Why Asheville Lacks High-Paying Jobs | Jonathan Brown of UNC-Asheville

Today's episode began with a question: Why does Asheville struggle to attract large corporations and the thousands of highly paid, highly skilled jobs that come with them? For answers, we turn to UNC-Asheville assistant professor of economics Jonathan Brown. Our conversation spans the region’s history, culture and livability amid a heavy dependence on tourism. We also talk about how remote working is changing the equation. This conversation took place before the announcement that the Pactiv Evergreen paper mill in Canton will close later this year, taking away about 1,100 jobs.

Transcript

Matt Peiken: Today is one of those episodes of the overlook that begins with a question, why doesn't this region attract large corporations and the thousands of highly paid, skilled jobs that come with them?

I'm Matt Peiken of the Overlook, and I have my own theory about this, but for educated answers, I turn to UNC- Asheville, assistant Professor of Economics, Jonathan Brown. Brown considers himself chiefly a labor economist. So he brings a lot of study and insight into a conversation that spans the region's history and culture and its livability in the shadow of our heavy dependence on tourism. We also talk about how remote working is changing the equation, and yes, I also run my own theory past Professor Brown, all that, and more coming up.

I began my conversation by asking Professor Brown whether my very premise is true that this region indeed struggles to attract corporations that could bring thousands of highly educated, highly paid workers. 

Jonathan Brown: I think so, and I think it has a lot to do with the way Asheville developed historically and the way that it developed culturally in terms of its identity Now.

So when I think about bringing lots of, well paying white collar jobs, and you gotta think about the holy grail of an industry growing in a region. Silicon Valley, right? And Silicon Valley. A lot of stuff. Was happening at the time that really worked in favor of Silicon Valley. The growth of sort of that technological sector was right in line with a generation of workers that no longer wanted to.

Find a company in their twenties and work there till they were 60. So you had a lot of people that were constantly looking for their next project. So not only were there companies there, there was also a workforce there that was constantly looking for jobs. So as a company, you need labor and you need capital, and ideally you wouldn't come to an area and need to import both.

So if there's like a land intensive. industry like coal mining, for instance. It has to be there and maybe you're gonna bring people in, or if there is a workforce there, you can bring the capital in. But in situations where you would need to bring in the capital to produce and the workforce, it's not gonna be particularly attractive to an industry, and I think Asheville is in an interesting position because they've built a lot of their economy on tourism. So a lot of the economy that is built here is built on people filtering through instead of building an industry of people that are meant to stay. 

Matt Peiken: Tourism has been a draw to this area for more than a century.

But were there times in this city's history where there was genuine industry or some other element like transportation, other things that were happening that were a source of well-paying jobs here beyond tourism? 

Jonathan Brown: Tourism goes back far in Asheville. It's interesting, in the early part of the 20th century, it wasn't just recreational tourism.

There was an element of coming here to sort of convalesce. There was a, there was a thriving healthcare industry where you would come here because of the clean air and the clean water, and it was the early days of. Focusing on mental health. There were areas where you could treat tuberculosis because of what was clean air was the only thing.

We knew how to treat tuberculosis, and then you also had this idea that if you were struggling from mental health issues, you could come here and it was serene. That was the draw to this area for a long time. Southern Appalachian coal doesn't really extend to Asheville. There's no oil here. A lot of the forests have been protected for a long time, so there wasn't aggressive deforestation for the lumber industry.

We were really rooted in tourism and just existing as a place. That was scenic and beautiful for quite a long time. 

Matt Peiken: So you mentioned the tourism aspect and how the history of tourism goes back a long way here. A lot of cities have strong tourism elements, but they also have other things, other conditions and factors that play into why they are strong job markets.

Why has Asheville struggled to either build or maintain any sort of industry that brings these kind of higher paying jobs beyond tourism?

Jonathan Brown: I think Asheville has an interesting history post-Great Depression. We had here one of, if not the highest debt per capita ratios in the country, and there was also a sort of a local government that refused to default on that debt.

So Asheville was one of the cities in the United States. That spent decades paying off that debt and it slowed down the economy considerably. And you're talking post-depression. Post-depression. I don't think that [00:06:00] debt was paid off until, I wanna say the seventies. And while a lot of cities of the United States were investing in civic infrastructure, Asheville was largely boarded up and they were investing and hanging off that debt slowly.

