CREATING REGIONAL ADVANTAGE IN 

APPALACHIA: TOWARDS A STRATEGIC 

RESPONSE TO GLOBAL ECONOMIC 

RESTRUCTURING 

Keystone Research Center 

April 2005 

FINAL REPORT UNDER 

ARC CONTRACT NO: CO-12884T-03 

ASSESSMENT OF WORKFORCE DISPLACEMENT AND ADJUSTMENT 

POLICIES IN APPALACHIA’S LABOR MARKETS

This report was written by Stephen Herzenberg, Suzanne Teegarden, and Howard Wial, 

with assistance from Amy Glasmeier, Mark Price, Peter Wiley, and Matt Yancheff. 
1

Table of Contents 

I. Executive Summary.................................................................................................... 2 

II. Introduction................................................................................................................. 4 

III. Historical Context for Contemporary Restructuring............................................... 5 

IV. Recent Restructuring in Appalachia ........................................................................... 6 

V. Responses to Worker Displacement and Economic Restructuring.............................. 10 

A. Overview of Field Research Site Selection .......................................................... 10 

B. Responses to Worker Dislocation......................................................................... 13 

C. Economic Readjustment ....................................................................................... 19 

1. Strategy and Planning ....................................................................................... 19 

2. Policy and Implementation ............................................................................... 23 

Traditional Practices..................................................................................................... 25 

New Approaches........................................................................................................... 27 

Building on regional strengths.................................................................................. 27 

Diversifying the industrial base................................................................................ 29 

Movement toward higher value-added manufacturing............................................. 30 

Improvements in job quality, including in services .................................................. 30 

VI. Conclusion ................................................................................................................. 33 

Appendix A. Appalachian Economic and Social Indicators, 1970-2000. ....................... 36 

Appendix B. Summary of Best Practices in Two Areas.................................................. 39 
2

I. Executive Summary 

This report documents the findings of field research in seven Appalachian states on 

responses to worker displacement and economic restructuring. (The seven states are 

New York, Pennsylvania, Ohio, West Virginia, Kentucky, North Carolina, and Georgia.) 

This field research complements quantitative analysis of worker displacement in 

Appalachia from 1993-2003 that is detailed in a earlier report (and summarized below).1 

Overall, we found that Appalachia has experienced significant economic distress 

especially beginning in 2001 (earlier in some places) and that worse may be yet to come, 

especially in Southern Appalachia. Other major findings include the following. 

• The Appalachian region is highly vulnerable to economic changes now occurring as a 

result of the concentration of low-wage manufacturing in Southern Appalachia, 

incomplete adjustments from earlier manufacturing job losses in the “rust-belt” 

regions of Northern Appalachia, and longstanding underdevelopment in the coaldependent regions of Central Appalachia. 

• In Appalachia as a whole, manufacturing still accounts for one out of every six jobs, 

and one out of five in Southern Appalachia, compared to one out of nine nationally. 

• In January 2004, among workers displaced in the 2001-03 period, lower shares of 

Appalachian than non-Appalachian workers were re-employed, in the labor force, and 

enjoying wage gains compared to their previous job. Appalachian workers’ difficulty 

bouncing back from displacement likely stems from the higher share of older, less 

educated, and long-tenured workers displaced in the region as well as a high share of 

jobs lost due to plant closings. Plant closings in some rural areas wiped out a 

substantial share of employment in regional labor markets. 

• Appalachian wages have lost ground since 2001 at virtually every point in the wage 

distribution, including a drop in the median wage from $12.74 to $12.58 (in inflationadjusted 2004 dollars). This compares with a wage gain over the same period in the 

non-Appalachian U.S. from $13.80 to $14.07. 

• A wide variety of responses to worker displacement and economic restructuring can 

be observed in Appalachia. Most field research regions had developed systems of 

responding to layoffs and connecting dislocated workers to services. In many 

regions, however, the overall response to restructuring has been reactive, with more 

energy and activity focused on coping with the direct impact of displacement than on 

developing a comprehensive and strategic long-term response. 

 

1 Readers can find more detail on the experience of displacement in Appalachia, including bar graphs 

summarizing key findings, in a stand-alone report. See Stephen Herzenberg, Mark Price, and Howard 

Wial, Displacement in Appalachia and the Non-Appalachian United States, 1993-2003: 

Findings Based on Five Displaced Worker Surveys, report prepared for the Appalachian Regional 

Commission, 2005, available online at www.arc.gov. 
3

• The areas with the most potentially effective workforce and economic development 

practices have effective leadership and base local practices on a regional vision and 

strategy developed with input from diverse stakeholders; an emphasis on building on 

local economic assets; strong stakeholder partnerships; explicit goals that are 

measured and tracked; and an awareness and use of external “knowledge.” 

• Virtually all of the case study sites described a shift in emphasis away from industrial 

recruitment strategies and towards industrial retention, growing new businesses, and 

human capital strategies. In the distribution of business subsidies, some attention to 

job quality and accountability (e.g., clawbacks that require incentives to be partly or 

completely returned if promised job or wage targets are not met) were becoming 

standard economic development practice in these regions and in many cases these 

features are built into state subsidy programs. 

• Several interviewees observed that, while listening to business is pivotal, that 

business does not always know what it needs. Their observations underscore a need 

to go beyond simply being industry driven; sophisticated economic and workforce 

developers also need to assist business with identifying collective needs important to 

regional industries and bolstering these industries’ capacity to anticipate future 

market trends and threats. 

• Although not currently recognized as part of the standard economic development 

toolbox, technical assistance that supports organizational change within firms 

emerged as a practice for retaining and/or improving jobs at several of the case study 

sites. 

• In all field sites, a lack of confidence was evident, especially but not only among 

displaced workers, regarding whether there is any approach that could create enough 

middle-class jobs in the context of global economic pressures. 

• Implicit in the best practices evident across all of these seven regions is a new 

Appalachian economic development strategy with the potential to replace the 

previous emphasis on industrial recruitment. So far, no economic or workforce 

developer has articulated the new strategy in a comprehensive way, which could 

advance its refinement and implementation. 

• Further developing the emerging strategy, in part by pooling the most advanced 

approaches across all regions, is likely to be critical to enabling Appalachia to prosper 

in the face of the economic pressures of the next decade. To foster more developed 

“next generation” economic development strategies for rural Appalachia, this report 

recommends the following: 

• Inclusive strategic planning that creates and tracks efforts to improve middle-class 

well-being for the whole community. Improving job quality, for example, is 

difficult enough in the current environment that it is not likely to happen without 

tactics aimed explicitly at that goal. 
4

• More recognition of and support for human capital and learning institutions that 

cut across multiple companies – such as industry workforce partnerships or 

intermediaries, collaborative networks of small companies, and industrial 

extension services that go beyond routine “lean production” to include technical 

assistance on strategic planning, marketing, and organizational change. 

• Experimentation with diverse approaches to giving local industries forwardlooking strategic knowledge and the ability to anticipate the next competitive 

threat and opportunity. Such capacity might be housed in industry centers of 

excellence, community colleges, higher-level academic institutions, or industry 

associations. Without such capacity, more segments of Appalachian industry will 

find themselves unable to cope with the pressures of the next decade. 

Over the past decades, the Appalachian region has used infrastructure development 

coupled with industrial recruitment and some improvements in human capital to close the 

economic gap with the rest of the United States. This has been an important achievement 

and in many cases creates a strong foundation for coping with new challenges. But while 

improved infrastructure and education levels are necessary, they are not sufficient. The 

overall message of this report is that past economic development approaches are 

inadequate to cope with the pressures confronting Appalachia today. Building on the 

most creative economic and workforce ideas and practices in the region, however, many 

of the region’s relatively accessible rural regions retain opportunities to flourish in the 

21st Century. 

II. Introduction 

This report is based on field visits to seven different regions within Appalachia including 

counties within the southern tier of New York, the Athens metropolitan region of Ohio, 

North Central Pennsylvania, Southeast Kentucky, South Central West Virginia, 

Northwestern Georgia, and the Asheville metropolitan region of North Carolina.2 The 

field work for this report was undertaken for two major purposes: to deepen the 

understanding of the character and impact of dislocations within Appalachia and to 

understand and describe current responses to the impact of job/worker displacement with 

an emphasis on promising approaches that: 

• expand opportunity for individual dislocated workers; and 

• bolster longer-term regional economic viability including via “next generation” 

economic development strategies. 

The context for this report is the unprecedented economic challenge from the expansion 

of Mexico and China as manufacturing export platforms serving the U.S. market. This 

challenge is more daunting in Appalachia than the United States as a whole because of 

the region’s dependence on manufacturing for 17 percent of all jobs, as compared with 11 

percent in the United States as a whole. Appalachia also has a concentration in laborintensive manufacturing, such as textiles and food processing, in which imports have 

 

2 Case studies providing more detail on each field visit are included as appendices. 
5

grown and are projected to continue growing rapidly. The high poverty rates in 

Appalachia make residents of the region even more vulnerable to economic downturns 

and the low education levels make efforts to diversity the economy more challenging. 

While the field visits confirmed the impacts of manufacturing job loss related to trade, 

the experience of displacement within Appalachia also varied by region. Sites in 

Southern Appalachia reflected the loss of manufacturing jobs throughout the south; sites 

in northern Appalachia were shaped by earlier waves of “rust belt” manufacturing job 

loss and the responses that had been made to that earlier restructuring; sites in central 

Appalachia, in which manufacturing was much less important, continued to be affected 

by a combination of longstanding underdevelopment and displacements caused by longterm changes in the coal industry. 

There were a wide variety of responses to economic restructuring among the site visit 

regions. In general these practices can be grouped as follows: 

• Reactive: energy and activity were focused on coping with the direct impact of 

displacement, but there was little emphasis on developing comprehensive and 

strategic long-term responses. 

• Dispersed: effective practices that went beyond simply coping with dislocations 

existed in one or several local agencies, but these practices were not closely 

connected or coordinated into an overall strategic response. 

• Comprehensive: a shared vision and strategy existed and was being implemented 

across multiple workforce and economic development agencies. 

Most hopefully, there were an emerging set of new practices that hold promise for 

readjustment strategies in rural Appalachia. No region fully articulated or implemented a 

new economic development vision, but each offered examples of innovative programs 

and several appeared to be moving towards a newer, more comprehensive approach. 

III. Historical Context for Contemporary Restructuring 

In Appalachia, the current displacements – and those that appear to be looming -- are 

shaped not only by the region’s economic history and industrial structure, but also by 

differences within Appalachia. The last 30 years have seen overall improvements in 

many economic and social indicators in Appalachia, but varied changes within different 

parts of the region. Southern Appalachia has become less poor and more educated, but 

has a larger concentration of manufacturing making it more vulnerable to pending swings 

in manufacturing employment. Northern Appalachia weathered significant 

manufacturing losses in the 1980s and 1990s, but has retained pockets of high-wage 

manufacturing jobs. Northern Appalachia has also gone from a poverty rate lower than 

the national average to one higher. It may have fewer manufacturing jobs to lose than 

Southern Appalachia, but has not fully recovered from previous restructuring. Central 

Appalachia remains the region with the highest poverty levels and the lowest levels of 
6

education. Appendix A provides additional background on economic and social progress 

in Appalachia from 1970 to 2000. 

IV. Recent Restructuring in Appalachia

This section examines recent economic restructuring using three sources. 

• Employment data from an establishment data based maintained by the Bureau of 

Labor Statistics (BLS). 

• A displaced worker survey (DWS) conducted by the Census Bureau and BLS as a 

supplement to the Current Population Survey (CPS) in one of the first two months 

of 1996, 1998, 2000, 2002, and 2004. Each DWS asks workers about displacement 

experience in the previous three years. 

• The CPS itself, a monthly survey of 60,000 households that is the standard source 

for wage and demographic information in non-Census years. Although 

Appalachia per se is not identified in the CPS (or, therefore, the DWS), we 

constructed a sub-sample that approximates Appalachia using the metropolitan and 

state geographic identifiers that are available. 

Table 1 shows manufacturing employment trends in the United States, Appalachia, the 

Appalachian portion of 13 states, and the seven field site regions studied for this project. 

