Mapping CED Progress…and Struggle: The 2024 NC County Tier Rankings

What is the NC Tier system?

Almost 40 years ago, the North Carolina Commission on Jobs and Economic Growth formally identified a pattern in the state’s economic growth.  There were clearly haves and have-nots — a divide between prospering urban areas and economically stagnating rural areas. Analysts referred to it as a “two-tiered economic system.”  In response, in 1986, the N.C. General Assembly developed a tax incentive program to promote economic development, with access to the incentives based on a county’s place (designation) in an ordered list reflecting the relative economic distress of all 100 NC counties.  The list was then broken into Tiers, or groups, showing the most distressed group of counties (Tier 1) to the least (Tier 3).

In the years that followed, this Tier system faced challenges and underwent frequent changes to meet shifting economic circumstances, development and state priorities, ultimately settling on the three tier system we use today (see here for a 2015 state legislative report providing more details on its history and here for the relevant state statute outlining the current designation structure and process).

What is the Tier system used for?

Originally, the system was used to promote economic development through tax incentives for new or expanding businesses.  The tier system helped target those incentives to the most distressed areas of the state.  It is now used to help counties through a wide range of programs, from federal Community Development Block Grants (CDBG) to Job Development and Investment Grants (JDIG).  The Commerce Department has a limited list of current programs using the Tier system as part of their award or program implementation process, but notes the designation has been picked up by a wide variety of non-profits, such as the Golden Leaf Foundation, and other institutions outside of government as a valid and reliable indicator of where community and economic needs are particularly acute across the state.

Where Are We Now? The 2024 Tier Designations and the Data Behind Them

The N.C. Department of Commerce recently released an excellent short report with the 2024 county tier designations and the complete data used for the designation process. Two key factors determine a county’s designation:

1) The first factor is composed of four variables that, when combined, determine the overall rankings from most distressed (rank #1) to least distressed (rank #100). The four variables that determine where a county falls in the #1 to #100 rankings are average unemployment rate, median household income, percentage growth in population, and adjusted property tax base per capita.  The Department of Commerce report presents the details of the final rankings, including how they are calculated, time frames of the data used, data sources and all the applicable data.  There is also a detailed description of the changes in the rankings from the prior year.  Readers can clearly see which counties moved up or down, and what factors prompted the change.

2) The second factor is a legislative requirement that the final list be broken into three tiers, with a mandated allocation of 40 counties each in the Tier 1 and 2 designations, with 20 counties in the least distressed, or Tier 3, counties group.

It is important to remember that with both of these factors at play, whether a county falls into one tier or another is not an independent calculation for each county but depends on everyone’s progress or struggle relative to each other.  If one county changes its place in the ranking, it will have a ripple effect where another county will also be bumped up or down, which is especially impactful when a county is on the edge of one of the 40-40-20 Tier break points.   An example of a change for 2024 was Burke County, which improved its overall economic distress ranking via positive changes in the measures for population growth and median household income.   According to the Commerce Department’s report, Burke County improved its position relative to all other counties, resulting in it moving from #33 on the distressed list down to #50.  Because only 40 counties can be in the group considered most distressed (Tier 1), Burke County dropped from a Tier 1 distressed county in 2023 to the Tier 2 group in 2024, the group considered to be in better shape in terms of economic development.

There are other, perhaps more immediately tangible signs that Burke County’s shift in the rankings reflects economic progress on the ground.   Just days ago, a local paper featured a front page opinion piece titled “Exciting Things Happening In Economic Development in Burke County,”  including news this past fall of a major grant for a textile manufacturing hub. The foundation for today’s growth was established years ago. This blog has chronicled efforts to revitalize the county seat’s historic downtown, such as the Morganton Trading Company in a historic mill (here) and the historic Mimosa Theater (here). In addition, the School of Government’s Development Finance Initiative (DFI) partnered with the State of North Carolina, Burke County, and the City of Morganton to create a vision and master development plan for the historic buildings near Broughton Hospital, and initial progress with that development is described here.