the ranking of 44th in per capita income.

Last year the average hourly earnings of factory workers in the south were $1.41, or less than three-fourths of the national average.

That means that a production worker outside the South would have to work less than nine months of the year to earn the same income for which the Southerner must work the entire year.

Furthermore, says the Senate Banking Committee, the Southern employee received fewer fringe benefits such as pensions, medical care, vacation and paid holidays.

The reason is not entirely exploitation. The South not only has the lowest percentage of its labor force in manufacturing of any region. The nature of its predominant industry is a major factor.

The next gauge of the contribution that an industry makes to the income of a region is (1) the value added to the raw materials, per employee, by the manufacturing process, plus (2) the number of employees in the industry.

If the value added by manufacturing is low, wages will be low.

For instance, the census of manufacturing divides American industry into 20 major groups. The value added per employee ranges from $12,300 in chemicals to $4,200 in apparel.

Half the manufacturing employees of the South work in the five lowest industries--textiles, apparel, leather, lumber and furniture. The same industries accounted for less than a fifth of the employees elsewhere in the country.

Between 1947 and 1954, the five lowest industries gained employees in the South. They lost employees outside.

New England is an illustration. It lost the bulk of is textile industry to the South, complaining all the while that Southerners were a bunch of industrial pirates. Now it is replacing its losses with a growing electronics industry and is quite happy at the switch. The reason is the difference in value added by manufacturing, translated into higher wages for new England pockets.

In 1954, the value added per employee in the South was $5,956. In the rest of the country it was $7,393.

In textiles, the South's industrial leader, the value added peer employee was only $3,976. Outside the South the figure stood at $5,322.

South Carolina stands at the bottom of the ladder in value added per manufacturing employee. Its figure is only 65.9 per cent of the national average.

Mississippi is second, at 71.6 per cent. Both North and South Carolina are considerably below even the Southern average in the earnings of their factory workers. Against a regional average of $1.41 an hour, North Carolina's rate is $1.28, South Carolina's $1.30. Only Mississippi is below them, at $1.20.

South Carolina also is at the bottom in its farm wage. In 1955, its average farm worker was making only 41 cents an hour, or 59 per cent of the national average of 70 cents an hour. Mississippi was paying 49 cents; North Carolina, 55 cents.

It probably will be some time before the South feels free to pick and choose its industry. The farm transition will go on, and it will demand new jobs as long as it lasts. If new payrolls can be lured, the South's industry-seekers are not going to pay too much attention to such high-sounding phrases as 'value added by manufacture'.

Eventually, that important factor will be regarded more seriously. There already is a growing realization that a wage region cannot be entirely rescued by low wage factories. The North Carolina statistics are ample proof of the point.

But to say that the South's industrial base must be broadened is not to say that the industry already here is not valuable. It is.

Textiles, for instance, are North Carolina's industrial pioneer. They have helped to sustain the State and helped to keep its services at a relatively high level.

Their situation is highly competitive; their fortunes wax and wane. This has reflected itself in low profit margins and consequently in wage scales.

Gov. Luther Hodges, who is keenly aware of the State's industrial needs, expresses the thought in these words: "Thank God for the industry we have. It's all we have."

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update 24 July 2008