N.C.’s slow rebound may determine whether it really is a swing state

Associated PressSeptember 15, 2012 

In many ways, Keith Fountain’s personal economic odyssey is North Carolina’s.

After a decade at Lucent Technologies, Fountain was making $22 an hour working in the company’s warehouse in Concord, northeast of Charlotte, when he was laid off in July 2009. He used a federal retraining grant to go back to community college, but decided he’d rather be working, so he took a part-time job making sandwiches in a grocery deli to supplement his unemployment check.

After two years and hundreds of applications, the 49-year-old Army veteran finally landed another manufacturing job, driving a forklift for a company that makes components for rechargeable lithium-ion batteries. It paid $13.75 an hour.

Since President Barack Obama took office, Fountain says he and his wife, Mary, have slipped “down toward the bottom end of the middle class.”

Big fall, slow recovery.

Four years ago, Obama became the first Democratic presidential nominee to win North Carolina since Jimmy Carter in 1976. Pundits called the victory historic, but it came by the slimmest of margins, just 14,000 votes out of nearly 4.4 million cast.

History suggests that if the economy doesn’t show substantial improvement in the year before a presidential election, the incumbent loses. North Carolina’s recovery from the Great Recession has lagged behind the nation’s.

Between February 2008 and February 2010, the recession’s lowest point, the state shed more than 330,000 jobs. More than half were in manufacturing and construction. As of July, North Carolina was still down more than 53,000 jobs from when Obama took office, and a report from the nonprofit North Carolina Budget & Tax Center says many of those gains have been in the low-wage sector.

At one point, the state’s jobless rate reached 11.4 percent, making North Carolina one of only nine states where unemployment topped 11 percent. The rate is now 9.6 percent, more than a percentage point above the national average.

Who gets the blame?

Whether election history repeats itself in the Tar Heel state depends largely on whom residents blame for what even Obama has called an “incomplete” recovery. If 2010 elections, when Republicans gained control of the state General Assembly for the first time in more than a century, are any indication, Obama is in trouble, says economist Mark Vitner.

“There’s a lot of angst about the economy,” says Vitner, a managing director and senior economist at Wells Fargo in Charlotte.

Fountain says he does not blame the president for his financial setbacks.

“I mean, there are some things he could have handled a bit different,” Fountain says of the man he voted for in 2008, and for whom he intends to vote again this November. “But, for the most part, he’s made every effort he can to turn things around. Just with the obstructionists in Congress and stuff, it’s been hard to get anything done.”

Charlotte career counselor Randy Mitchell says others might not be so forgiving.

“I think many people expected here, four years later, there would have been more of an improvement than there has been,” says Mitchell, who works to link laid-off professionals with franchise opportunities. “The people I talk with, I don’t believe most of them blame the current administration for this continued economic malaise. I do think many of them, though, do vote with their wallets and may say, ‘Hey. Maybe it’s time for a change.’”

A state divided

Driving around Raleigh, it’s not unusual to minivans with vanity plates declaring the occupants a “house divided”: One side UNC Chapel Hill Tar Heel blue, the other N.C. State Wolfpack red.

The plates are an apt political metaphor for The Old North State.

On paper, Democrats outnumber Republicans here by about 760,000. But when it comes to presidential elections, North Carolina’s heart has been pretty reliably red.

Carter’s victory came in the wake of the Watergate scandal, “an odd election,” says Michael Munger, a professor of political science, public policy and economics at Duke University. In 2008, there was that electric feeling that history was in the offing.

With the sluggish recovery, says Munger, “all the air is just out of that balloon.”

“Under the ideal conditions, Obama barely won,” says Munger, the Libertarian Party’s 2008 gubernatorial nominee. “It’s not clearly a swing state.”

The candidates are certainly treating it as if it is.

Through the end of August, the campaigns and independent groups had spent about $56 million on television spots here. That places North Carolina, which has 15 electoral votes, fourth in total ad spending.

But economist John Connaughton says North Carolina is notoriously hard to pin down.