It's one of the reasons why. Asheville, our little mountain town has one of the highest concentrations of art deco architecture outside of Miami because we didn't knock all those buildings down to build those concrete monstrosities from the seventies. 

Matt Peiken: But you mentioned how we handled our debt situation played into our inability to attract a certain industry here.

How did that play into our job prospects? 

Jonathan Brown: I think so when a lot of cities were focused on developing and growth and infrastructure, Asheville was quietly paying down its debt in a way that sort of preserved what was going on, but wasn't really focused on building much new, the mountains [00:07:00] weren't going anywhere, the river wasn't going anywhere.

So there was this element of just waiting it out and we had tourism in it, and there's this mentality that we'll always have tourism, and once we clot our way out of that, the tourism's started to rush back exponentially. I've lived here since 2016, and I'll talk to people that have been here for much longer than I have, and I'll ask about Asheville in the nineties or the s And inevitably, everyone uses this, uses the same term, which is sleepy.

There is, there's this element of, Asheville was this tiny mountain town and it seemed that was part of their identity and this element of tourism that's a lot more active when you're seeing people come here, not just to go on a hike and enjoy the serenity, but they want to go downtown and they want to visit all of the breweries.

It's my understanding that that's relatively new and it's because. Asheville had that sleepy identity for so long. There wasn't a lot of investment in change. There wasn't a lot of investment in infrastructure. And now I think we're at a crossroads where we're saying, are we gonna lean so fully into this tourism industry that, that we become a town that's meant for you to visit and not stay?

Or do we need to tip the scales and say, okay, we've relied on. Tourism enough. We need to start investing in a population that's going to be here and be here permanently. And I don't think during the middle part of the 20th century, the city was taking on that decision. It wasn't that kind of existential question.

Matt Peiken: Very early in the conversation, you mentioned the culture. Is there a culture to a sleepy identity? Is there a certain acceptance that this is what our community is and or isn't? And. It dampens or mutes aspiration.

Jonathan Brown: I don't know that it mutes aspiration on, but I do think that firms don't want to come in and change a culture, and that's not necessarily out of respect for the culture.

It's just that why would I put the time and effort into changing the trajectory of an entire community when I could find a community that actually complements what I'm trying to accomplish as a firm? When I think when firms look at Asheville, we can say, you know, like, why is in Asheville attracting these large corporations that want to expand to our town and bringing all these jobs, but New Belgium came.

And Sierra Nevada came and Oscar Blues came, and there is this culture here of K Craft brewing. It goes just as far as tourism in terms of, there's something about the water here. There's something about the air here that makes this a very attractive industry. So when companies like that can play off of what's already happening here, it's a much easier transition than we have to come here and we have to establish our firm as well as attract a workforce that's not already here. 

Matt Peiken: So you're touching on something that is really at the heart of what is striking My curiosity about this, and tell me if I'm off base in looking at the math of this, from what I understand, a lot of big companies that might offer well-paying jobs.

And you touched on this, they're looking at a region that already has a strong university system that is graduating lots of engineers and other highly skilled labor. And then when they see a town like this where we aren't graduating those kinds of students, certainly not in those kinds of numbers and where.

Our largest university in the entire region is Western Carolina University, which is now west of us. They're not exactly known for engineering or a med school or a law school. Some of the stereotypical really high paying jobs. We graduate a much more liberal arts, educated blue collar workforce. And companies might look at that and say, where's our workforce going to be?

And it touches on what you just said. A company doesn't want to come into a region. And try to make it what it needs to be. They'll go to a place that already exists that has those ingredients. Am I off base in saying that because our universities here, by and large are not graduating that kind of workforce, that we are not an attractive location for that kind of corporation.

Jonathan Brown: I don't think that you're off base. I do think that it puts a lot of pressure on a university, and the reality is that a corporation like the one that you're describing, a large corporation can bring lots of jobs, can exist on exclusively new graduates. So I think they do look for. That type of university system, that educational system.

But I think that type of educational system is also indicative of the community. So if you have a university that has a very prominent medical school, it's not just that they're graduating new doctors, it's that medical school is probably. Attached to a world class hospital that's employing doctors at all levels, at all places in their careers, which is going to attract manufacturers of medical equipment.

It's going to attract all sorts of facets of the industry beyond just the educational aspect, I think education is often a reflection of the community. And here, I think you're spot on in that there's that liberal. Core U N C A is a liberal arts institution and that kind of reflects an artistic, creative sensibility that I think is Asheville's part of Asheville's identity like we were talking about before.

