I recently heard some discussion about the state of industry in Haywood County that causes me some concern. There is some belief that “high wages” paid by certain sectors in this county are driving outside industries and investment away. The argument goes that because longtime Haywood residents are used to the high wages paid by the former Champion and Dayco, their level of expectations are set too high and this deters other industries from moving in. I believe this argument is false, for several reasons.

First, I believe there is a sector in Haywood’s economy that mistakenly wants to encourage low wages in the false view that higher wages would impact profits in the tourism and retirement industries.
Tourism is a house of cards, built upon the whim of people outside of this area spending money here. To base profit expectations on this is to engage in magical thinking at best. To try to base any portion of the entire economy on such a roller-coaster is surreal at best.

To add to the folly, apart from the fact that tourism is seasonal and thereby creates large fluctuations in economic activity each year, very many of the businesses engaged in this industry are not owned by local residents at all. Non-resident business owners take the profits each fall and leave with them, creating an exodus of capital from this area. The local owners, who have every ounce of my personal sympathy, are left to hang on by a thread during the winter, praying for a return of the fickle tourists the next season. As I’ll outline below, there is a solution for them.

Although no one wishes them ill, retirees are an extraordinarily poor source of economic prosperity. Their care and maintenance demands a pool of poorly paid caregivers. Regardless of their wealth, elderly people perceive themselves as being not well off and spend accordingly. Perhaps this is because of their fear of being hit by a catastrophic illness, or because they are saving to give to their beneficiaries, or perhaps because they remember when a dollar really was a dollar. Whatever reason, they do not spend to any great extent. Any shopkeeper who caters to them, if they are absolutely honest and not in denial, will point out that retirees shop and putter around, but do not spend much. The advertising myth of septuagenarians frolicking on speedboats with bottles of champagne is just that: a myth.

Second, the real disincentive for industry relocating to Haywood County is not wages but a system of promotion based on seniority. This system, somehow ingrained in the psyche of every worker in the area, means that any promotion and almost all available management personnel are the result of “hanging-tough” and enduring over the years rather than actively working for profit and the betterment of the business. It means that any industry moving to the area unwittingly becomes hamstrung in their attempts to select profit-motivated workers. Since this is generally alien to the way they look at the conduct of their business, by the time they come to the realization of what is happening, their profits are so suppressed they leave. This system has the further disadvantage of driving younger, motivated workers from the area permanently. Promotion based on seniority is a prescription for business ruin.
Economic prosperity is based on the amount of money available (volume) and the speed at which that money changes hands (velocity).

One reason I have always been a proponent of limiting population growth in the mountains is the issue of money volume. A constant influx of warm bodies dilutes the amount of money available to any one resident. Because my primary concern is the economic well being of all the businesses in the area, I also care very much about the local realtors. I think it is entirely possible and, in fact, very likely, that they will prosper more from reselling existing real estate than from continually expanding the pool of available properties. Supply and demand. Simple. There is also a reverse economy of scale associated with real estate: greater sales volume of cheap property means more expense than lower sales volume of more expensive property.

The recent remarks of Alan Greenspan notwithstanding, open markets do not necessarily generate prosperity for individuals. Ask any Third World child. What I propose is a mechanism for increasing both the volume and velocity of money in this area, thereby increasing the prosperity of the residents here. In order to do this, it is important to regard Haywood County as well as all of Western North Carolina as a separate and distinct economic entity. This runs counter to an awful lot of thinking that likes to argue for a “global economy.” To me, the concept is just another buzz-word or rationalization for inhibiting wages and benefits to domestic workers. The global economy started with cave men and continued through Marco Polo down to the present time. Nothing new.

Customers and wage-earning employees are one and the same. Lower wages means fewer customers. The small restaurants and gift shops that now exclusively cater to outside tourists that may or may not come would be better off redirecting their emphasis to working families from the immediate area. The greater the wages to working families in the area, the more money that will be spent in local restaurants and gift shops. The greater the local prosperity, the more sales to higher-end retailers. This local prosperity can only be generated by a handful of area economic engines or spark plugs: Con-Met, Caterpillar, Chicago Rawhide, Blue Ridge Paper, Western Carolina University, the hospitals, Harrah’s, and a few others I’m embarrassed to omit. Not only should these industries be nurtured, but their numbers should be increased by the percent necessary to achieve full employment in the area. They should be encouraged to hire as many local staff as possible. They can be helped immensely if we shuck the seniority emphasis. Then we will be - all of us - amply rewarded when the higher wages flow through to the rest of the businesses in the area.

This is our lives and our futures, our families and our pocketbooks, and we can squander our hopes on pipedreams and shifts in the wind or we can rally the wagons and keep our campfires bright.

Patrick Holleman
Jackson County

 

Back to Top
The Smoky Mountain News