The table shows that manufacturing employment in Appalachia and the United States was 

flat from 1990 to 1998 but declined 18 percent between 1998 and 2003. Since 

manufacturing accounts for a larger share of employment in Appalachia, the same 

percentage loss of employment in manufacturing from 1998 to 2003 amounts to 3.9 

percent of total employment in Appalachia versus 2.5 percent nationally. (The second-tolast column of numbers in the Table 1 shows manufacturing job loss from 1998 to 2003 

as a percent of total employment. This is a better measure of the regional impact of 

manufacturing job loss than percent decline in manufacturing employment.) In southern 

Appalachia, manufacturing job loss from 1998-2003 varied from 3.9 percent of total 

employment in Appalachian Virginia to 8.6 percent in Appalachian Mississippi. In the 

Appalachian portions of the three most northern states in the region, New York, 

Pennsylvania, and Ohio, manufacturing job loss from 1998 to 2003 ranged from 3 to 4 

percent of total employment. In the five field site regions in Southern and Northern 

Appalachia, manufacturing job loss from 1998-2003 amounted to between 4.3 and 6.8 

percent of total employment. 

Our second data source is our constructed Appalachian displaced worker survey subsample from 1993 to 2003.3

 Over the entire period, Appalachia experienced the same 

displacement rate among long-tenure workers (who have at least three years of 

experience) as the rest of the United States. Displacement rates escalated in both the 

United States and Appalachia in the most recent three-year period, 2000-03 – to about 4 

 

3 Readers can find more detail on the experience of displacement in Appalachia, including bar graphs 

summarizing key findings, Herzenberg, Price, and Wial, Displacement in Appalachia and the NonAppalachian United States, 1993-2003.
7

percent overall and to nearly 10 percent in manufacturing. Displacement rates were 

higher in rural Appalachia than in the rural parts of the rest of the United States. 

Especially towards the end of the 1993-2003 period, workers without a high-school 

education experienced higher rates of displacement in Appalachia than outside it. 

College educated workers experienced lower rates of displacement in Appalachia. 

Table 1. Manufacturing Employment, the United States, Appalachia and the Appalachian 

Portion of Thirteen Appalachian States

Manufacturing Employment 

Percent Change in 

Manufacturing 

Employment 

1990 1998 2003 1990-

1998 

1998-

2003 

Manufacturing 

Employment 

Change As a 

Share of 

Total 

Employment, 

1998-2003 

Manufacturing 

Employment as 

a Share of Total 

Employment, 

2003 

United States 17,797,353 17,616,672 14,459,712 -1% -18% -2.5% 11% 

Appalachia 1,826,312 1,818,196 1,491,316 0% -18% -3.9% 17% 

App. Georgia 160,002 185,959 165,081 16% -11% -3.0% 19% 

GA Field Visit 40,123 38,134 32,992 -5% -13% -4.6% 28% 

App. Kentucky 50,263 54,457 47,194 8% -13% -2.3% 14% 

KY Field Visit 1,051 1,308 952 24% -27% -1.9% 5% 

App. Maryland 15,516 15,125 13,477 -3% -11% -1.7% 13% 

App. 

Mississippi 85,931 81,974 63,967 -5% -22% -8.6% 30% 

App. New York 89,611 78,796 66,175 -12% -16% -3.0% 16% 

NY Field Visit 17,511 18,860 13,411 8% -29% -6.8% 17% 

App. North 

Carolina 173,688 168,203 124,928 -3% -26% -7.2% 20% 

NC Field Visit 35,752 32,909 24,097 -8% -27% -5.7% 14% 

App. Ohio 85,474 96,638 79,423 13% -18% -4.0% 17% 

OH Field Visit 14,661 13,960 10,887 -5% -22% -4.3% 15% 

App. 

Pennsylvania 424,786 404,271 333,260 -5% -18% -3.1% 14% 

PA Field Visit 23,891 25,794 21,283 8% -17% -5.4% 24% 

App. South 

Carolina 131,379 126,552 103,778 -4% -18% -5.1% 22% 

App. Tennessee 245,035 237,975 194,843 -3% -18% -4.6% 19% 

App. Virginia 44,075 42,602 35,460 -3% -17% -3.9% 18% 

West Virginia 79,495 76,217 63,963 -4% -16% -1.9% 9% 

WV Field Visit 6,770 6,350 5,909 -6% -7% -0.4% 6% 

Source: Keystone Research Center (KRC) based on the Quarterly Census of Employment and Wages 

(QCEW). 

Throughout the 1993-2003 period, Appalachian displaced workers experienced more 

difficult post-displacement labor market experiences, with lower shares of Appalachian 

workers re-employed, in the labor force or enjoying wage gains compared to their 

previous job. The gap between Appalachia and the rest of the United States in the share 

of workers re-employed at the time of the DWS peaked in the most recent DWS survey, 

covering displacement in the 2001-03 period. 
8

Two factors that may have contributed to the low resilience of Appalachian workers 

in the face of displacement were the prevalence of plant closings and the high share 

of high-tenure displaced workers. 

• From 1999-2003, 55 percent of displaced Appalachian workers lost jobs due to 

plant closings, compared to 42-47 percent outside the region. 

• Nearly one out of five displaced workers in Appalachia had more than 20 years 

experience on their previous job compared to just under one in 10 in the rest of 

the United States. 

Table 2 and Figure 1 report the results of wage analysis using the CPS. Table 2 shows 

that the median hourly wage in Appalachia roughly tracked the U.S. median (albeit with 

some variation in year-to-year changes) over the 1996-2001 period. In these five years, 

the Appalachian and the non-Appalachian U.S. median each rose by almost exactly 10 

percent. (For men and women separately, the increases in median wages were also 

similar in this five-year time span.) Since 2001, however, the Appalachian median has 

fallen by 1.2 percent while the Non-Appalachian median has increased by 1.9 percent. 

Figure 1 shows that a gap in the growth of Appalachian and non-Appalachian wages 

since 2001 exists throughout most of the wage distribution. The gap is largest at the two 

highest wage percentiles shown, the 80th and 90th percentile, as well as the 20th percentile. 

Table 2. Inflation Adjusted Median Hourly Wages at Each Wage Percentile in Appalachia and the 

Non-Appalachian United States, 1996-2004 

All Workers Men Women 

Appalachia 

NonAppalachian 

U.S. 

Appalachia 

NonAppalachian 

U.S. 

Appalachia 

NonAppalachian 

U.S. 

1996 $11.58 $12.53 $13.19 $14.29 $9.92 $11.14 

1997 $11.72 $12.79 $13.58 $14.36 $10.00 $11.44 

1998 $11.86 $13.20 $13.78 $14.91 $10.37 $11.65 

1999 $12.33 $13.53 $14.13 $15.32 $10.52 $11.83 

2000 $12.29 $13.54 $14.08 $15.40 $10.79 $12.02 

2001 $12.74 $13.80 $14.53 $15.61 $11.05 $12.32 

2002 $12.77 $13.93 $14.60 $15.64 $11.17 $12.57 

2003 $12.80 $14.13 $14.32 $15.51 $11.30 $12.59 

2004 $12.58 $14.07 $14.30 $15.37 $11.09 $12.59 

% Change 

1996-04 8.6 12.2 8.4 7.6 11.8 13.0 

% Change 

1996-01 10.0 10.1 10.2 9.3 11.3 10.6 

% Change 

2001-04 -1.2 1.9 -1.6 -1.5 0.4 2.2 

Note: Inflation adjusted hourly wages were calculated using the CPI-U-RS, 2004 dollars. 

Source: KRC analysis of the CPS. 
9

Figure 1. Inflation-Adjusted Wage Change at Each Wage Decile, Appalachia vs. 

Non-Appalachian United States, 2001-04 

-5

-4

-3

-2

-1

0

1

2

3

10th 20th 30th 40th 50th 60th 70th 80th 90th

Percent Change

Appalachia Non-Appalachian U.S.

Source: KRC based on the CPS. 

Table 3 provides a longer-term regional perspective on the disjuncture in economic 

performance represented by the past few years based on CPS data for each of the 13 

Appalachian states and for the United States. (Since we cannot approximate Appalachia 

in the CPS prior to 1996, Table 8 provides statistics for the entire Appalachian state in 

each case not just for the Appalachian portion of the state.) 

For Tennessee and for all of the six southern Appalachian states, 1995-2000 was a time 

of considerable progress. In Tennessee and four of the Southern states (Virginia, North 

Carolina, South Carolina, and Georgia), 1995-2000 capped two decades of wage gains 

that increased the median wage by at least 21 percentage points. In Tennessee, Virginia, 

North Carolina, and South Carolina, the 2000-03 period was a time of economic 

stagnation, especially relative to the previous five years, with median wages climbing by 

3 percent or less and declining in South Carolina. 

Except for Tennessee and to a lesser extent New York, in northern and central 

Appalachian states (Pennsylvania, Ohio, West Virginia, and Kentucky), the 1979-2003 

period as a whole was one of economic stagnation, with 1995-2000 the one brief 

reprieve. If it were possible to extract data for just the Appalachian portions of New 
10

York and Pennsylvania, the story of economic stagnation since 1979 would likely be 

more pronounced.4

 

Table 3. Inflation Adjusted Median Hourly Wages in Appalachian States (including NonAppalachian Portions) and the United States, 1979-2003

Percent Change 

 1979 1989 1995 2000 2003 

1979-

89 

1989-

1995 

1995-

2000 

2000-

03 

1979-

2003 

%age Point 

Difference, 

2000-03 

minus 

1995-2000 

 U.S. 12.36 12.36 12.14 13.07 13.62 0.0 -1.8 7.7 4.2 10.2 -3.5 

NY 12.93 14.21 13.82 13.91 14.54 9.9 -2.7 0.7 4.5 12.5 3.9 

PA 12.84 12.35 12.35 13.15 13.59 -3.8 0.0 6.5 3.3 5.8 -3.1 

North OHIO 13.44 12.43 12.08 13.51 13.14 -7.5 -2.8 11.8 -2.7 -2.2 -14.6 

WVA 13.12 10.47 10.92 11.56 12.01 -20.2 4.3 5.9 3.9 -8.5 -2.0 

KY 11.96 11.08 11.17 11.98 12.26 -7.4 0.8 7.3 2.3 2.5 -4.9 

TN 10.81 10.30 10.85 12.26 12.48 -4.7 5.3 13.0 1.8 15.4 -11.2 

Central MD 13.63 14.10 14.41 14.87 16.07 3.4 2.2 3.2 8.1 17.9 4.9 

VA 11.95 12.99 12.39 14.13 14.55 8.7 -4.6 14.0 3.0 21.8 -11.1 

NC 10.31 10.80 11.17 12.31 12.48 4.8 3.4 10.2 1.4 21.0 -8.8 

SC 9.97 10.75 10.86 12.77 12.53 7.8 1.0 17.6 -1.9 25.7 -19.5 

GA 11.11 11.59 11.52 12.29 13.45 4.3 -0.6 6.7 9.4 21.1 2.8 

South AL 11.32 10.65 10.23 11.59 12.84 -5.9 -3.9 13.3 10.8 13.4 -2.5 

 MISS. 9.58 9.22 9.87 11.08 11.63 -3.8 7.0 12.3 5.0 21.4 -7.3 

Source: KRC based on Economic Policy Institute analysis of Current Population Survey data. 

V. Responses to Worker Displacement and Economic Restructuring

A. Overview of Field Research Site Selection

In selecting field research region within Appalachia we sought a combination of locations 

that met the following criteria. 

• Site diversity with respect to states and sub-regions within Appalachia, county 

economic status (i.e., distressed, transitional, competitive), economic base 

(highlighting manufacturing-dependent regions but with some variation), and 

demographics (i.e., we included one area, Dalton Georgia, with a recent 

substantial influx of Hispanics). 

• State diversity with respect to measures of how well workers bounce back from 

dislocation based on our analysis with the displaced worker survey (Table 4 

below summarizes how the field sites vary on this dimension). 

 

4

 For evidence on this for Pennsylvania, see The State of Working Pennsylvania, various years, accessible 

online at www.stateofworkingpa.org. 
11

• Diverse experiences prior to the displacements of the last few years. In practice, 

this variable overlaps the regional one, requiring inclusion of northern areas with 

extended experience with manufacturing job loss, central regions with extended 

experience with economic stagnation and mining job loss, and southern regions 

that had flourished until the end of the 1990s. 

Table 4. Displacement Experience in Field Site States Based on Displaced Worker Survey (DWS) 

Analysis 

Displacement experience State 

High displacement rate, low resilience (measured by share of displaced 

workers who are employed and full-time employed at time of DWS) 

New York, Pennsylvania, 

Ohio* 

High displacement rate, some resilience (as indicated by share of displaced 

workers employed and full-time employed at time of DWS survey and the 

share with wage gains) 

West Virginia, North Carolina 

Resilience (measured by share of displaced workers employed at the time 

of the DWS and by re-employed workers’ weekly earnings relative to 

prior earnings) 

Georgia 

Resilience (measured by share of displaced workers employed at time of 

DWS) through low-wage job creation (measured by share of employed 

with wage loss of 20 percent or more) 

Kentucky 

*While Ohio had a moderate displacement rate based on the full 1993-2003 period, it has had a high 

displacement rate in the latter part of the period. 