Matt Peiken: An example what you just brought up is, so Duke University, well they're just a couple hours east of us, duke has, is highly regarded as a medical. School and medical center, and when you have a triangle of schools, you have UNC Chapel Hill, you have Duke. When we have such geographic proximity to a high-powered university region with already an existing strong corporate and financial base, does it make it even harder on a place like Western North Carolina to attract businesses that could just be two hours east of us and have a much more rich workforce to draw?

Jonathan Brown: I would say yes and no to a certain extent. When you have that research triangle, when you have Duke and Chapel Hill, it's not much of a stretch to expect some of those graduates to move west to Asheville. So I think you can actually draw from that pool. So in that sense, it might make it easier. On the other hand, why not be closer to them?

Why not draw off? The industry that already exists. The question then becomes, what exists here that creates an advantage to actually distancing yourself a little bit from the epicenter of that industry? Is there a reason that branching out might outweigh the benefits of being a little bit closer to what's going on?

And I think it comes back to the idea of what's happening in our local economy right now and how tourism. Clashes with that idea of building a permanent industry in the area. 

Matt Peiken: That's really interesting cuz you talked about Oscar Blues and New Belgium is here in Nevada. Coming here and building major outlets for themselves.

It is not by and large an educated workforce that they depend on. So it seems like we have a history here, at least a recent history of doubling down on what this region, culturally, and I guess. In terms of its marketing stands for, and that we draw, continue to draw more of those kinds of companies. Not that's a negative, but you're saying the two have trouble coexisting.

Having that kind of a tourism-based economy and doing something that on a city and county level that would attract larger companies.

Jonathan Brown: I think so when you look at a company like New Belgium or Sierra Nevada, there are a lot of blue collar jobs associated with that. But they're gonna need accountants and they're gonna need HR managers and they're going to need, but we're executives.

Matt Peiken: Yeah, but we're talking dozens of employees, so Sure. We're not talking even hundreds of employees in that case. 

Jonathan Brown: But those businesses like that can. jobs, and some of them are going to be entry level, some of them are gonna be better jobs, but they're inextricably linked to tourism and a company like that.

The benefits that they receive from tourism outweigh the costs that they would incur from being in an economy that is rooted in tourism. And when I say costs to a company by existing in an economy that's rooted in tourism, I'm thinking of. Nonwage amenities. Basically, your compensation package is made up, obviously, of the number on your paycheck, but companies constantly look for ways to pad a compensation package with nonwage amenities, which is exactly what it sounds like, it's benefits to you that aren't wage.

So vacation days and sick leave. I don't wanna even say healthcare because that could be a whole nother issue, but a lot of those non wage amenities. are beneficial to the company when they're completely separate from anything they have to pay for. So Sunny Days is the mountains. The mountains is the city.

Walkable is, they're a good school district. The company doesn't have to pay for any of that, but they can use that to attract workers. And a lot of. , really marquee amenities in Asheville are built for and priced for people who aren't gonna stay. 

Matt Peiken: So you're saying that our amenities, even that we market are for tourists.

So we're not really even doing anything to market this region for permanent residents.

Jonathan Brown: Look at one of our marquee attractions, the Biltmore, costs a hundred dollars to get in. 

Matt Peiken: I have never been, I've been here five and a half years, I've deliberately not gone cuz I refuse to pay that kind of money to go there.

Jonathan Brown: I joke to my students, I'm like, don't pay to get into the boat more. If you stay in Asheville long enough, someone will give you tickets for free. That's right. And it's beautiful, but it's something that you do on vacation. And Asheville can kind of support restaurants that might be a little bit too pricey for a small community like ours.

But there's always gonna be people that are here. On vacation, and that's something that people that live here have to compete with, right? If you go to a place on a vacation, you know, you've saved up for it, you've planned it, you've come, and for a week you're spending your money in a way that is unsustainable.

But that's because in seven days, you're gonna go back to work and go back to your life. But for the people that are here, That unsustainable level of spending is sustained because it's a rotating cast of tourists that are spending like that. So if you work in an industry that caters to tourists, that's very beneficial to you.

But if you're trying to attract people that are just going to come here and they're going to stay, then you're pointing to. Restaurants and you're pointing to entertainment and you're pointing to all of the frankly wonderful things about Asheville. They're gonna be priced like the most expensive place to live in North Carolina, and Asheville does consistently rank number one, or I think it goes back and forth with Chapel Hill as one of the most expensive cities to live.

