Back in 2014, a state-commissioned report concluded that North Carolina’s economic distress tier system was flawed and recommended its discontinuation. The model, which classifies counties into three tiers based on economic indicators, fails to accurately reflect local economic hardship, particularly within individual communities. Despite this finding, the framework has remained largely unchanged for over a decade and continues to influence numerous state programs.
North Carolina stands out as the only U.S. state using a three-tier model with such broad policy implications. Critics argue that the rigid structure does not adapt well to localized needs, especially in counties where prosperity and poverty coexist. For instance, Chatham County Commissioner Karen Howard highlighted how towns like Siler City and Goldston remain overlooked because their county’s overall economic performance places it in Tier 3, disqualifying them from targeted support available to Tier 1 and Tier 2 areas.
Howard advocates for a collaborative, bipartisan approach among counties facing similar challenges. She suggests forming coalitions to develop nuanced solutions that recognize intra-county disparities and present unified proposals to lawmakers.
Legislators have differing views on the system. Representative Dante Pittman, representing persistent Tier 1 counties Wilson and Nash, values the current model for spotlighting rural hardship and wants any reform to preserve support for underserved regions. In contrast, Representative Brian Turner calls the system outdated and overly simplistic, urging an independent review by external experts to avoid political interference.
Some lawmakers, like Garland Pierce, were unaware of the tier system despite representing Tier 1 counties, underscoring a lack of widespread understanding even within government.
Other states offer alternative models. Georgia uses four tiers and allows dynamic reclassification after economic shocks, such as factory closures or natural disasters. It also designates sub-county zones like Less Developed Census Tracts to target aid more precisely. Notably, Georgia limits the use of tiers to a single job creation tax credit program, avoiding overreach.
Tennessee ranks counties on a five-tier scale benchmarked against national economic standards—a method supported by Carolyn Fryberger, co-author of a University of North Carolina study on distress classifications. She emphasizes the need for measurable well-being benchmarks.
Josh Carpenter of the Mountain West Partnership argues against fixed quotas of counties per tier, noting that economic realities don’t conform to preset numbers—there isn’t always exactly 40 distressed counties.
Federal Opportunity Zones use census tracts instead of county lines, enabling finer geographic targeting. Maryland and Virginia have established Enterprise Zones that cross county boundaries. Iredell County Manager Beth Milton supports shifting North Carolina’s designations to zip code level for greater accuracy, though legislative backing remains lacking.
The current county-based system may also be too narrow in some cases. Eastern North Carolina’s cluster of persistently distressed counties could benefit from regional approaches like Colorado’s multi-county Enterprise Zones, which foster cooperation over competition.
Fryberger notes that the tier system reinforces county-level rivalry rather than encouraging regional collaboration.
Some believe the entire system should be scrapped. Henderson County Commissioner Rebecca McCall argues that Tier 3 status unfairly blocks access to capital funding and lottery resources, advocating for need-based allocation instead.
Alternatives include focusing special programs on the 20 to 25 most struggling counties rather than grouping them with moderately distressed ones. NC Rural Center CEO Patrick Woodie stresses that lumping all Tier 1 counties together dilutes support for the most vulnerable.
Representative Lindsey Prather identifies three key reforms: eliminating mandatory county counts per tier, expanding the number of economic indicators beyond the current four, and reconsidering whether smaller geographic units like zip codes might better capture community-level conditions.
The consequences of inaction are significant. Struggling areas see little improvement, affluent counties cannot assist their impoverished pockets, and improving counties face funding cuts—a disincentive to progress.
A decade after recommending its end, the legislature has instead expanded the tier system’s reach. While change is feasible, success depends on political will and cross-party cooperation.
— news from Carolina Public Press
— News Original —
Seeking better options for NC economic development
In 2014, the North Carolina General Assembly commissioned a report that came to a stark conclusion: the state should discontinue the use of its economic distress tiers. The tiers fail to accurately capture economic distress, the report said. The system isn’t working for struggling communities.
A decade later, the system has only become more entrenched, influencing an unknown number of state programs, both economic and not.
North Carolina is the only state in the country with a three-tiered economic distress ranking — and certainly the only one where such ranking bears this amount of influence. Could there be a better way to distribute state funding and lift up the state’s most disadvantaged communities?
“There have been many attempts to tinker with the system,” NC Rural Center CEO Patrick Woodie told Carolina Public Press.
“It has remained basically intact, mainly because we haven’t found a viable alternative. There’s a lot of lawmakers that would like to see improvement, but can’t find a consensus or a path forward.”
In 2024, a bipartisan bill that would have directed the NC Collaboratory at UNC-Chapel Hill to study potential changes to the economic distress tier system on behalf of the legislature did not become law.
This year, the NC Department of Commerce conducted listening sessions in cities across the state to hear residents’ concerns and ideas about the state’s economic development strategy.
The conclusions drawn from those conversations will help inform the Comprehensive Strategic Economic Development Plan for 2026 through 2030. Whether that plan will attempt to address the shortcomings of the tier system remains to be seen.
This is the third article in Trapped by Tiers, a three-part Carolina Public Press investigative series examining North Carolina’s economic distress tiers, a system intended to promote economic mobility across the state. CPP analyzed state data and found that this system is ineffective, stagnant, and at times, counterproductive.
The first article examined the ways in which this system fails counties across the economic spectrum. The second focused on where North Carolina went wrong. This third and final installment explores ways to improve the system, as well as possible alternatives.
Speaking up about pockets of economic distress
Karen Howard of Chatham County has a plan.
As a commissioner, she has seen how the county’s persistent Tier 3 status has left less fortunate parts of her county in the dust — towns like Siler City and Goldston. Because they are located in Chatham County, those communities do not get the special treatment that struggling communities in Tier 1 and 2 counties do. The situation in economically distressed communities within counties are concealed within an overall countywide picture of economic success.