Source: Based on Stephen Herzenberg, Mark Price, and Howard Wial, Displacement in Appalachia and 

the Non-Appalachian United States, 1993-2003: Findings Based on Five Displaced Worker Surveys, report 

prepared for the Appalachian Regional Commission, 2005, available online at www.arc.gov, see especially 

Tables 9 and 10. 

• Richness with respect to policy and institutional responses. (Table 5 summarizes 

some characteristics of the site regions that led us to include them). Since one 

purpose of this report is to provide information on effective practices to those 

within Appalachia and others coping with job loss, several sites were selected 

because of a reputation for effective economic or workforce development 

practice. 

Table 5. Policy and Institutional Responses in the Site Regions 

Southern Region Central Region Northern Region 

Possible cluster-based 

approaches 

Dalton, GA (carpets) 

Asheville, NC (furniture 

and textiles) 

West Virginia WIA 

Region 1 (health) 

North Central PA 

(powdered metals) 

Community audit/asset 

and workforce 

development sector 

approaches 

North Carolina West Virginia North Central PA/Other 

PA; New York 

Entrepreneurial 

strategies 

North Carolina West Virginia Athens, Ohio, 

Pennsylvania, NY, 

Capacity building and 

finance strategies 

Kentucky Highlands* 

Region1 

Athens, Ohio 

Best practice rapid 

response 

North Carolina 

Georgia 

Southern Alleghenies 

PA, 

Industry-linked 

community college 

programs 

North Carolina Kentucky Highlands* 

Region1 

Athens, Ohio 
12

• A final consideration that emerged more strongly during the field work itself (and 

shaped the choice of counties to emphasize in New York, Kentucky, and Georgia) 

was the desire to include locations that had experienced the impact of 

displacements within a rural region. The rural nature of most of Appalachia 

creates a distinctive set of challenges for developing effective displacement 

response including problems caused by the lack of accessibility, limited financial 

resources, and the presence of older, and labor intensive industries that are 

vulnerable to off-shoring. All of the selected sites were in rural regions or regions 

that have a small metropolitan hub but are primarily rural. 

Table 6 characterizes the site visit regions based on the displacement now shaping the 

regional economy. As shown in this table the observed displacements follow regional 

patterns. Sites in southern Appalachia reflected the substantial loss of manufacturing 

jobs now occurring throughout the South; sites in central Appalachia and, to a lesser 

extent, Appalachian Ohio, continued to be affected by the displacements caused by longterm changes in the coal industry. Sites in northern Appalachia are shaped by earlier 

waves of “rust belt” manufacturing job loss (some of which are continuing) and the 

effectiveness of regional responses to that loss. 

Table 6. Summary of Site Visit Regions 

State and Region Counties Form of Displacement 

Northern Appalachia

 New York 

 Southern Tier 

Chemung, Schuyler and Steuben Earlier and substantial recent 

manufacturing job loss 

 Ohio 

 Athens region 

Athens, Hocking, Perry, Meigs, 

and Vinton 

Earlier manufacturing job loss, 

long-term displacements from the 

coal industry, and recent 

manufacturing job loss 

 Pennsylvania 

 North Central 

Cameron, Clearfield, Elk, 

Jefferson, McKean, and Potter 

Some earlier and substantial recent 

manufacturing job loss 

Central Appalachia

 Kentucky 

 Southeast 

 

Harlan and Bell Long term displacements impacts 

from the coal industry 

 West Virginia 

 South Central 

Fayette, Greenbrier, McDowell, 

Mercer, Monroe, Nicholas, 

Pocahontas, Raleigh, Summers, 

Webster, and Wyoming, 

Long term displacements impacts 

from the coal industry 

Southern Appalachia

 Georgia 

 Northwestern 

Bartow, Catoosa, Chattooga, 

Dade, Floyd, Gordon, Haralson, 

Paulding, Polk, Walker, Fannin, 

Gilmer, Murray, Pickens and 

Whitfield 

Substantial recent loss of 

manufacturing jobs except in 

counties with concentration of the 

carpet industry 

 North Carolina 

 Asheville area 

Buncombe, Haywood, Henderson, 

Madison, and Transylvania. 

Substantial recent loss of 

manufacturing jobs 

The two sections below provide more detail on the responses to displacement practices 

within the seven site visit regions. We have organized these practices into two 

categories: responses to worker dislocation and economic readjustment, the latter 
13

referring to development of longer-term regional responses to economic restructuring. 

Appendix B contains a stand-alone summary of effective practices in each of these two 

categories. Within the text below, tables describe individual effective practices and cite 

examples of the practice within field site regions. 

The description of practices is divided into responses to dislocation and economic 

readjustment for both conceptual and practical reasons. By necessity dislocation 

responses and economic readjustment utilize distinct albeit overlapping tools-kits and are 

driven by different time frames. The response to workers losing their jobs and incomes 

needs to be immediate – prior to a layoff, if possible. Workers losing their jobs cannot 

wait years for new opportunities. On the other hand, community economic readjustment 

strategies require time to plan, implement, and take effect. That said, response and 

readjustment strategies can be most effective when linked and aligned with one another. 

B. Responses to Worker Dislocation 

Effective practices in responding to layoffs and plant closings include systems for 

identifying and potentially helping to prevent layoffs; early, comprehensive assistance to 

workers who will be laid-off; and strong connections between early response and 

continuing worker adjustment assistance. The benefits of effective practices in these 

areas are to prevent layoffs, where possible and to assist workers more easily in 

connecting to new, good job opportunities, when layoffs are inevitable. Each site visited 

had some system – and in some cases exemplary systems -- for responding to layoffs and 

connecting laid-off workers to on-going assistance at One-Stop Career Centers. 

However, no site had established formal early warning systems. Only a few had informal 

early warning systems that enabled workforce developers to plan rapid response efforts 

well in advance of the actual layoffs. 

Proactive Response 

• Early Warning and Layoff Prevention. There are established practices and procedures 

that anticipate, seek to prevent, and quickly respond to potential layoffs and plant 

closings. 

• Rapid Response. There are practices and procedures to provide information and 

resources to potential dislocated workers prior to layoff and as soon after notification as 

possible. 

• Rapid Response Follow Through. There are practices and procedures to ensure on-going 

outreach contact with displaced workers after initial information on services has been 

provided. 

Early Warning and Layoff Prevention is a multi-stakeholder approach to identifying 

companies at risk that seeks to: 

• Identify individual firms that may be at-risk to inform response strategies that 

prevent layoffs and support the firms in remaining viable; 

• Identify potential layoffs of workers that can not be prevented to be able to 

provide adjustment services as quickly as possible; and 
14

• Identify labor market trends to inform economic/workforce development 

strategies. 

Early Warning and Retention 

The Steel Valley Authority’s 

Strategic Early Warning Network 

(SEWN) provides business 

retention and development services 

to troubled manufacturing 

companies in 21 counties in 

Western Pennsylvania. SEWN was 

established by a broad coalition of 

business, labor, and community 

leaders and is funded primarily by 

the Pennsylvania Department of 

Labor and Industry. It has created a 

process for identifying small and 

medium-sized manufacturing firms 

that are at risk. Once at-risk firms 

are identified, SEWN can provide 

assistance with financial 

restructuring, buyouts, labormanagement relations, and 

operations and cost 

Although the field visits did not find examples of 

early warning systems, the Steel Valley 

Authority’s Strategic Early Warning Network 

(SEWN) in southwestern Pennsylvania illustrates 

such a system and is currently being evaluated 

for replication in the North Central Pennsylvania 

field site. The system as described in more detail 

in the accompanying box, both tracks potential 

firms at risk and has tools to assist in those 

situations where jobs can be saved. In North 

Carolina, one of the sites visited in the state had 

also undertaken work to prevent layoffs. In the 

late 1980s the economic development agencies 

in the area provided significant financial support 

to local workers to assess the feasibility of an 

employee buyout at Champion Paper, a large 

local employer being closed by its parent firm. 

Renamed Blue Ridge Paper, this plant is now the 

largest employee owned paper company in the 

world and is working with the local Workforce 

Investment Board to train its incumbent 

workforce. 

Rapid Response and Rapid Response Follow-Through. In almost all the sites visited, the 

local rapid response teams held meetings informing those workers facing layoff of the 

services and resources available to them. However, several areas were able to go far 

beyond the simple provision of information on services. In Georgia and North Carolina 

local workforce staffs were able to deliver services on the site of some plant closings far 

in advance of the closing. Additionally, the programs created for these layoff situations 

effectively integrated a range of services crafted to meet the needs of the workforce. 

Theses sites accessed resources from multiple federal and state programs as well as the 

companies conducting the layoffs. 

Policy and Process 

• Demand-driven Workforce Programs Targeting Good Jobs. Employment, training and 

education efforts are informed by income goals and real labor market demand. 

• Access and Leverage Resources. Available resources for dislocated workers are 

aggressively sought, coordinated, and accessed. 

Another set of effective practices identified in some of the site visit were policy and 

process efforts established to target and guide support services. In West Virginia the 

Region 1 WIB commissioned several reports to help inform its workforce policies. One 

report helped to identify local demand occupations and another established the self-
15

sufficiency wage standard for the region. Using this information the WIB put policies in 

place to ensure all of its approved training and employer services guaranteed both a job 

and a self-sufficient wage. Training providers in the region confirmed that the 

information from the reports and the WIB’s policies had transformed the types and 

methods of training programs that were being offered. 

In Pennsylvania, the North Central region has long utilized its strong connections with 

employers to identify priority training options. In Pennsylvania there is a new state-level 

process that aims to identify high-demand occupations that meet self-sufficiency wage 

and skill shortage criteria and ensure that all WIB regions target their scarce training 

resources to these occupations. The Pennsylvania process began with the mapping of 

targeted industry clusters in the state using a combination of detailed industry statistics 

and input from leading WIB directors with knowledge of the industries in their region. 

The next step was to use all available official government data to screen which 

occupations pass a wage threshold (200 percent of the poverty line for a family of three 

or $26,364) and thresholds related to whether there is excess demand for the occupation 

(e.g., occupational unemployment rates, recent growth in occupational employment and 

wages, and the ratio of “training completers” graduating from courses that qualify them 

for the occupation to job openings in the occupation). The third stage of the 

Pennsylvania process provides for “local knowledge” from industry experts, WIBs, 

industry training consortia, educators, or economic development practitioners to modify 

the list of high priority occupations that emerges from analysis of the most recent data 

(some of which are two years out of date). In the future, state support for training and 

education will be targeted at high priority occupations and thus at skill needs of regional 

economies that also provide good job opportunities. 

The Three Components of 

Determining High Priority Occupations in Pennsylvania 

• Cluster analysis to determine the industry sectors that have the potential for growth or in 

which strategic investments are likely to improve outcomes for businesses and 

Pennsylvania’s workforce. 

• Occupational data analysis to determine based on official statistics what are likely high 

priority -- high demand, higher wage -- occupations within each of the targeted clusters. 

• Input from local workforce practitioners, educators, and other stakeholders to 

identify additional high priority occupations demand for which is not captured by 

government data.

North Carolina, as described in other sections of this report, has required each of its 

economic development regions to identify critical industry clusters and create strategies 

for supporting them. This process led by Advantage West, the regional economic 

development organization for the Asheville metro region, identified a tension between 

support for emerging clusters and current systems of demand-driven training. In North 

Carolina, the community college system has a well-earned reputation for providing quick 
16

turnaround of high quality workforce training for employers. However, these institutions 

are now also being asked to anticipate the “demands” of the future. Advantage West, has 

worked with the educational institutions within its region first to identify key future 

industry clusters and, now, to begin creating education and training offerings that support 

future jobs within these clusters. This requires the post-secondary educational system to 

not only to be responsive, but to also be pro-active in creating new economic futures. 

Public funding for workforce development has been declining and the lack of resources 

presented challenges for almost all the sites. In some areas cutbacks in public funds were 

reducing the accessibility of services and threatened to undermine promising innovations. 

Even with this challenge, some sites were creative in identifying and accessing resources 

from multiple sources. North Carolina, for instance, has been aggressive in seeking 

federal discretionary grants and assisting companies to become certified as tradeimpacted, which expands available resources for workers laid-off from these firms. 