Matt Peiken: You brought up an entirely other leg of this conversation, which is sustainability for people who are living here, and while the incomes of the jobs here are not going up, certainly the cost of living here and housing is going up.

Yes. So as you draw these separate lines of the rise in housing costs versus the rise or lack thereof in salaries, When are we going to reach a certain apex where the two cannot marry up when the people who are living here, by and large are not making the kind of money to even afford rents here, let alone purchase a house.

Jonathan Brown: I feel as though I'm coming across as though Asheville doesn't have a lot of hope, and I actually feel the opposite. I think like we were talking about before, we're crossroads. We are bringing in quite a bit of tax dollars in like occupancy tax for instance, and right now most of that. Is earmarked for advertising for more tourism.

Matt Peiken: Yeah. Through the TDA. Exactly. Which is a whole other issue when you have a body like the Tourism Development Authority that has the largest kitty of money of any element in this city, and that by their very mandate, the money has to go back into things that promote tourism. What does that tell this community?

Jonathan Brown: exactly, and because it, it's in percentage.

as tourism explodes, the amount of money they're pouring into tourism grows with it. It's not capped such that we're just peppering billboards all over the country. With come to Asheville to a point where it's probably not benefiting us anymore, we're probably seeing very low margins to the money we're spending on that.

One point, it was 75% of the taxes were earmarked for advertising, and it dropped to 66 last year. But it's still the majority of the money. And I think, again, we're at a crossroads where tourism is such a thriving industry in Asheville that we need to start asking how can tourism help the community instead of what can the community do to bring in more tourism?

And I think. There is money there for that to happen, and I think there is a lot of ways that we can invest in this community such that we can support locals and we can support local businesses and start. Benefiting even more from that tourism industry. 

Matt Peiken: At the same time though, none of this is necessarily creating the kind of higher-paying jobs that wouldn't be dependent on tourism to some degree.

The company Pratt and Whitney was, they had an agreement to come here and develop a certain number of jobs, and according to the Citizen Times an article they had recently that Pratt and Whitney didn't even meet their quota for the kind of higher paying jobs. They missed out on a 2.6 million incentive payment because they didn't offer 250 high paying jobs.

Jonathan Brown: It becomes catch 22. You need people to come here with high paying jobs, but you need people to already be here offering those type of jobs to attract those workers. So it's, which comes first? Does the company come first or do we build a community of people that have high paying jobs? Asheville, I think, is poised to maybe attract the workers.

particularly post-pandemic, when a lot more companies are being more open to working from home. Remote workers. 

Matt Peiken: Remote workers. Is this the source of the hope that you were just talking about? You just said you do have hope. Is this where you're 

Jonathan Brown: talking about? I would say yes. One of the things I think about a lot from a real macro perspective, I think Asheville has a lot going for it.

And we have the mountains and we have. Which I think is going to become a really attractive thing for both people and industries as we try to figure out what's going on in terms of climate change. Where far enough from the coast that hurricanes aren't so much of a problem. We're not dealing with the drought and the water issues the West coast has.

I think Asheville is really poised to attract both people and corporations. But we're also at a crossroads where we have to think about how are we going to keep our water clean? How are we gonna keep our air clean? How are we gonna keep the landscape that we have? And no one wants to go on a hike and look out on a mountain that's dotted with houses.

So there's actually, in that respect, there's less land than we think there is because we want to keep so much of it empty. So there's all these moving parts right now, and I don't. Asheville has crossed any sort of point of no return. I think there's a lot of opportunity for our small town and we're growing so quickly, and I think there's a lot of really cool stuff that could happen.

That. And also I think if we can attract people to work remotely from here for the amenities that exist, you can create that workforce that is poised to welcome some of these larger companies. So for instance, like right now, there are plenty of jobs that cater to the service industry, but last I checked, we have a handful of.

Bus lines that run after 10:00 PM and I think one that runs after midnight. If you're working at a bar downtown and you're closing up till 1:00 AM you, you might be making $15 an hour and then you have a $15 Uber ride to get home. Even the parking downtown. Yeah, even the parking is an issue. So if we can make it easier for people to just exist, having jobs like that such that maybe they can attend.

