Workers & Jobs
Employment in North Carolina
Since 1990, employment in the North Carolina finance industry increased, from 103,041 to 149,252 (3.7% of the North Carolina employment work force) by the end of 2006. This constitutes a 45% rise in jobs, and one of the highest employment growth rates of any sector in the North Carolina economy over that time.1 North Carolina specializes in deposit and credit intermediation activities at the national level, and has recently seen increases in investment management activities as well. This study focuses on a subset of the finance industry of particular importance to the North Carolina economy and to North Carolina's efforts to insert itself into the national finance industry. This subset, identified in Tables 2a and 2b, is composed of the following segments: credit intermediation and related activities [NAICS 522]; financial investment and related activities [NAICS 523]; and trust funds and other financial vehicles [NAICS 525].
Employment Trends for Industry Subsectors
Average annual employment growth over the last five years is 6.7% for credit intermediation, 6.3% for financial investment activities, and 2.8% for trust fund activities. Within this narrower credit intermediation sector, employment has risen from 68,811 in 1996 to 87,770 in 2006, representing the bulk of banking activity as measured by both establishments and employment.2 Most of credit intermediation is composed of traditional banking activity (depository credit intermediation). These depository banks have increased employment by nearly 38% just over the last five years, and are responsible for nearly 60% of all new firms established over the period. Wages have nearly doubled in the last decade, but still trail wages in financial investment. Other sectors of credit intermediation, namely nondepository credit intermediators and firms providing other credit intermediation activities, have grown more slowly or decreased their employnment.
Financial investment is a fast-growing component of the banking and finance industry in North Carolina, as they nearly doubled between 1996 and 2001 and rose by an additional 30% increase between 2001 and 2006. Though this component has less than one-third of the number of firms as credit intermediation and one-sixth the number of employees, its growth rates and wages are higher. Finally, trust funds and other financial instruments (NAICS 525) is a small but growing segment of the finance industry. Less than 900 people were employed in 127 firms in 2006, and thus this component has the smallest employee-per-firm ratio of the three components listed here. Tables 3a and 3b display this employment and firm information graphically.
According to Reference USA, the top ten companies in banking employ nearly 34,239 people in North Carolina (see Table 1).3 This represents 32.9% of the 103,896 employed in banking (NAICS codes 522, 523 and 525) in 2006. This is an indication that the banking and finance industry in North Carolina remains fragmented.
Wage Growth in North Carolina
Table 2b lists average wage from 1995 to 2005 for each of these components. Workers employed in the banking industry have enjoyed persistent wage increases, from an average of $37,772 in 1996 to $75,871 in 2006,4 a doubling of wage rates unmatched by any other economic sector in the state.5 Within credit intermediation, wages have risen from $32,807 in 1996 to $70,221 in 2005. In investment activities, the comparable wages are $84,337 and $109,307. These two components of banking represent nearly all employment in this industry, with only 860 jobs in funds, trusts and other activities in 2006.6 Clearly, the wages for all three components of this industry have experienced rapid rates of growth over the last decade. Growth within credit intermediation has been faster than in both financial investment and trust funds and other financial instruments. However, financial investment has much higher wages over the period -- nearly twice that of the other two components of the industry. Currently, this component represents a small part of the entire industry, but wage levels and industry growth are encouraging for North Carolina.
Job Losses
Job losses are present within this industry, though not at the levels observed in declining industries. Table 4 disaggregates job loss information by county and company, while Table 5 displays job loss information for the state in the banking and finance industries. The most severe layoff events are concentrated in banking companies, and are concentrated in only a few counties. However, both banking and finance have experienced sizable losses and volatility in losses over the last decade.
County Level Information
The aggregate data allow for a state-level picture of the industry. However, this picture neither gives the reader an understanding of what is unique to North Carolina, nor identifies where this industry is located. Maps 1, 2, and 3 break down the aggregate data by county and present this information in map form for the state.7
Map 1 presents the concentration of industry firms in 1995 and 2005. By 2005, every county contains at least one banking firm, though high concentrations exist in just several counties. Map 2 presents the number of employees by county for the same period. Mecklenburg County, which contains Charlotte, is obviously the center of banking in North Carolina, though few smaller concentrations also exist. Finally, Map 3 identifies job losses over the last 10 years by county. Mecklenberg has lost the most jobs of any county in the state, and only two others, Wake and Forsyth, have lost more than 1,000 jobs.
Why North Carolina?
A key to understanding why the banking scene thrives in North Carolina is asking what makes it such an attractive location. Why is it that the banking and finance industries in North Carolina, specifically Charlotte, have seen strong job growth? The answer lies in the several tangible and non-tangible features that the state offers.
- Favorable legislative environment: The single most important reason for North Carolina's strategic competitive advantage is its historically liberal banking legislation. North Carolina was one of the few states that legalized state-wide banking, while unit bank states barred the opening of multiple branches in a single state. As inter-state banking was gradually legalized beginning in the 1980s, banks in North Carolina were already more efficient and better able to aggressively acquire struggling banks in other states during the industry's intense consolidation trend.
- Strong business climate: The state has taken the initiative to spur economic development with high-quality jobs and prosperity across the state. A good work ethic coupled with low operating costs (such as low unionization rates, unemployment insurance, low tax and worker's compensation rates, and low utilities cost) give businesses incentives to operate from the state, which then have local banking needs. Site Selection magazine has ranked North Carolina the number one business climate in the U.S.
- Large employment base: North Carolina is the tenth most populous state with 8.9 million residents; this provides a pool of local and employable residents in what has been described as a "right-to-work state with highly skilled workers."
- Emphasis on education: There are many premier private, state and community colleges and universities in North Carolina, and many technical training opportunities which are a valuable asset for the state and businesses located within it.
- Convenient location: The well-connected and expansive transportation systems and infrastructure of the state further increase the value of its location within the U.S. and global marketplace. Charlotte's international airport is equipped to handle the needs of frequent travel.
- Leader in technology: Banks headquartered in North Carolina have opened major technology operations in the state pulling from its technological resources and complementing local industries and firms. Two examples include the creation of the ATM machine and secure online banking.
- High quality of life: North Carolina's mild and seasonal climate, its professional sports teams, array of cultural venues, and many community amenities attract new residents and help it compete with big cities like New York or San Francisco for the recruitment of employees.
References
- North Carolina Employment Security Commission. Employment and Wages by Industry. Downloaded July 29, 2007 [http://www.ncesc.com]
- Op cit., North Carolina Employment Security Commission (fn. 1).
- Harris Infosource, North Carolina Manufacturers Directory, 9/04
- Op cit., North Carolina Employment Security Commission (fn. 2).
- Ibid.; Bureau of Labor Statistics. "Gross State Product." Bureau of Economic Analysis: Regional Economic Accounts [online database]. Downloaded July 29, 2007. Note: NAICS Code 52 was used to define this industry.
- Op cit., North Carolina Employment Security Commission (fn. 1).
- Op cit., North Carolina Employment Security Commission (fn. 1).