Additionally, the state has provided funding to subsidize workers’ health insurance 

payments and negotiated with insurance providers to lower rates. West Virginia has 

received funding from a multiple federal sources including a grant from the Small 

Business Administration to establish a Women’s Business Center. Representatives from 

sites in North Carolina, West Virginia, and Kentucky had also sought and received 

foundation grants and contributions from employers. 

Operations 

• High Quality Individualized Employment Services. Programs are designed to meet the 

needs of individual displaced workers 

• Multiple Options for Workers. A wide variety of needed services and resources are 

available for displaced workers. 

• Family and Community Supports. Practices are in place to respond to the wider impacts 

of displacement. 

Creating an Effective Response 

Steelcase, a wood office manufacturing facility in Henderson 

County, North Carolina closed in January 2005. Prior to this 

closing the company had employed almost 500 workers with 

an average hourly wage of $14.76 and an average age of 47. 

The local Rapid Response team organized local partners to 

provide on-site services at the company for almost one year 

prior to this closing. The partners included company 

production and human resources management, two local 

JobLink Centers, United Way, Consumer Credit Counseling, 

Blue Ridge Community College, and the local Chamber of 

Commerce. The first step was to gather information from the 

company and workers on needs. The rapid response team 

then worked with managers and representatives from the 

workforce to craft a plan. Services included small business 

counseling, financial counseling, career counseling, job 

search skills, training and placement support. Workshops 

were provided during work hours. This plant was certified 

for Trade Adjustment Assistance allowing workers access to 

longer-term training, subsidized health insurance, and 

A challenge in dislocated worker 

programs has been the “handoff” from the rapid response to 

on-going assistance of One-Stop 

Career Centers. Even when the 

Rapid Response teams meet with 

workers prior to the layoff, the 

stress of the situation may mean 

that follow-up is needed to 

ensure that these workers connect 

to a Career Center. West 

Virginia, North Carolina, and 

Georgia had all integrated rapid 

response efforts with the OneStop Career Centers helping to 

maximize the chances of workers 

connecting to services. In 
addition, the Centers tracked the services provided to workers from designated layoff 

situations, so that they know which workers had not yet come in for each type of 

assistance. In contrast, following a transfer of the oversight of all workforce 

development programs to the state’s welfare department, staff from the One Stop Career 

Center in Athens, Ohio generally learned of layoffs through the newspapers. There was 

little follow-up to ensure workers came in for services and the state reportedly was not 

drawing down available resources for dislocated workers.5

In West Virginia, staffers from the United Mine Workers union local were directly 

involved in service provision and were dogged in their efforts to assist those they had 

worked with for decades. The United Mine Workers in West Virginia operated a OneStop Career Center for laid-off union and non-union mineworkers, workers affected by 

layoffs in the mines, and the spouses and family members of miners. The peer 

counselors at this Center were particularly talented at identifying miners’ skills that could 

be transferred to related occupations. A similar Center had been located at a community 

based organization in Ohio before the state reorganization of its workforce systems. 

Even in areas with well functioning workforce development programs, there were still 

long-term, devastating impacts on many laid-off workers. Displaced workers who 

remained in the area frequently did so by eking out an existence based on the 

underground economy, being forced into long commutes, going on disability insurance, 

using pension payments from previous jobs to supplement low earnings on current jobs, 

and/or relying on friends, family, and wives who previously had not worked outside the 

home taking jobs. Some of the ways in which displaced workers have cushioned the 

effects of re-employment in low-wage jobs are unsustainable if the gap between predisplacement wages and the wages paid by available jobs widens, the numbers of those 

able to access pension income from previous employment shrinks, and the ability to 

increase labor force participation by women is lessened. Recognizing this problem, the 

rapid response efforts in North Carolina have been broadened to include more active 

involvement from local community groups like the United Way and community action 

agencies. This involvement helps to sustain support for dislocated workers after some of 

the specialized services established for particular layoffs have been completed. 

Ultimately, however, to avoid laid-off workers forced into poverty or relocation, local 

areas must be able to create new, good work opportunities. Efforts to do that are 

described in more detail in the section on responses to economic restructuring. 

 

5 Based on the DWS over the entire 1993-2003 period, workers in Appalachian Ohio experienced one of 

the lower rates of reemployment – “percent worked since lost job” – of any of the Appalachian states, 71 

percent versus 76 percent for all of Appalachia. This figure, however, covers two periods in which Ohio 

grew economically and, at least in the field site region, reportedly had effective dislocated worker services 

and a second period in which Ohio lost a lot of jobs and reportedly had ineffective services. (Using all of 

Ohio for sample size reasons, we are currently analyzing whether there is a change in Ohio workers’ 

resilience in the face of dislocation between 1993-98 and 1999-2003.) 
18

Measuring and Tracking 

Performance Management - Goals are established and measured for responding 

to displacement.

Although performance management systems can appear to be the unglamorous plumbing 

of program management, effective systems not only track but also can improve services 

and outcomes. As representatives at several sites stated, attention must be paid to what 

measured. The Workforce Investment Act (WIA) has established an extensive 

performance management system to track information on placements, wages, and job 

retention for dislocated worker programs. Therefore, all the sites operating federally 

funded dislocated worker programs had some systems for tracking performance 

outcomes. However, under this system outcomes are only tracked for those dislocated 

workers actually enrolled in WIA and program operators are not required to identify 

whether all workers affected by layoffs and needing services are reached. In cases where 

discretionary federal emergency grants are provided for specific layoff events, program 

operators are required to track outcomes for those layoffs being served including 

comparing the number of dislocated workers proposed to be served to those who actually 

received services. This tracking of outcomes helps to identify whether those needing 

services are being reached and what the results of those services are. 

The site visits identified three types of effective practices in performance management for 

responding to dislocated workers. The first was to go beyond federal requirements to 

track whether the dislocated workers needing services were being reached. The second 

was to use performance information in an active way to analyze and improve program 

performance. Finally, the most extensive performance outcomes system observed in the 

site visits was not directly related to dislocated worker outcomes but instead to tracking 

workforce and educational attainments within the Kentucky Community and Technical 

College System (KCTCS). 

Community colleges are frequently criticized for failing to track significant workforce 

development outcomes. Addressing this criticism, the KCTCS has created an extensive 

system of performance goals and measures that are carefully tracked and utilized for 

improving performance. The major indicators tracked by the Kentucky Council on Post 

Secondary Education include: 

• Are more Kentuckians ready for Postsecondary Education? 

• Are more students enrolling? 

• Are more students advancing through the system? 

• Are Kentuckians prepared for life and work? 

• Are Kentucky's communities and economy benefiting? 

Objectives and measures are set for each goal and tracked. Program operators have 

incentives and disincentives for how well programs meet goals. In some instances funds 

are moved to another operator, if performance goals are not met. Over the last few years, 

most measures have shown clear improvements. There has been progress in the number 
19

of people enrolling in college as wells as in the numbers of certificates, two-year and 

four-year degrees granted. The tracking of performance is also used to conduct research 

to better understand the causes of outcomes and performance. 

C. Economic Readjustment 

The section above discusses the direct responses to worker dislocation within the seven 

case site areas. Additionally, there were efforts in each to assist local communities adjust 

or prepare for economic changes. These efforts were undertaken by the traditional 

economic development agencies and, in some areas, local workforce investment boards 

and community colleges also played an active or leading role. In all the case study 

regions there was a perceived need to respond to worker displacement with economic 

development activity that would create and/or retain jobs. Some regions also responded 

to displacement with long-term workforce development activities that went beyond 

reactive responses. Observed practices included both traditional economic development 

techniques and newer strategies that appeared better adapted to rural regions and 

economic challenges. We divide this section into a discussion of strategy and planning 

following by a discussion of policy and implementation. 

1. Strategy and Planning 

As revealed in our field research, strategy and planning for economic readjustment 

includes the four components in the Box. 

Strategy and Planning 

• Analysis and Planning. There are practices and procedures to analyze and understand local 

economic conditions and possibilities. 

• Strategy. The analysis leads to the creation of strategic plans to respond to identified needs 

and opportunities. 

• Inclusive Process – “More Voices, Better Choices.” There are practices in place to create 

comprehensive regional development strategies that include key regional stakeholders in the 

process of strategy development and implementation. 

• Measuring What Matters. Goals are established and measured for overall regional economic 

health. 

Analysis and Planning. The use of basic economic data to track regional economic 

progress and identify economic and workforce development needs is common in the case 

study regions. Some regions have used these data to develop industry cluster strategies 
20

for both economic and workforce development. Some have combined data with 

stakeholder surveys or dialogues that led to policy changes. 

The state of Pennsylvania has used Census economic data to identify statewide industry 

clusters of special importance to the state’s economy and has created a workforce 

development strategy to support job growth, retention, and improvement in these clusters. 

As described earlier, the state of North Carolina requires regional workforce and 

economic development agencies to identify industry clusters that are expected to drive 

future job growth and to develop a plan to prepare the region’s workers to work in those 

clusters. In the Asheville area, Advantage West, the regional economic development 

agency identified 10 key industry clusters based on a combination of regional economic 

advantage, expected job growth, and community values. Workforce and economic 

development strategies were then identified to support those clusters. 

In West Virginia the local Workforce Investment Board brought together representatives 

of business, community colleges, four-year public and private colleges, the public 

schools, training vendors, labor unions and other workforce development stakeholders to 

oversee the creation of a State of the Workforce report and a self-sufficiency wage 

standard report. These reports, based on surveys of employers, educational institutions, 

and training providers as well as on publicly available data, influenced the Workforce 

Investment Board policies to leverage more demand-driven training and to target better 

jobs. 

Georgia uses economic information in several ways. The state conducts one of the few 

sophisticated state-level manufacturing surveys, which concludes that manufacturers 

assisted by Georgia Tech have better performance than comparison groups of 

companies.6 In Rome, Georgia, a consultant facilitated a process of regional analysis and 

stakeholder consultation that led to the creation of a “Rome 2020” report, which included 

20 recommendations to be implemented over a 20-year period. The Chamber of 

Commerce and other stakeholders are attempting to implement the recommendations. 

Strategy Development. The case study regions vary greatly in the extent to which they 

have been able to formulate a unified regional economic and workforce development 

strategy. Organizational separation between economic and workforce development 

agencies, the existence within a region of multiple economic or workforce development 

agencies, and in some cases a lack of cooperation between separate agencies can make it 

difficult to formulate such a strategy. Some regions – most notably West Virginia and 

North Carolina – had created ties across agencies and regions. 

The Athens region of Ohio, where many separate organizations have their own strategies, 

illustrates a situation in which there is no unified strategy. County-level public economic 

development agencies often have little history of cooperation across county lines, several 

nonprofit organizations and a university have their own independent economic 

 

6

 We did not hear about the manufacturing survey in our field work and therefore questions exist about how 

deeply or at least widely it has penetrated providers of workforce and economic development assistance in 

the state. 
21

development strategies, workforce and economic development activities are 

organizationally separated, and there is no person or institution that coordinates the 

activities of the separate organizations. New York, which also lacks a unified regional 

strategy, likewise has competing geographically based economic development agencies 

and a separation between workforce and economic development organizations. However, 

there appear to be more links between the economic and workforce functions. The 

director of the Workforce Investment Board works closely with the economic 

development organizations and sits on the governing board of at least one. 

West Virginia, which has a high degree of strategic coordination within and between 

workforce and economic development activities. There, staff from the regional 

Workforce Investment Board led a process to analyze and create the base of a regional 

strategic plan. The process and resulting plan helps to frame a shared perspective and 

joint implementation of strategies among the economic development agencies, postsecondary institutions, and workforce agencies. 

North Carolina has organized its state and regional structures to support greater 

coordination while allowing local entities to take the lead in defining needs and crafting 

responses. There are regional economic development organizations that provide local 

assistance to local economic development agencies. Campuses of the community 

colleges are also organized into regional districts aligned with the economic development 

districts. This alignment supports greater planning and cooperation between economic 

development and the education system. Recently, the state provided funding for the local 

economic development agencies to partner with educational institutions to identify 

priority clusters. As a result, the regional educational institutions have invited Advantage 

West into their curriculum development sessions to help them develop trainings for these 

clusters. 

Inclusive Strategic Planning For the most part, displaced workers’ interests influence 

economic development activities only in indirect ways. Representatives of labor unions 

and community organizations do sit on the governing boards of Workforce Investment 

Boards. But, generally, these interests are not formally represented in the governance of 

economic development organizations nor do they appear to exercise much informal 

influence over the decisions these organizations make. 