U N C A, maybe they can invest in something a little more entrepreneurial. Maybe they can build up skills instead of like living paycheck to paycheck. Because the city is built for visitors instead of for them. We can [00:24:00] have a workforce that is looking for new opportunities to come to them. And we already have people with good jobs coming here.

I was speaking to a firm in Tallahassee about some consulting work a couple years ago, and I met with them on Zoom. Without knowing it. I was like, yeah, I'm in Asheville. And one of the executives was like, I'm in Weaverville right now. And another one was like, I'm meant two of them were in Asheville at the time, talking to me about this job in Tallahassee.

Totally coincidentally, I think there are people coming here because they want to come here and they're realizing they don't have to work where their company is headquartered. And I think if we can lean into that and focus on making Ashe. Livable for workers, for permanent workers. In my opinion, I think Asheville is poised to create that labor force before they attract workers rather than asking workers to come and expecting the people to follow.

Matt Peiken: You touched on from parking to transportation. We talked a little bit about housing costs. What other elements are within this city's control to make this area a more attractive, livable place for workers? 

Jonathan Brown: I think a lot of it has to do with housing costs, so investing specifically in affordable housing is extremely important.

Matt Peiken: That seems like it's such a struggle because we can't apparently, as going back to what the state legislature allows municipalities to do and not do, apparently we don't have the leverage to impose on developers. X percentage of their units that they're developing in these new complexes be earmarked for people at a median income below the medium income that any developer that signs onto that does so voluntarily that we can't impose that.

Yes, everybody knows we need more affordable housing. Is that within our control or are we at the benevolence of develop? 

Jonathan Brown: I would say unfortunately, it probably is the latter. There's always room in terms of zoning and who gets contracts and who gets either go ahead to, to produce these units, Asheville as a city, there are limits to what you can dictate a contractor builds.

So once you own the land, we can put roadblocks here and there. No, you can't like squeeze a mansion into this tiny lot. But beyond that, firms are very good. I'm maximizing profit, right? So I can fit my home into the blueprint that you gave me. But we can't say, Hey, you have to cap it at this price. If I build a beautiful home that happens to be small enough to be zoned, and then someone's willing to come in and pay a million dollars for it, that's going to happen.

And you see it all over Asheville. I live in an 800 square foot home in, in West Asheville. I live in like a tiny neighborhood. Around the corner, there's a million-dollar home that was built. Pop up everywhere. And there is an element of, you know, we still live in a market  system, right? Prices are still dictate by the market.

We don't have a system where the government controls our prices. So we are a little hamstrung in that situation. But I think when we look at which products get funded and try to understand what type of. Income level, is this development going to attract what's happening here in the community? Who do we expect to move into these units?

I think we do have information that we can make better decisions about who these homes will be for. 

Matt Peiken: Just as an aside, did you see ? There's a development I read today in, this is in times there's the new development of micro units, micro apartments that's coming in 250 to 300 square feet going for a thousand dollars.

Jonathan Brown: Yeah, a month. That's crazy. It's, it is. There is a lot of momentum to the housing market here and I think it might be plateauing a little bit, but it's going to be really difficult to curb. 

Matt Peiken: And how does this relate to the prospects on the market?  Well-paying work that originates here going forward, are we reaching an era because of the, the rising prevalence of remote work that municipality or areas such as Asheville are throwing up their hands.

We can't attract the big industry, so we just better hope for people bring their own jobs here. 

Jonathan Brown: I wanna say I, I hope not, but I also don't think it's a binary. So I think focusing on making the community attractive to individuals who can bring their own job is not mutually exclusive from being attractive to corporations who might want to set up shop.

Here. There is a very high cost of living here, and we are going to make corporations bulk when we ask them to come here, and they think they're gonna have a really hard time attracting workers. To an area where the cost of living is so high. Going back to what you were saying about Duke and the medical industry, when a corporation is thinking, do we want to be in the research triangle or do we move out?

Most of the time when a company moves away from the epicenter of that industry, it's the situation where you can be like, Hey, the cost of living is a lot lower here. There are all these things we can offer you, but like, why would I leave the epicenter of what's happening to move to a place where the cost of living is just as high, if not maybe higher.

So I think if we can really work on keeping Asheville livable for the individual worker, it's going to be conducive to firms that want to come here and create permanent jumps. 

Matt Peiken: We've got the mountains. 

Jonathan Brown: We do have the mountains. Absolutely.