The South emerges as jobs haven

Jim Berieau, a bartender, recently did something that seemed foolish. In the middle of last year's napping economy, he decided to buy a restaurant, the Humble Pie, in Raleigh's bohemian West End. He calculated that a new train depot - with boutiques, artists' studios, and townhouses nearby - would draw enough patrons to sustain his Spanish-style eatery.

While the final result of his experiment in chorizo capitalism isn't known, Mr. Berieau for now is overlord of a thriving business - for which he has hired a dozen people. "It seems like people who have come into town have gotten rooted here," he says. "It's kind of an up-and-coming urban area, but it's not outrageously expensive like most cities."

Berieau's journey into entrepreneurship is one reason Raleigh's unemployment rate recently dropped to 3.6 percent - among the lowest in the nation. It also helps explain a paradoxical job recovery in the South: Despite the thousands of manufacturing and technology jobs lost in recent years, this magnolia-scented region is now leading the nation in job creation.

From the Virginia Sounds to the mirror-skinned towers of Houston, large segments of the South are posting some of the highest employment gains in the country, which is particularly significant given the magnitude of the textile and other shop-floor losses of the past decade. Though pockets of hardship endure - and the region continues to lag in wealth creation - the economic growth has been impressive.

"When we talk about jobs being created [in the South], we're talking about everything from medical technicians to software writers to barbers," says Bernard Weinstein, director of the Center for Economic Development and Research in Denton, Texas. "We're not seeing an outmigration, even though a lot of basic industries were hit hard, and that's telling me there's a lot of fermentation going on underneath the surface."

The numbers bespeak some of the vibrancy:

• Total nonfarm employment in the South grew slightly over the past four years, while the nation as a whole lost a net of nearly 2 million jobs.

• From November 2003 to April 2004, the region's jobless rate dropped from 5.6 to 5.0 - the lowest rate of any US region.

• More locally, Virginia has posted a net gain of nearly 34,000 jobs the past four years, despite losing some 60,000 manufacturing. Florida has added nearly 278,000 positions. North Carolina produced more jobs, too, even though it lost 155,000 manufacturing positions.

"In the South, you've truly got areas that are magnets now, that have the jobs," says Mike Wald, a regional economist for the US Bureau of Labor Statistics in Atlanta. "They've done a beautiful turnaround, for example, in D.C. and northern Virginia and Maryland, and nobody even told Florida there was a recession going on."

Why the South is rising

Behind the South's vigor lies a variety of forces, from low wage rates and "right to work" laws to a languid lifestyle. Certainly the region's enduring population boom contributes to the economic dynamism. More people are moving to the South - which now contains one third of the US population - than any other region. Retiring baby boomers have helped boost population growth across the Sun Belt by as much as 50 percent more than some other areas. The demographic surge is reflected in robust housing numbers: In March, 613,000 new homes were sold in the South - nearly as much as all other US regions combined.

One notable characteristic of the new migrants is that they are staying put. In the recession of the late 1980s and early 1990s, many laid-off Southerners moved elsewhere looking for work. In the more recent downturn, many hung around - and are now finding jobs in an emerging service economy.

For instance, when Ben McLawhorn and his friends - many of them originally from the North - lost their jobs at a big pharmaceutical company near Raleigh a few years ago, the question quickly became: What now?

A North Carolina native, Mr. McLawhorn found a job with the state as a comptroller. Several of his friends, instead of returning home to Schenectady, N.Y., and Detroit, dealt with the layoffs by opening their own firms in Raleigh. Today those businesses are worth millions and employ hundreds in and around this capital city. "In the end, it took a major job loss for them to follow their dreams," says McLawhorn.

Quality of life is one reason many workers have decided to stay and others are moving in. The region's coastal areas, misty inland mountains, year-round golf courses, and temperate climate all are part of a new equation may employers look at when siting plants and businesses.

"As more and more of our production and employment is geared toward services, the location, for employees, is much more of a consideration," says David Penn, an economist with Middle Tennessee State University at Murfreesboro. Moreover, the easier rhythms appeal to many people, too. "People come South and stay for the climate, quality of life and work, and the slower pace," says Mr. Penn. "For many, 9/11 and [Oklahoma City] put things in perspective: Life is too short to be chasing the fast buck or the fast lifestyle."

In a coffee shop in Portsmouth, N.H., for instance, George Coulston, a local carpenter, recently noted how he was going to move to Richmond, Va., to renovate antebellum homes. Another area resident, a cemetery manager, was already packing to move to Charleston, S.C., the "rose of the Confederacy." "I'm sick of the weather and the pace in the North," he said.

In some cases, states are making strategic investments that are contributing to the South's revival. North Carolina, for instance, is funding a first-of-its-kind broadband network across the state that is intended to attract Web-based firms and software startups. The Raleigh area alone is expected to add a net 20,000 jobs by the end of 2004.

In Georgia, the decision to build a new terminal at Hartsfield-Jackson International Airport sparked a miniboom in construction that helped yield a net gain of some 67,000 jobs, most in Atlanta. In Tupelo, Miss., investments in local industry helped turn the Tupelo Furniture Market into the second-largest in the country, bringing in new firms such as Bauhaus and Tecumseh.

In Greenwood, S. C., the state spent almost $1 million to send potential workers for Fuji Film to Japan for training. The gambit paid off: While Kodak has downsized in New York, Fuji is growing in South Carolina.

With the new vibrancy is coming a new entrepreneurialism. Dave Jones, a former professional hockey player, recently defied the naysayers and started Marketing Ministries - a PR firm in Raleigh with an evangelical twist. He now has three employees and double-digit growth. "I call it God's economy," he says. Rick Porter has captured the spirit, too. "Around here, if you want a job, you can make one," says Mr. Porter, who owns a two-employee car detailing shop in Raleigh.

Not all is a yellow brick road

Still, economic disparities remain more pronounced in the South than anywhere else in the country. In fact, the overall poorest states are firmly Southern ones, including Alabama, Mississippi, and South Carolina. And experts point out that the job boomlet has largely bypassed Tobacco Road and the South's defining rural areas - the ones hardest hit by the manufacturing trend toward outsourced labor.

Only 70 miles east of Raleigh, textile-dominated Rocky Mount is facing 9 percent unemployment after a rash of factory closings. The accelerated job-gains in the cities, moreover, means the gap between richer metro-dwellers and their poorer country cousins is only increasing throughout the South. "It might have been a stretch for North Carolina Sen. John Edwards [in his presidential run] to speak about two Americas, but there are clearly two North Carolinas," says Michael Walden, an agriculture economist at North Carolina State University in Raleigh.

Yet for many professionals, the South is a harbinger of what some say is the "new" economic expansion: smaller, riskier, and, to an extent, freer. "I have a friend from Boston who keeps complaining that he wants to move back North," says McLawhorn. "And I just keep asking him: "Why would you ever want to do that?"

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