“There needs to be more vision in the planning for how these tiers affect communities,” Howard said. “Not just counties, but communities. We could come up with workable solutions that allow for some nuance and for the possibility of a wealthy town very close to a poor town.”
Even in her frustration, Howard sees a path forward.
“Counties that have this challenge have the opportunity to form some sort of coalition,” she said.
“We need to work on the solution and present it to our legislators as a nonpartisan or bipartisan endeavor to address the very real challenge. Counties across the state span these deep pockets of wealth and then deep pockets of poverty. We could come up with and collaboratively design a workable solution that could be presented to the state.
“We can’t just show up and say you need to do better. There really needs to be some sort of a broad collaborative effort to draft this solution and present it to our legislators as a cohort, and I think we have a much better chance of success.”
The legislature
For Rep. Dante Pittman, D-Wilson, Nash, protecting disadvantaged counties like those he represents is of the utmost priority. Wilson and Nash are both persistent Tier 1 of economic distress counties. Pittman appreciates the way that the system recognizes and singles out the struggles of his constituents. If the system were to change, he wouldn’t want that special spotlight to shift.
“My primary focus is making sure that any changes to this system protect rural counties that don’t have the same level of resources,” Rep. Pittman told CPP.
Past changes to the system have been colored by specific legislators’ motivations, rather than a genuine attempt to improve the system for all counties, said Rep. Brian Turner, D-Buncombe. Rep. Turner believes the economic distress tiers system is outdated, overly applied, and fails to serve its original purpose.
“The system is overly simplistic, and just really needs to be updated and more sophisticated,” he said. “It needs to be done independent of manipulation and influence of the legislature. We need a revised system, and we need a consultancy to help us create one. Because I don’t think that the expertise exists within the legislature to do this without people putting their thumbs on the scale.”
Meanwhile, some legislators don’t even know about the system.
Rep. Garland Pierce, a Democrat who serves Hoke and Scotland counties, is one of these legislators. Both of his counties are persistent Tier 1 counties, but he told CPP that he did not know there was any system in place to benefit them.
What do other states do?
One place to start that work is looking at what other states do.
Georgia’s system of four economic tiers builds in flexibility and allows for sub-county targeting. If a county experiences sudden economic distress — say from a hurricane or a factory closure — state officials can choose to move that county into a different tier, opening it up to enhanced state assistance. In addition, special zones like Less Developed Census Tracts and Georgia Opportunity Zones allow for pockets of poverty in otherwise affluent regions to get recognition.
Plus, Georgia’s tiers are used for just one thing: a job creation tax credit program.
Rep. Turner thinks state programs other than economic development should have to apply to use the tier system in their decision making programs, rather than just implementing it with impunity.
In Tennessee, counties are ranked in a system of five tiers that measures economic performance against a national standard.
This is closer to what Carolyn Fryberger, co-author of the UNC School of Government study on distress tiers, thinks could work.
“Let’s find a real benchmark of well-being and then measure ourselves against that,” she said.
Getting rid of the pre-set numbers of counties in each economic distress category would be a major improvement to the system, said Josh Carpenter, director of economic development group Mountain West Partnership. There isn’t always going to be exactly 40 distressed counties, 40 medium counties and 20 non-distressed counties, he pointed out.
At the national level, Federal Opportunity Zones use census tracts rather than county lines. This allows for a more granular look at geographic disparities. Both Maryland and Virginia identify specific Enterprise Zones that target specific areas within and across counties borders.
Many in North Carolina think this kind of specificity would help the system.
“We have proposed that tier designations should be assigned based on zip code, which is more reflective of the specific area,” Iredell County manager Beth Milton told CPP.
“Unfortunately, we have received little support from our legislature to make this modification.”
North Carolina’s county-by-county economic distress system catches a lot of flack for being too broad. But in some cases, the county-level is actually too narrow. The regional clustering of persistent Tier 1 counties in Eastern North Carolina, for example, is not addressed by the system.
Colorado’s Enterprise Zones, in contrast, span multi-county regions, allowing for regional cooperation.
“Regions are so much stronger when they work together,” Fryberger said. “The tiers just further cement county-to-county competition and ranking.”
Finding solution to economic distress
Some agree with the 2014 report from the legislature: the tier system should just be thrown out.
“I will say that being designated Tier 3 prohibits us from receiving many benefits, especially related to capital project funding for new and renovated buildings as well as lottery funds,” Henderson County Commissioner Rebecca McCall told CPP.
“It is my stance that the tier system should be eliminated and funding provided where most needed.”
One idea is that there should be special programming for the bottom 20 counties, or that more tiers should be introduced back into the system. There aren’t 40 counties suffering from the highest level of economic distress, according to Woodie of the NC Rural Center — it’s more like 20 or 25. Grouping those bottom 20 in with counties the top half of Tier 1 does them a disservice, he said.
In the eyes of Rep. Lindsey Prather, D-Buncombe, the problems with the system are simple and fixable.
“First, there’s no reason to have a required number of counties in a certain category,” she said. “Second, we should consider whether more factors should be measured beyond the current four. Third, we should consider whether counties are the best district to measure, or if a smaller area — like zip codes — would better reflect the communities.”
The stakes are high. Struggling counties are not improving under the current economic distress system. Wealthy counties can’t access state assistance for their own disadvantaged communities. Counties that improve economically get punished with reduced funding.
A decade ago, the legislature recommended killing the system. Instead, the distress tiers have found even broader applications.
Changing the state’s system of economic development is possible. The question is whether North Carolina’s legislators and policy makers have the political will to make it happen and can set aside their differences long enough to work toward an effective solution.
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