“You know, North Carolina is not a single state. It’s a bunch of different regions,” says Connaughton, a professor at UNC Charlotte. “I don’t know whether the candidates, either one of them, really appreciate the differences in message that they ought to do in Charlotte versus in Raleigh and versus in the eastern part of the state.”

In a just-released report from UNC’s Global Research Institute, Daniel Gitterman argued that the state had not fully recovered from the 2001 recession when the latest blow struck.

“To put the matter bluntly, it is difficult to overstate the problems that have troubled the North Carolina labor market over the past decade,” Gitterman writes. “Policy wonks are still debating some of the details, but no one doubts that conditions remain distressed.”

Beyond blue collar

That distress is not just in the blue-collar sector. It also extends from the factory floor to the skyscraping bank headquarter buildings in Charlotte.

Obama carried just 32 of the state’s 100 counties in 2008, but they were the major population centers, including Raleigh-Durham, Charlotte and the Triad. The president got a huge boost from Charlotte’s Mecklenburg County, where he took 62 percent of the vote, beating U.S. Sen. John McCain by just under 100,000 votes.

The last four years have not been kind to “Bank Town.” The nation’s No. 2 banking center behind New York, Charlotte has lost thousands of jobs in the financial industry shake-up.

Many of them came during the industry boom of the late 1990s and early 2000s, and wanted to stay even after their jobs went away. That would describe Rob Hanckel.

Hanckel moved to Charlotte in 1997 after nearly a decade at Smith Barney in New York. He spent much of the next 13 years in institutional sales with Charlotte-based Wachovia, once the nation’s fourth-largest bank holding company.

In 2008, Wells Fargo bought out the company. Two years later, Hanckel was downsized.

After months of trying to find work in his field, the 56-year-old husband and father of two decided to volunteer with the local unemployment office. He spends part of each week in the fellowship hall of a local church, teaching other laid-off workers how to network and polish their resumes.

Many thought it was telling that retired Bank of America CEO Hugh McColl Jr., a lifelong Democrat and honorary co-chair of the DNC host committee, agreed to co-host a Charlotte fundraiser for Romney this spring.

Conservative by nature, Hanckel voted for McCain four years ago. Despite all he’s been through, he’s not yet ready to say whether he’ll be voting for Romney.

“There’s certainly some measures that maybe people could have handled differently, and certainly measures that were forced upon him,” he says. “It’s been a huge challenge. I think people have made mistakes. I think people have tried to do as best they could under the sets of circumstances. And I think people may have made different decisions had they been a 20-20 quarterback. You know, Monday morning quarterback.”

Some bright spots

But while things are still fairly bleak across the state, there are some bright spots.

A recent survey by The PNC Financial Services Group found that the number of new businesses in the Raleigh area was up 3 percent since 2008, nearly twice the national rate. One of those startups is Xanofi.

Launched in September 2010, the company is preparing to market a liquid-based nanofiber production process. CEO Miles Wright says the company’s products could be applied to everything from filtration and drug delivery to cosmetics, food additives and acoustics.

Xanofi started with $1.2 million, mostly from “angel” investors. Employment has gone from two a year ago to 10 today.

“We expect to see revenue in the next couple of months,” says the Dallas native, who moved to the Triangle in 1986. “We will be profitable in 2013.”

Wright, a registered independent, chuckles at a new GOP ad calling this period “the worst economic recovery America has ever had.”

“The fact is, it’s still a recovery,” he says. “Innovation hasn’t stopped. People’s efforts to commercialize technology, to open up a service business, while it gets harder because of lack of capital, I don’t think people have stopped hoping and dreaming. And a lot of people have had success.”

Wright says a lot of the job growth is happening in small companies like his “that maybe go a little under the radar.” But the point is, it’s happening.

“The narrative that we hear is one of gloom and despair,” he says. “The world’s a harder place. It’s harder for the Bain Capitals of the world to do a leveraged buyout now than it was four years ago. It’s harder for everybody.”

Wright says the country was “hemorrhaging” when Obama took office. Four years later, he sees “a lot more opportunity” out there and no reason to change course.

“I voted for Obama four years ago,” he says, “and I will vote for Obama again this year.”

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service