Southeastern Kentucky Community and Technical College’s participation in the Ford 

Foundation-funded Rural Community College Initiative illustrates broad public 

participation in the development of an economic development strategy. This Rural 

Community College Initiative site created a governing team led by community college 

staff and including representatives of business, local government, and citizens. The team 

created a shared vision of the region’s economic future, developed a strategic plan, and 

led the implementation of that plan. Such broad participation can provide opportunities 

for displaced workers’ concerns to influence economic development strategy. 

In several regions workforce development activities are integrated to some degree with 

economic development activities. In these regions both workforce and economic 
22

developers see strengthening the economic resilience of the region as a means of helping 

displaced workers and reducing the magnitude of displacement over the long run. For 

instance in West Virginia the WIB has created an economic development subcommittee 

on its Board that includes economic development agencies and planning commissions in 

the region. The integration of workforce concerns into economic development activities 

has led economic development agencies to de-emphasize industrial recruitment and has 

changed the types of industries that receive economic development assistance. 

On the other hand, in New York the staff director of the Workforce Investment Board is a 

member of the governing boards of several local economic development agencies and 

works closely with economic developers to ensure that businesses understand the 

characteristics of the local workforce and are able to access training programs as needed. 

In this region the integration of workforce and economic development takes the form of 

workforce development being responsive to economic development policies, but the 

needs of the workforce do not influence economic development policies in any 

substantial way. 

In some of the case site regions community colleges have gone beyond their role in 

workforce development to play a more direct role in economic development. For 

instance, in Kentucky every community college in the state has community and economic 

development staff onsite. This staff helps engage the community in identifying and 

implementing workforce development efforts that support economic growth. In New 

York and Ohio local colleges provide technical assistance to small startup businesses. 

Also in Ohio, Hocking College, in cooperation with the nonprofit AceNet, offers classes 

for new entrepreneurs. The Community Colleges in North Carolina have also recently 

implemented entrepreneurial training in conjunction with technical assistance to the new 

businesses owned by entrepreneurs receiving training. 

Measuring What Matters. For the most part the economic development agencies in the 

case study regions view job growth, either in the region as a whole or in firms receiving 

economic development assistance from the agency, as the major indicator of the 

effectiveness of their work. Job quality is usually secondary, although it is a major 

concern of economic developers in West Virginia, North Carolina, and Ohio. For 

instance, in West Virginia the economic developer evaluates development efforts on the 

basis of increases in educational attainment, labor force participation, and wages in the 

region as a whole. Poverty reduction is a major concern of all economic development 

agencies in Ohio. The economic developer for the Chamber of Commerce in Athens, 

Ohio, says pulling people out of poverty is her primary goal. 

While the regions generally had “goals” for their work, these goals were not always 

translated into specific measures that were tracked and reported. The issue of measuring 

and tracking goals was even more complicated in those areas that had created strategic 

plans that went across institutional boundaries. With new regional strategies in place, 

North Carolina and West Virginia were both beginning to determine how to measure the 

effectiveness of the work being implemented. Those interviewed said that the next steps 

will be to define what “success” (i.e., what is the goal for reducing the poverty rate in one 
23

year, in five years, in ten?), determine what measures best capture the goals that have 

been set, and create systems for collecting data. 

2. Policy and Implementation 

This section of the report moves from issues of planning and strategy to actual practice, 

highlighting five basic operating principles. 

Policy and Implementation 

• Strategies Are Operationalized. There are practices in place to support regional growth 

and sustainability 

• Accessing and Leverage Resources. Additional resources to support regional growth and 

sustainability are aggressively sought, coordinated, and accessed. 

• Community and Worker Benefits. Development efforts are structured to leverage 

benefits to the community and its residents. 

• Regional Response to Dislocation. Practices are in place to respond to wider impacts of 

displacement 

• Network Globally, Apply Locally. Structures are in place to learn from practice and 

improve on-going efforts.

As described in the Box below, the idea of "waves" of economic development strategy 

has been formulated to describe economic development practice at the state level. As it 

stands, this literature was developed without any special attention to rural areas in general 

and Appalachia in particular. 

Our case studies reinforce one important observation about the existing wave literature 

that is made at the end of the Box below. In Appalachia, economic developers use 

various combinations of practices associated with the "waves" as tools with which to 

pursue objectives and/or strategies. They may be pursuing a traditional first wave 

strategy (use of subsidies for business attraction) while also implementing second wave 

strategies of retention and third wave strategies of stimulating entrepreneurship. The 

relative importance of first wave and later wave practices has changed and economic 

developers use some of these methods differently than they did a generation ago or even 

a decade ago. 

The outlines of a rural “third wave” economic development strategy are beginning to 

emerge. As suggested, this strategy is pragmatic in that it uses the tools that are at hand. 

Emerging elements of the strategy also appear to include identifying local assets and 

building on regional strengths, diversifying the regional economy, strengthening the 

quality of jobs in non-tradable sectors, and supporting the movement from a low-wage to 

 
24

Three Waves of State Economic Development Strategy 

Each generation or wave of state economic development strategies emphasizes a core set of ideas 

about how state and local officials could and should stimulate economic growth and job creation, 

along with an accompanying set of public policies. Explicit policies intended to attract 

manufacturing plants, seems to have begun in Mississippi in the late 1930s.7 Other states have 

chased tourists, retirees, and federal government facilities, including defense plants, prisons and 

military bases. Southern states, in particular, continue to chase manufacturing, with considerable 

success in recent years as illustrated by new auto and auto parts plants built in Kentucky, 

Alabama, South Carolina, and elsewhere. 

The objective of “chasing” is to attract outsiders to the state — employers who will create new 

jobs for local residents, or new residents who will spend their paychecks at Opryland or casinos, 

their pension checks at Wal-Mart. The objective of second-wave strategies is to “grow your 

own.” Instead of relying solely on recruitment of firms from the outside, practitioners seek to spur 

development by encouraging the formation of new firms and the growth and retention of existing 

firms. Second-generation strategies often focus on technology-based sectors, such as computers 

and telecommunications (Austin, Texas in the 1980s) or biotechnology (San Diego in the 1990s). 

Policies may begin with chasing — Austin put together an attractive package of incentives to land 

the microelectronics R&D consortium Sematech — but extend to support for business incubators, 

state venture capital funds, export assistance, technical assistance and technology transfer, and 

firm-specific training. Efforts to improve public education at all levels can also be considered 

second-wave policies, especially efforts to link higher education with high-technology in ways 

that emulate some of the features of Silicon Valley or North Carolina’s research triangle, which 

have derived much of their entrepreneurial vitality from world-class research universities. 

The still-emergent third generation of economic development practice began to take shape during 

and after the recession of the early 1990s. The third generation is in part a process-oriented or 

capacity-building refinement of the second wave. Because it is still somewhat inchoate, thirdgeneration practices can be difficult to distinguish from the second-wave approach. Among the 

newer ideas have been policies to strengthen industry clusters and flexible manufacturing 

networks, viewed in terms of self-reinforcing economic agglomerations that will trigger “virtuous 

circles.” Thus policies to support industry clusters have sometimes been rationalized in terms of 

industry-specific “public goods,” such as joint marketing (e.g., furniture fairs), workforce training 

partnerships, and enabling structures for technology diffusion and technological learning.8

Industry-specific institutions and networks have the potential to achieve economies of scale and 

scope for participating firms. Potentially more significant, they may have the ability to accelerate 

through peer interaction the development of creative new ideas and the diffusion of existing best 

practices — in other words, to foster innovation. 

One caveat with respect to waves is that practitioners who embrace ideas of the second and third 

wave do not necessary abandon the tactics associated with earlier waves. What takes place 

instead is an expansion of the repertoire of economic development practitioners and policymakers 

along with a shift in emphasis towards newer directions. 

 

7

 The typology in this box is a modification of that in Andrew W. Isserman, “State Economic Development 

Policy and Practice in the United States: A Survey Article,” International Regional Science Review, Vol. 

16, 1994, pp. 49-100. 

8

 Howard Wial, “Rethinking the Microeconomic Foundations of Worker Representation and Its 

Regulation,” Proceedings of the 47th Annual Meeting, Industrial Relations Research Association (Madison, 

WI: IRRA, 1995), pp. 414-421. 
25

a higher-wage manufacturing sector. Below we describe both the traditional and 

emerging economic development practices observed in the case study sites. 

Traditional Practices 

Historically, the isolation and hilly terrain in Appalachia have been major barriers to 

economic development. Therefore, investments in highway construction have been a 

major development tool. With the exception of individuals interviewed in Kentucky, 

representative in the case study sites stated that their regions had or were in the process of 

building highways that economic and workforce developers regarded as adequate for 

business and long-distance commuting. Much of the highway construction was financed 

with the assistance of the Appalachian Regional Commission. Public water and sewer 

service remain inadequate or nonexistent in many rural areas in every case study region, 

according to economic developers, who see this as a major obstacle to attracting new 

businesses or expanding existing ones. 

The literature on economic development policy identifies industrial recruitment, 

accomplished using various kinds of subsidies (such as tax credits, low-interest loans, and 

subsidized training) for firms that move to a region, as the hallmark of the “first wave” of 

economic development policy. Many rural areas, including those in Appalachia, relied 

on industrial recruitment incentives as their primary development strategy from the 1930s 

through perhaps the mid-1990s. Economic developers hoped that locational incentives 

would attract manufacturing branch plants, which would bring jobs that paid high wages 

by local standards. Portions of rural Appalachia, especially rural southern Appalachia, 

used this strategy successfully. But with the decline in U.S. manufacturing employment 

since the late 1990s now hitting rural and Southern Appalachia, economic developers 

have reconsidered the roles of both industrial recruitment and locational incentives in 

economic development practice. In the case study regions their current view of these 

practices may be summarized as follows. 

• Industrial recruitment is no longer used as the primary development strategy but as 

one among several methods of achieving development goals. Economic developers 

in the case study regions regard business retention, business expansion, human capital 

formation, and entrepreneurship promotion as more important than recruitment. 

Several of them stated that it is difficult to attract out-of town companies to their 

regions because of a lack of water and sewer infrastructure, a lack of business-ready 

development sites, low-quality public schools, and/or a lack of amenities that are 

attractive to executives of large corporations. For this reason they saw recruitment as 

less important than other methods of increasing employment. 

• Economic developers do not believe that they can abandon recruitment efforts 

entirely. In part this may be because they feel that they cannot avoid participating in 

a competition in which all their professional peers engage, and which some 

sometimes win. In part it may be because recruitment, despite its low perceived 

likelihood of success, is still a means of increasing regional employment quickly. In 
26

regions, such as many of those in the case studies, where the closure of large 

manufacturing plants causes large-scale job loss, economic developers may perceive 

a need to replace the lost jobs quickly. For example, an economic developer in Ohio 

wanted to replace the 360 jobs that the region lost because of a plant closing. 

Although she did not think recruitment in general was the most important economic 

development tool for the region, she saw it as the most likely tool to use to replace the 

lost jobs. 

• Locational incentives are no longer used solely for recruitment but also for business 

retention and expansion. In New York, for example, economic developers stated that 

a major manufacturer with a preference for remaining and expanding production in 

the region nevertheless expected them to offer the company a package of incentives 

that was competitive with those offered by economic developers in other potential 

locations. If the incentive packages were comparable, then the firm would open a 

new plant or expand an existing facility in the region. 

• State laws or policies, rather than local ordinances or local economic developers, set 

the rules for the most important locational incentive programs. In some states, such 

as West Virginia and Ohio, companies receiving these subsidies must create the 

number of jobs they promise to create; if they do not do so then they are required to 

repay part or the entire subsidy. In some subsidy programs recipients are required to 

meet legally mandated minimum job creation targets (as in New York’s Empire Zone 

program) or wage targets (as in Athens, Ohio’s, requirement that companies pay at 

least $10 per hour on all jobs created within state enterprise zones). Economic 

developers in the case study regions accept these constraints on locational incentives 

and, in some cases, see them as important. For example, one economic developer 

saw more enforceable job-creation requirements as means of ensuring that public 

money will not be wasted on firms that are not committed to the region. Another saw 

wage requirements as means of ensuring that that new businesses will not cost local 

governments more (in subsidy payments to firms and public assistance payments to 

low-wage workers) than the economic benefits they bring to the region. In one case 

an economic developer believed strongly that a firm should not accept public 

subsidies and then leave the area. She was investigating whether the firm could be 

required to repay a training subsidy that it had received. 

