Fed chief's ailing roots

The Baltimore Sun

Federal Reserve Chairman Ben S. Bernanke told Congress in July that he is disturbed by the growing chasm between the rich and the poor and wants everyone to be able to pursue "the American dream."

The dream of greater prosperity has bypassed his hometown of Dillon, S.C., which is honoring its native son with Ben Bernanke Day today, seven months after he took charge of the Fed.

In June, Dillon County's unemployment rate was 9.7 percent, more than twice the national average of 4.6 percent that month, according to the U.S. Labor Department. Average income of $20,342 a year came to 62 percent of the U.S. average in 2004, according to the Bureau of Economic Analysis.

Mayor J. Todd Davis is trying to attract new jobs by pitching Dillon's easy access to Interstate 95 and proximity to Myrtle Beach. A low-skilled work force and poorly financed schools are keeping high-paying employers away, though. The town of 7,000 people hasn't recovered from textile layoffs in the 1990s prompted by competition from lower-cost Asian imports, nor from the decline of tobacco.

"We are one of the most economically distressed areas," said Davis, mayor of the 118-year-old town since 2003. "The old tobacco money used to drive the town. It is gone. A lot of the textiles are gone."

"The trade policies haven't done anything to protect the manufacturing base here," said Gene Butler, director of the Dillon County Development Board.

The town's economic decline isn't crimping plans to laud Bernanke, 52, at the red brick Dillon County Courthouse. The Fed chief is scheduled to attend a ceremony where he will be awarded the Order of the Palmetto, South Carolina's highest honor, which is named for the state tree. More than 80 of his Dillon High School classmates plan to attend, Davis said.

Dillon County's economy has changed since Bernanke graduated from high school in 1971. It had 215 tobacco farmers as recently as 1992, said Wes Daniels, the county's executive director for the U.S. Agriculture Department's Farm Service Agency. The number has dropped to 45, with growers moving into cotton, peanuts and other crops as federal price supports for tobacco were ended.

Global competition prompted manufacturing layoffs over the past 15 years, led by Mohawk Industries Inc.'s 1995 closing of a carpet factory whose work force had shrunk to 380 from 1,000. Bernanke praised globalization as a way to boost productivity in a Durham, N.C., speech in 2004, but noted that competition creates "hardships for affected workers, their families, and their communities."

Other former textile and tobacco towns have diversified. Spartanburg, S.C., lured a Bayerische Motoren Werke AG (BMW) assembly plant in 1994 that employs 4,500. Winston-Salem, N.C., recruited computer maker Dell Inc. to build a plant last year that employs about 1,100.

Dillon, 120 miles southeast of Charlotte, N.C., just started an Internet site to promote economic development, noting abundant land and a small-town "Southern style."

The town's best-known attraction is South of the Border, a village of souvenir shops along I-95 that advertises with a profusion of garish billboards featuring a cartoon pitchman called Pedro.

George Roberts, 31, works one seven-hour shift at a South of the Border shop stocking cigarettes and soft drinks, and a second shift at a Stuckey's store, earning $506 a week to help pay his $450-a-month mortgage on a double-wide mobile home. He and his wife have no medical benefits. Roberts gets as little as three hours of sleep a night.

"It is rough," said Roberts, who dropped out of school in 10th grade to work. "Companies don't want to hire you unless you've got high school and college degrees."

Cookson Group PLC's Vesuvius unit, a ceramics maker, has been trying since early August to fill 10 jobs in Dillon for pay starting at $9.30 an hour. So far, it has found two people to hire from more than 300 candidates for the positions, which require manufacturing experience and math and reading skills.

"We don't have a lot of technology skills," said Nancy Finklea, director of the county's employment and training services.

Dillon's per-capita income rose an average of 3.8 percent a year from 1994 to 2004, trailing increases of 4 percent statewide and 4.1 nationwide.

"There is not an appreciation that education is so important," Douglas P. Woodward, a University of South Carolina regional economist in Columbia, said of Dillon.

Bernanke continually speaks about productivity and education as basic elements of the U.S. economy. He told an economic and development conference in Greenville, S.C., yesterday that America's productivity probably would keep growing solidly for some time to come, an important force in bolstering living standards.

Although future productivity gains can be difficult for economists to forecast, Bernanke offered a largely optimistic case that the country will continue to log gains in worker productivity over the long term. He said recent figures showing a short-term slowing in productivity didn't change his view.

Since 1995 productivity has been growing at a significantly faster rate than it had in the previous two decades, when efficiency gains had been sluggish.

Between 1995 and 2000, productivity growth was about 2 1/2 percent a year, Bernanke noted. In contrast, from the early 1970s until about 1995, productivity growth averaged about 1 1/2 percent a year, he said.

In his earlier congressional testimony, Bernanke said learning is the path to prosperity.

"Fundamentally, the increased importance of skilled jobs and of technology in our society puts a higher premium on people with more education, more experience and more skills," he said.

Bernanke, born in Augusta, Ga., moved to Dillon with his family as an infant, according to the Federal Reserve Bank of Atlanta's Web site. His uncle, Mort Bernanke, 77, said the future economist waited tables at South of the Border's Sombrero Room restaurant as a teenager. He also played the saxophone in a group that broke up after a single public appearance, said John Braddy, a Dillon insurance salesman and fellow band member.

Bernanke taught himself calculus from books, because Dillon High didn't offer math higher than algebra, his uncle said. After scoring 1,590 out of a possible 1,600 points on the SAT, Bernanke left Dillon for Cambridge, Mass., to study economics at Harvard University, where he earned a bachelor's degree, and the Massachusetts Institute of Technology, where he earned a doctorate.

His example hasn't been followed much in Dillon, where SAT scores are below average. Scores last year averaged 922 in the district that includes Dillon High, less than the 993 average for the state and 1,028 for the U.S., according to the South Carolina Department of Education.

The Dillon school district, with offices in a 110-year-old school building, gets 14 percent of its funds from property taxes, which have been hurt by the region's poverty, said Ray Rogers, superintendent.

"We are missing the boat," Rogers said. "The jobs we get are not much more than menial pay.

The Associated Press contributed to this article.

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