Technical assistance to businesses to help them adopt new technologies, reorganize work, 

or find new markets is an economic development practice that became prominent in the 

1980s, when many economic developers in urban areas began to emphasize the retention 

and expansion of existing firms over the attraction of new ones. If firms that are at risk 

for mass layoffs or plant closings can be identified before these events occur, then 

technical assistance can also be a means of avoiding worker displacement. Economic 

developers in several case study regions, including New York and Ohio, offer technical 

assistance as part of their package of services to businesses. However, with the exception 

of assistance to startups and early-stage small businesses in these regions, technical 

assistance is not a major part of economic development activity. 
27

New Approaches 

A new economic development strategy is beginning to emerge in the case study regions 

to replace the previous emphasis on industrial recruitment. No economic or workforce 

developer has articulated the new strategy in a comprehensive way but the main 

ingredients of the strategy are apparent in some of the economic and workforce 

development practices that are being used in the regions. 

Building on regional strengths. Perhaps the most prominent feature of the emerging 

new strategy is building on a region’s existing strengths. Even traditional workforce and 

economic development methods, such as business attraction and customized job training, 

are often used to promote the growth of firms and industries in which a region already 

has a competitive advantage. In building on regional strengths economic and workforce 

developers in rural and small-city Appalachia are using a version of Michael Porter’s 

theory of regional advantage, according to which a region can best promote its growth by 

assisting and building on industry clusters in which the region is already specialized.9

 

The purpose of building on regional strengths is not simply to “grow your own” 

industries but to enable the region to participate in the national and world economies in 

ways that give the region a durable competitive advantage in those economies. With 

such an advantage the region can develop a base of jobs that, at least in the short to 

medium term, is not vulnerable to competition from low-wage countries or regions. In 

this way, building on regional strengths offers the possibility that large-scale worker 

displacement will become less frequent in the future. Interviewees in several of the case 

study sites – West Virginia, North Carolina, Pennsylvania, and Ohio – were well versed 

in the literature on cluster strategies. The consciously saw their role to be “importing” 

new knowledge and practice into their regions. 

 

In some of the case study regions the strengths on which economic and workforce 

developers are trying to build are in particular industries or industry clusters and the goal 

of economic and workforce developers is to retain, expand, or attract new firms in those 

industries or clusters or improve job quality in them. 

The state of Pennsylvania has built a workforce development strategy around industry 

clusters in which the state has a competitive advantage. In the case study region the 

dominant cluster is manufacturing, especially powdered metals. The regional economic 

and workforce development agency works closely with employers in this cluster. It 

established a training institute to provide short-term training that employers need. It also 

organized geographically based business consortia to help employers, both within and 

outside the cluster, cooperate to meet their common needs for training and technical 

assistance. 

Similarly, Advantage West in Asheville, North Carolina, responding to a state 

requirement to identify industry clusters that are expected to drive future economic 

growth in the region, designated ten key clusters: advanced manufacturing, 

 

9

 Michael Porter, The Competitive Advantage of Nations [FULL CITATION] 
28

arts/crafts/design, communications and information technology, environment, food, 

health care, life sciences and agribusiness, recreation and tourism, retirement, and 

security. Business attraction and support efforts, including customized job training, are 

directed at these clusters. 

In New York, where economic developers do not have an explicit industry cluster 

strategy, there is nevertheless some emphasis on retaining, growing, and attracting firms 

that have economic ties to the region’s major employer, Corning, Inc. There is a small 

business incubator for firms with a business relationship to Corning, Inc. Ceramics firms 

started by former Corning, Inc. employees are among the firms in which economic 

developers are especially interested. One local economic development agency is 

surveying businesses in the region to learn about their customers and suppliers, 

potentially leading to an understanding of industry clusters, including those of which 

Corning, Inc. is a part. 

The local Workforce Investment Board in West Virginia helped employers in the 

hospitality, health care, and manufacturing industries form industry-specific regional 

consortia to enable them to solve problems common to all employers in the industry. The 

health care consortium decided that training licensed practical nurses to become 

registered nurses was a desirable way of addressing the region’s shortage of registered 

nurses. The Workforce Investment Board arranged this training and the health care 

employers pay for it. The hospitality consortium saw a need to stabilize employment in a 

largely seasonal, resort-based industry with distinct summer and winter resort employers. 

The consortium created a staffing firm that employs workers full-time and year-round, 

shifting them among hospitality employers according to seasonal demand, and provides 

employee benefits. It expects this arrangement to reduce labor turnover as well as 

increase the income and access to health and pension benefits of hospitality workers. The 

manufacturing consortium has just been started. However, it appears that it will take on 

the task of helping those manufacturers dependent on the coal industry to diversify into 

new markets. 

In some regions perceived strengths exist in certain small business sectors and the 

development goal is to enable these firms to grow by helping them obtain better access to 

capital or by reducing costs through shared economies of scale. Ohio’s AceNet supports 

small businesses in industry clusters that use locally produced raw materials to make 

products that can be sold at a premium in the local area or nearby metropolitan areas. 

The price premium exists because consumers value the use of local raw materials (such 

as locally grown ingredients in food products). The jobs in these clusters are not likely to 

leave the area because the industries need to produce locally and/or use raw materials that 

are perishable or expensive to transport. The jobs are potentially high-wage (relative to 

others in the same industry in the local area) because of the price premium that firms may 

be able to receive. AceNet helps small businesses take advantage of scale economies 

from shared facilities and joint purchasing and marketing arrangements. In the food 

cluster, AceNet’s oldest and largest, the organization operates an incubator that enables 

businesses to rent kitchen, storage, and/or retail sales space through a time-sharing 

arrangement. It also created a regional food brand for small, independent food businesses 
29

and a local independent restaurant association that buys from local food suppliers. 

Advantage West in North Carolina has also just established a certified kitchen that local 

food producers can access to develop value-added products using local inputs. It based 

its plan for the kitchen on comparative research of 15 existing incubators of local food 

producers nationally, including the one operated by AceNet. Longer-term Advantage 

West hopes that some producers may warrant venture capital investment to expand 

marketing of local branded products with demonstrated potential. But first products must 

be developed and sold on a smaller scale. 

The One-Stop Career Center in Haywood County, North Carolina, provides human 

resource information for employers that are too small to obtain this information easily on 

their own. It created an Employer Resource Room stocked with information on human 

resource management and labor and employment law issues. It also brought together 

about 15 local employers to create a Human Resources Association that enables 

employers to share information and resources. 

Adena Ventures, a venture capital fund that invests in start, early- and growth-stage small 

businesses in Appalachian Ohio, West Virginia, Kentucky, and Maryland, its portion of 

Appalachia as having a population and small business base comparable to those of some 

large metropolitan areas but as having a shortage of venture capital. It tries to fill capital 

gaps that it can identify using local knowledge that venture capitalists outside the region 

do not have. It also provides technical assistance to firms in which it does not invest as 

well as to those in which it does invest. 

As part of its work under the Rural Community College Initiative, Southeastern 

Kentucky Community and Technical College created a loan fund to help small businesses 

in its region fill capital gaps and worked with area bankers to create a multi-bank loan 

fund for new and expanding small businesses. 

Diversifying the industrial base. Somewhat in tension with the emphasis on regional 

advantage is the desire of economic and workforce developers in some manufacturing- or 

mining-dependent regions to diversify the industrial base. The desire to diversify may be 

a response to past dependence on and job losses in mining and manufacturing industries. 

It may also reflect a desire to avoid the cyclical swings in employment that exist in those 

industries. Yet the possibilities for diversification may be inherently limited in rural and 

small metropolitan areas. Regions that want to reduce their dependence on single 

industries may need the ability and desire to grow into larger metropolitan areas (or 

become part of larger metropolitan areas that already exist) to achieve much of the 

benefit of diversification. 

Although the mining industry is currently expanding, economic and workforce 

developers in the case study regions of West Virginia and Kentucky would nonetheless 

like to reduce the region’s historic dependence on coal mining. Economic developers 

have focused their efforts on assisting other industries that have a major presence in the 

area and industries that use technology in a manner that enables the region to compete in 

the world economy. 
30

In Georgia economic developers expect future losses of manufacturing jobs. They would 

like to diversify away from manufacturing, in which their region has long specialized. 

(In 1970, 60 percent of regional employment was in manufacturing.) Therefore, rather 

than developing a strategy to retain the region’s key manufacturing industries (such as 

carpets), they have emphasized strategies connected to health care, tourism, and 

retirement. 

Movement toward higher value-added manufacturing. Some economic developers who 

expected or wanted their regions to retain or expand manufacturing employment 

recognized that the region’s manufacturing jobs would continue to pay high wages only if 

they were based on higher value-added production. Although not all regions can 

successfully adopt this strategy some may be able to retain, expand, or even attract highwage employers by emphasizing high value-added manufacturing. In North Carolina, 

economic and workforce developers expect that the furniture and textile industries, 

longtime mainstays of the regional economy, will be much smaller and, if they remain in 

the region, aimed at high-end markets. Therefore, the regional economic developers 

target their work to high value-added segments of manufacturing. Community colleges 

offer a manufacturing certification program that covers the basic skills needed in 

advanced manufacturing, including safety, quality, teamwork, communication, basic 

math and measurement, and problem-solving methods. 

Economic developers in New York characterize the region’s recent losses of 

manufacturing jobs as having been mainly in low value-added production. They expect 

that high value-added manufacturing, anchored by Corning, Inc. and other major 

manufacturers, will remain in the region. 

Improvements in job quality, including in services. In addition to promoting the growth 

of firms and industries that give their regions a competitive advantage in the national and 

international economies, some economic and workforce developers in the case study 

regions are also trying to improve the quality of jobs, including in service industries. 

Nationally, over 80 percent of employment is now in service industries (defined as nongoods production). Much of this employment is inherently tied to local areas because 

service delivery must take place in close proximity to the consumer. For this reason, 

meeting job quality goals in any regional strategic plan is likely to require some tactics 

directly aimed at improving job quality in services. (In some cases, services must take 

place near the consumer but some of the consumer base is mobile. In these cases, 

improving job quality can also improve regional competitiveness by attracting more 

consumers to the area.) 

One example of an effort to improve job quality in services, described above, is the 

creation of a staffing agency by a consortium of West Virginia hospitality employers so 

that part-time and seasonal jobs might become more full-time and year-round. 

Employers expect that turnover will decline, and service quality improve, because 

workers will have the opportunity for more stable employment throughout the year. The 

local Workforce Investment Board played a critical role supporting the hospitality 
31

industry to come together and conditioning use of public resources to help on 

development of an approach that would improve jobs. 

In Athens, Ohio a prominent worker-owned restaurant founded two decades ago was an 

early venture supported by the non-profit organization AceNet. The restaurant pays 

wages above the local standard and relies on its use of local ingredients as a source of 

competitive advantage. Some former worker-owners at this restaurant have left to found 

other local restaurants which also tend to have advanced employment practices and better 

paying jobs than typical for this sector. The founding worker-owners have also 

considered the idea of a local living wage law which would require the University and its 

service contractors or a broader range of businesses in Athens to pay above the national 

minimum wage. (Many U.S. cities have passed living-wage laws since 1994 when 

Baltimore passed one.) While increasing prices somewhat, a living wage requirement 

might also increase the income spent in Appalachian regions by visitors to tourismrelated businesses, including restaurants and hotels. Income retained by the region would 

increase especially if consumer demand is inelastic – i.e., demand declines little in 

response to small increases in price. Rather than reflexively assuming that a carefully 

designed living-wage law would impede growth, strategic economic developers would be 

well advised to commission economic analyses to see if a higher wage floor might benefit 

their region. 

A third example that seeks to improve the quality of service sector jobs is taking place in 

Appalachian Pennsylvania. The Southwestern Pennsylvania Partnership on Aging 

(SWPPA), a 10-county 398-member coalition of health care providers, government, 

educational institutions and older adults and caregivers, has been overseeing a project to 

spread “culture change” in the regional long-term care industry. Culture change reorients 

the delivery of long-term care around the wants and needs of the consumer rather than the 

provider. A central part of this shift is to improve job quality so that consumers are 

assisted by more skilled caregivers who quit less frequently. In 10 participating faithbased nursing facilities, the SWPAA culture change project began with efforts to gain 

CEO and board buy-in; training for nursing supervisors and direct care workers and 

supervisors; and the creation of internal working groups in each provider to oversee 

implementation of culture change. Many facilities have replaced sterile corridors with 

small residential neighborhoods. “Resident aides” (formerly “nurse aides”) are assigned 

permanently to the same consumers. Several facilities have introduced more choice for 

consumers regarding what they eat and when they eat and wake. (It speaks volumes 

about the need for culture change that traditional nursing homes strip adults of such 

elemental choices as when they eat and wake.) Some facilities have also adopted noninvasive approaches to bathing residents.10 One County Commissioner on a walk 

through a facility commented “Aren’t they bathing anybody today, no one’s yelling?” 

Residents in some culture change facilities regained weight, and food spoilage and use of 

medication has declined. 

 

10 Anne Louise, Joanne Rader, Beverly Hoeffer, Philip D. Sloane, Bathing without a Battle: Personal Care 

of Individuals with Dementia (New York: Springer Publishing, 2002). 
32

In communities within Appalachia and beyond it, some efforts are also beginning to 

improve job quality in acute health care jobs, a larger employment pool than in long-term 

care. Many of these efforts have their origins in earlier regional initiatives that addressed 

shortages of nurses and other allied health professionals through recruitment and 

expansion of training capacity. In northwestern Georgia, for example, training capacity 

was expanded for licensed practical nurses (LPN) so that dislocated Levi’s workers could 

get training, including at a new training facility in an abandoned strip mall close to the 

plant that closed. Job quality or “retention” initiatives recognize that part of the reason 

for staff shortages in health care is low retention of experienced workers. Retention 

initiatives include attempts to improve human resource practices. For example, with 

assistance from the Jewish Health Care Foundation, 20 hospitals in Southwestern 

Pennsylvania are now attempting to attain “magnet” certification for implementing a 

systemic set of organizational changes that research shows lower nursing staff turnover 

and improve health care outcomes. Other retention initiatives seek to strengthen career 

ladders as an incentive for lower-wage workers to stay in the industry and work their way 

up. 

Workforce and economic development agencies may see it as beyond their mandate to 

catalyze or support regional industry collaborations that lead to organizational 

improvements, higher performance, and better jobs. Indeed, one WIB director at a field 

research site volunteered that she could convene regional hospitals to discuss retention 

issues but then questioned whether that was her role. The argument here is that these 

types of industry initiatives are a strategic opportunity for WIBs and economic 

development agencies. In these cases, agencies are not telling industry what to do or 

suggesting that they know more about an industry than business leaders, managers, or 

workers. They are recognizing that individual employers, acting alone, are not always 

going to identify or address industry-wide human resource challenges and opportunities 

for collaboration. Creating a forum for dialogue and encouraging approaches that benefit 

employers, workers, and the regional economy can thus be an extremely valuable 

intervention – as in the case of the West Virginia hospitality industry. 

Elevating discussion of job quality in service industries is particularly important in the 

many Appalachian regions looking at tourism and services for the aging as components 

of a regional economic development strategy. While these are important job growth 

sectors for many regions, stimulating this growth ordinarily takes place without any 

discussion of the quality of jobs created. It is important to change this because many jobs 

in aging services and tourism are low wage and part-time or part-year. Public dollars 

shouldn’t stimulate the growth of these sectors unless there is a strategy in place to 

improve jobs. 
33

VI. Conclusion 

Two summary impressions, in tension with one another, emerge at the end of our analysis 

of worker displacement and economic readjustment in Appalachia. 

• In all field sites, uncertainty -- and a palpable lack of confidence among less 

educated workers -- exists regarding whether, even if current economic 

readjustment strategies and tactics were effectively implemented, this will be 

sufficient to deliver prosperity and enough good jobs in the context of global 

economic pressures. 

• At the same time, while no single area has “the answer” to how smaller 

metropolitan and rural areas of Appalachia can survive the global onslaught, a 

great deal of creative new thinking and practice is evident across the seven 

regions. Taken together, all of the creative strategy development and practice 

evident across the seven regions provides the basis for guarded optimism that it 

should be possible for many parts of the region to find a basis for regional 

advantage that benefits community members in general. 

It perhaps goes without saying – but we’ll say it anyway – that any successful new 

approach is likely to require a great deal more self-conscious strategy development and 

sustained and collaborative regional and community action than did the economic 

development that raised living standards in North Appalachia from the 1950s to the 

1970s and in Southern Appalachia from the 1970s to the 1990s. The environment within 

which most of the region operates over the next two decades, especially labor-intensive 

manufacturing regions, simply has less room for error. There is less guarantee that the 

tide as a whole will be rising in the United States – or in the southern Appalachian states 

– as in earlier periods of prosperity. There is also less guarantee that a rising national or 

regional tide will lift all communities or demographic groups. The bottom line is that 

best economic and workforce development practice will likely be a prerequisite for 

regional success in the future. Regions must act together to create strong institutions that 

develop a high quality workforce, inspired entrepreneurs, learning business organizations, 

and innovative economic clusters. 

What would a more developed “next generation” economic development strategy for 

rural Appalachia? Below we suggest some of the critical characteristics of such a 

strategy that pools the insights gained across our field sites. 

• Inclusive planning and strategy focused on broad community benefits. One key 

tool for achieving more fully developed strategies is inclusive processes of 

economic development planning. As it stands, none of the field research sites 

visited exhibited the classically unresponsive political structures depicted by 

Cynthia Mill Duncan and John Gaventa.11 At the same, displaced workers, and 

workers generally, tend to be weakly represented in strategic planning processes 

 

11 Cynthia Mill Duncan, Worlds Apart; John Gaventa, Power and Powerlessness. 
34

with one consequence being that job quality and poverty reduction receive muted 

attention as key indicators of success. Improving job quality is difficult enough in 

the current environment that it is not likely to happen without tactics aimed 

explicitly at that goal and benchmarks to indicate progress. No industry strategy 

should be advanced – retirement, long-term care, tourism, hospitality, restaurants 

and so on – without serious consideration of whether the cluster can be supported 

in a way that creates good jobs. 

• Alignment of implementation and resources. Just as the planning and strategy 

development needs to be inclusive of broad community interests, the 

implementation of strategy needs to broadly aligned across multiple actors and 

resources. The challenges faced in the case site regions were complex and rooted 

in long-term economic and cultural patterns. The most promising responses to 

those types of challenges appeared to be within those sites where a shared vision 

of a desired future established the framework for the actions and resource 

investments of multiple institutions across both the private and public sector. 

Individual organizations had different expertise and, therefore, different roles. 

However, the actions taken within these different roles were components of a 

complementary strategy. In an era of tight budgets and declining public 

resources, coordination of resources and concerted action towards shared goals is 

a necessity. 

• Investment emphasis on public goods. A third characteristic of more developed 

strategies would be more explicit recognition that economic development should 

focus on “public goods” – investments that benefit multiple firms (e.g., in an 

industry), but more importantly provide a lasting benefit to a community -- not 

subsidies or tax breaks to individual companies. This means a more significant 

abandonment of first-wave industrial recruitment, which has a less certain return 

for lower-wage U.S. regions than in the environment of the 1950s through 1990s. 

More often than not, critical public goods for the region will exist at the industry 

or the occupation level and be tools for strengthening specific regional 

advantages. Work at this level mostly seems difficult or mystifying because it has 

not been at the center of U.S. economic development practice. It will not seem 

that way once more practitioners follow in the footsteps of Advantage West in 

North Carolina, the Workforce Investment Board in North Central Pennsylvania, 

or AceNet in Ohio. 

• In the area of industry- or cluster-level public goods, human capital infrastructure 

must take pride of place. There is a huge need not just to respond to businesses 

immediate needs – whether for welders or industrial maintenance technicians – 

but to create a strategic learning infrastructure that continuously helps otherwise 

isolated businesses identify and adopt better organizational practices, understand 

their markets, and innovate to create new sources of regional advantage. Studies 

of the performance of U.S. industries today reveal huge gaps between the 

performance of the best companies and standard ones. Without the creation of a 

more powerful learning infrastructure tightly linked with industry, Appalachia is 
35

likely to have less of its share of the best companies and more of its share of the 

standard ones. That is a recipe for economic disaster. Institutionally, no one yet 

knows whether community colleges or higher levels of education or chambers of 

commerce or industry-specific associations or sectoral workforce partnerships or 

manufacturing extension partnerships – or any category of institution – can rise 

above immediate narrow self-interest and a trained deference to immediate 

business demand to provide industry-level learning infrastructure “at scale.” A 

key role for government is to create the conditions that support the emergence of a 

practice that fills this gap. 

Over the past decades, the Appalachian region has used infrastructure development 

coupled with industrial recruitment and some improvements in human capital to close the 

economic gap with the rest of the United States. This has been an important achievement 

and in many cases helps to create a base for coping with new challenges. But, while this 

base of improved infrastructures and education levels is necessary, it is not sufficient. 

The overall message of this report is that this past approach is inadequate to cope with the 

economic pressures confronting the region today. Building on the most creative 

economic and workforce ideas and practices in the region, however, many of the region’s 

relatively accessible rural regions retain opportunities to flourish in the 21st Century. 
36

Appendix A. Appalachian Economic and Social Indicators, 1970-2000. 

The tables below compare key variables in Appalachian counties and in U.S. counties 

based on the 1970, 1980, 1990, and 2000 Census. Maps based on county-level data over 

this period can be found on line at http://www.stratamodel.com/Appalachia.htm. 

Poverty Rates: Appalachia approached the national median rate of poverty between 1970 

and 1980 but the rate of change slowed after 1980 (Table A1). Both the proportion of 

people in poverty and the numbers of people in poverty declined over the decades 

between the 1970 and 2000 Census. Moreover, while poverty rates are higher in 

Appalachia, Appalachia outperformed the Nation as a whole in the rate of poverty 

reduction. 

The differences in poverty rates among the Appalachian regions are striking. The median 

poverty rate in Southern Appalachia counties declined over 40 percent since 1970 and is 

now lower than the national average. In contrast, the median county poverty rate in 

Northern Appalachia was over 3 percentage points lower than the national average in 

1970, but is now slightly higher. The percentage change in the median county poverty 

rate between 1970 and 2000 was largest in Central Appalachia, but this region still has a 

median county poverty rate almost twice that of the national average. 

Table A1. Poverty in Appalachia and the United States, 1970-2000 

(median refers to the poverty rate in the median county for each region) 

 Percent in 

Poverty 1970

Percent in 

Poverty 1980

Percent in 

Poverty 

1990

Percent in 

Poverty 

2000

% Change 

Poverty 

1970-2000

Change in % 

Population 

in Poverty 

1970-2000

National Median 17.5 14.2 15.2 13.0 -5.0 -20.4

Appalachian Median 22.8 16.2 17.2 14.7 -7.6 -26.6

North Appalachian 

Median 14.6 13.1 14.8 13.3 -2.0 -13.9

Central Appalachian 

Median 38.0 25.4 27.0 22.9 -14.5 -39.0

Southern Appalachian 

Median 23.3 16.5 13.6 12.0 -9.7 -41.5

Source: Amy Glasmeier for KRC based on the 1970-2000 Census. 

Labor Market Participation. The median county labor force participation rate and labor 

force participation growth for all of Appalachia is 3.6 percentage points below the 

equivalent national figure (Table A2). Central Appalachia is consistently 15 to 20 

percent below the national mean. However, the growth in labor force participation in this 

region has been slightly greater than the rest of Appalachia and the nation since 1970. It 

is likely that the increased labor force participation of women in the region accounts for 

this increase. 
37

Table A2. Labor Force Participation in Appalachia and the United States, 1970-2000 

(median refers to labor force participation in the median county for each region)

Percent in Labor 

Force 

Participation 

1970

Percent in 

Labor Force 

Participation 

1980

Percent in 

Labor Force 

Participation 

1990

Percent in 

Labor Force 

Participation 

2000

% Change 

Labor Force 

Participation 

1970-2000

National Median 54.1 58.1 61.0 61.6 13.5

Appalachian Median 52.2 55.5 58.4 58.0 11.7

North Appalachian Median 51.7 54.8 56.9 58.2 13.1

Central Appalachian Median 43.1 49.1 51.9 51.5 17.6

Southern Appalachian Median 54.5 58.0 60.9 59.2 8.0

Source: Amy Glasmeier for KRC based on the 1970-2000 Census. 

Manufacturing Employment: Nationally and in all three Appalachian regions, 

manufacturing as a proportion of employment fell from 1970 to 2000 (Table A3). 

Northern and southern Appalachia with a higher percentage of employment in 

manufacturing experienced the greatest declines. Appalachia experienced slower growth 

in the number of manufacturing jobs than the Nation. Northern Appalachia saw a 

significant loss of manufacturing jobs dragging this formerly important manufacturing 

area down toward the National median. Central and southern Appalachia saw growth in 

manufacturing jobs. 

Table A3. Manufacturing Jobs in Appalachia and the United States, 1970-2000 

(median refers to the manufacturing share of employment in the median county for each region)

Manufacturing as a 

Percent of Total 

Employment 

1970

Manufacturing as a 

Percent of Total 

Employment 

1980

Manufacturing as a 

Percent of 

Total 

Employment 

1990

Manufacturing as a 

Percent of 

Total 

Employment 

2000

Change in 

Percent 

Manufacturing as a 

Percent of 

Total 

Employment 

1970-2000

Percent 

Change in 

Manufacturing 

Employment, 

1970-2000

National Median 15.0 14.3 13.4 11.6 -23.2 34.0 

Appalachian Median 25.1 23.0 20.4 16.0 -34.0 11.2 

North Appalachian Median 24.2 20.4 16.7 14.2 -42.3 -16.1 

Central Appalachian 

Median 12.8 13.1 14.9 12.2 -9.7 57.3 

Southern Appalachian 

Median 32.3 29.8 26.5 20.3 -34.9 18.3 

Source: Amy Glasmeier for KRC based on the 1970-2000 Census. 

Education Levels: The fraction of the adult population in the median county in both the 

nation and Appalachia that never finished high school has fallen sharply since 1970 

(Table A4). Appalachian adults, however, have fallen farther behind the nation each 

decade. Central Appalachia continues to have the largest percentage of adults without a 

high school education. In this median county, this percentage has decreased from 75 
38

percent of adults without a high school education in 1970 to 35.9 percent in 2000. 

Northern Appalachia most closely mirrors the national average. 

Table A4. Percent of Adults With Less than Four Years of High School in Appalachia and the United 

States, 1970-2000 

(median refers to the % of adults with < four years of high school in the median county for each region)

% of Adults 

with Less 

than Four 

Years HS 

1970

% of Adults 

with Less than 

Four Years HS 

1980

% of Adults 

with Less 

than Four 

Years HS 

1990

% of 

Adults 

with Less 

than Four 

Years HS 

2000

Change in 

Adults with 

Less than 

Four Years 

HS 1970-

2000

Change in % of 

Adults with Less 

than Four Years 

HS 1970-2000

National Median 52.5 38.9 28.4 17.7 52.3 -65.9 

Appalachian Median 62.4 52.0 39.1 25.1 65.4 -59.3 

North Appalachian Median 49.2 38.9 28.8 17.5 49.2 -63.6 

Central Appalachian Median 75.0 62.6 51.0 35.9 74.1 -51.7 

Southern Appalachian Median 63.3 54.0 40.9 26.3 71.5 -58.4 

Source: Amy Glasmeier for KRC based on the 1970-2000 Census. 

Numbers on Disability: SSI payments in the median Appalachian country have 

consistently been higher than in the national median county (Table A5). The rate of 

increase in 2003 dollars and in per capita terms is also substantially greater than that for 

the Nation as a whole. Internal trends tell a more complex story. Southern Appalachia 

saw a real decline in SSI payments on an inflation-adjusted basis while some of the 

northern ARC counties gained over 278 percent. National geographic trends are equally 

dramatic. The per capita SSI rate in Central Appalachia is over three times the rate of the 

nation. 

Table A5. Supplemental Security Insurance Payments in Appalachia and the United States, 1970-2000 

(median refers to the median number of SSI payments in the median county for each region)

 

Per Capita 

SSI 1970

Per Capita 

SSI 1980

Per Capita SSI 

1990

Per Capita 

SSI 2000

Percent 

Change in Per 

Capita SSI 

1970-2000

Percent 

Change in SSI 

1970-2000

National Median 64.1 63.2 68.9 89 38.5 82.0 

Appalachian Median 82.2 102 116.5 142.2 104.8 170.5 

North Appalachian Median 52.9 64.1 83.7 132.3 200.5 183.1 

Central Appalachian Median 122.2 161.4 226.5 323 148.2 221.0 

Southern Appalachian Median 102.8 115.5 116.9 126.5 29.8 82.1 

Source: Amy Glasmeier for KRC based on the 1970-2000 Census.
Appendix B. Summary of Best Practices in Two Areas 

Effective Practices in Providing Assistance to Dislocated Workers 

Practice Potential Indicators Examples Descri

Proactive Response 

Early Warning and Layoff Prevention. There are established 

practices and procedures that anticipate, seek to prevent, and quickly respond to potential layoffs and plant closings. 

• Formal early warning systems • Informal procedures to anticipate potential layoffs.. • Efforts to prevent closings and/or layoffs (incumbent 

worker training. targeted loan programs, etc.) 

• Incentives for responsible employer behavior in 

conducting layoffs. 

• Pro-active efforts to strengthen and stabilize key sectors • Efforts to increase employee ownership 

• SEWN in Pennsyl

example of a more system; system is extension to North 

• Use of employee o

Carolina 

• NY layoff aversio

Rapid Response. There are 

practices and procedures to provide information and resources to potential dislocated workers prior to layoff or as soon after notification as possible. 

• Policies with defined timeframes for conducting rapid 

response meetings. 

• Evidence of timely on-site rapid response meetings • Rapid response meetings provide information on 

benefits and services available including near term assistance, e.g., financial and stress counseling 

• Efforts to coordinate employee benefits (severance, 

unemployment insurance) with services 

• North Carolina pro

early delivery of gprovides suppleme

• Other examples of 

include services to Levi’s in Georgia; through the Command the union) 

Rapid Response Follow Through.There are practices and procedures to ensure on-going outreach contact with displaced workers after initial information on services has been provided. 

• Effective hand-off between the rapid response team and 

Career Centers.

• Continuing outreach efforts to bring displaced workers 

into programs, including work with union leadership and community- and faith-based organizations

• WIB policies that encourage aggressive outreach to 

individual dislocation events.

• Case management for individual workers.

• North Carolina, W

provide good exbetween rapid reswith good coordpartners/worker aproviders. 
40

Policy and Process 

Access and Leverage Resources. Available resources for dislocated workers are aggressively sought, coordinated, and accessed. 

• The area has sought and/or received state and national 

emergency grants.

• Information is provided to firms and workers on 

applying for trade certification.

• Resource contributions from firms conducting layoffs

• Accessing of state and community resources for 

dislocated workers 

• North Carolina ha

seeking trade fundgrants for big layofunds to fill in gaphad contributions 

• West Virginia has 

funds. 

Demand-driven Workforce Programs Targeting Good Jobs.Employment, training and education efforts are informed by income goals and real labor market demand. 

• Policies for maintaining or improving income• Information on available jobs and occupations• Training options designed for demand occupations and 

industries.

• Strong and strategic connections with economic 

development efforts (MEPs, other)

• Connections to business community and/or key 

regional industries

• West Virginia crea

procedures to levetraining and strong

• Pennsylvania has 

guidance/practice demand occupatio

• North Carolina reg

development workcolleges to identify emerging clusters. 

Operations 

High Quality Individualized Employment Services. Programs 

are designed to meet the needs of individual displaced workers 

• Active involvement of displaced workers in program 

design and implementation. 

• Services provided in a timely manner • Emphasis on assessment of skills and interests. • Programs developed based on needs assessment • Efforts to strengthen supporting systems 

(unemployment insurance, health insurance) 

• West Virginia exa

involvement of miand implementing services. 

• North Carolina for

design and oversee also does detailed workers before de

Multiple Options for Workers. A 

wide variety of needed services and resources are available for displaced workers 

• Multiple employment, training, and education choices 

(soft skills, career information, workshops, support services, basic skills, training, education, etc.) 

• Other options (entrepreneurial training, IDAs, etc.) • Customized employment and training options for 

• Examples of broad 

Virginia and North 

• Examples of entre

Ohio 
41

workers from large-scale dislocations 

Family and Community Supports.

Practices are in place to respond to wider impacts of displacement 

• Family members also are provided training, education 

and employment services 

• Services available to workers affected by ripple effects 

of larger layoffs 

• Efforts made to assist overall community affected by 

the loss of key firms/industries 

• Efforts made to support new enterprise development. 

• Ohio and West Vi

workers has traininmembers 

• North Carolina org

involvement in reswhich improves fosustained support 

• West Virginia has 

Career Developmewomen beginning 

Measuring and Tracking 

Performance Management. Goals 

are established and measured for responding to displacement. 

• Policies for setting goals, tracking progress, and 

making changes when necessary. 

• Systems for tracking overall efforts and results of 

responses to specific layoff events. 

• Strategies for measuring long-term impact of 

dislocations within industry sectors, occupational clusters 

• North Carolina an

results of large lay

• Rome, Georgia se• Kentucky Commu

sophisticated trackdevelopment outco
42

 Effective Practice in Regional Strategies Readjusting to Economic Rest

Practice Potential Indicators Exa

Strategy and Planning 

Planning and Analysis. There are practices and procedures to analyze and understand local economic conditions and possibilities. 

• Collection of comprehensive information on regional 

economic and industry trends

• Connections of workforce and economic development 

practitioners to key regional industries

• Audits and analysis of supply side factors (skills, 

education)

• Mapping and understanding of economic conditions of 

residents (incomes, poverty levels, etc.)

• Analysis of community/regional assets 

• Pennsylvania targe

clusters/occupatiobegin to institutioneconomic analyses partnerships 

Strategy. The analysis leads to the creation of strategic plans to respond to identified needs and opportunities. 

• Creation of regional strategic plans • West Virginia did 

reports 

• Advantage West s

North Carolina 

Inclusive Process – “More Voices, Better Choices.” There are practices in place to create comprehensive regional development strategies that include key regional stakeholders in the process of strategy development and implementation. 

• Planning processes • Stakeholder involvement in analysis and development 

of strategy, including representatives of low-income communities, minorities, and working people 

• Multi-constituency fields trips used to gather 

information and cement relationships that cut across stakeholder and class divisions 

• Rural Community 

Kentucky created involvement in strimplementation. 

• West Virginia had 

involvement in creWorkforce Report

• North Carolina de

economic developcreation of economdocument. 

Measuring What Matters. Goals are established and measured for overall regional economic health. 

• Policies for setting goals, tracking progress, and 

making necessary changes. 

• Measuring long-term impact of displacement within 

industry sectors, occupational clusters 

• Broad goals acros

set in North Carolmeasure and track
43

Policy and Implementation 

Accessing and Leverage Resources. Additional resources to support regional growth and sustainability are aggressively sought, coordinated, and accessed. 

• The area has sought and/or received state and national 

discretionary grants that support overall economic strategies.

• Information and support is provided to firms on 

accessing and applying for potential public resources.

• There is evidence of coordinating available community 

resources. 

• North Carolina, K

sources of public a

• North Carolina ha

development and psupport better alig

Community and Worker Benefits. Development efforts are structured to leverage benefits to the community and its residents. 

• Policies for targeting economic growth that maintains 

or improves incomes of residents.

• Policies that create linkages between private 

development and public benefits.

• Evidence of strong connections with workforce 

development and education efforts

• West Virginia pub

higher-waged firm

• North Carolina ex

subsidies in recrui

• Strong connection

and North Carolin

Regional Response to Dislocation. Practices are in place to respond to wider impacts of displacement 

• Efforts made to assist overall community affected by 

the loss of key firms/industries 

• Efforts made to support new enterprise development. • Efforts to coordinate community resources to assist 

residents affected by displacement 

• Examples in Appa

West Virginia to d

• Examples in Athen

Carolina, and Wesnew enterprise dev

Network Globally, Apply Locally. Structures are in place to learn from practice and improve ongoing efforts. 

• Business and civic leaders, workforce and economic 

development practitioners, customarily networked with peer groups across the country and beyond. 

• Customer/stakeholder feedback sought on a continuous 

basis for programs. 

• Evaluations used routinely. • Feedback used to improve strategies and programs 

• Kentucky, North C

Virginia examples learning networks

Strategies Are Operationalized. There are practices in place to support regional growth and sustainability 

Strengthen Industry Clusters • North Central PA 

• Support for indust

hospitality, health West Virginia 

• North Carolina tar
44

Boost Local Small Business NetworksVenture CapitalImprove Job Quality, including in ServicesHuman Capital Strategies 

• AceNet, Athens, O• North Carolina de

kitchen to work w

• Adena in Athens, • Pine Mountain Co

in Kentucky 

• West Virginia staf

to make hospitality year round. 

• North Carolina Ca

human resource su

• Employee ownersh

Ohio and North C

• Technical assistan

business in North 

• Southwestern Pen

Aging promotion o(quality job-qualit

• Living wage stand

West Virginia traidiscussion in Athe

• Incumbent worker 

Carolina; acting as learning function f

• Kentucky campaig

attainment