Carolina Public Press—When economic developers from Anson County pitch their community to prospective businesses, they advertise its railroad access, its proximity to Charlotte, its airport and its available industrial sites. What they don’t mention is Anson County’s official tier designation as one of North Carolina’s most economically distressed counties — a cloud that’s been hanging over county officials’ heads since 2007.
That label is intended to help the county. More often, it does the exact opposite.
North Carolina’s attempt to promote economic growth in its poorest, most rural communities is rife with perversities like this one. In counties rich and poor across the state, officials wrestle with the state’s unique and inflexible approach to economic development.
North Carolina has been steadily adding both jobs and population for more than a decade, with the exception of during the COVID-19 pandemic. The problem, however, is that parts of the state are left out of that promising economic picture — with no way to join the fray.
This is the first 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.
This article focuses on our findings and their consequences for North Carolina communities across the economic spectrum. The second article focuses on the root causes of the system’s failures, while the third article will explore possible improvements and alternatives.
What are distress tiers?
State law requires North Carolina’s Department of Commerce to sort the state’s 100 counties into three tiers each year.
In theory, Tier 1 is home to the most distressed counties. Tier 2 represents medium distress, and Tier 3 the least distressed. But Department of Commerce officials apply just four criteria on a countywide basis to determine which counties are placed in which tier:
- Unemployment rate
- Population growth
- Median household income
- Property tax base per capita.
Each year, there must be 40 Tier 1 counties, 40 Tier 2 counties and 20 Tier 3 counties — regardless of overall progress or decline in the state or local economies. This is a central assumption from which many of the system’s issues stem.
The state uses the tiers in order to more prudently distribute its limited money to the counties that need it most. Or at least, that’s the idea.
The funding that is officially impacted by tier designations includes public infrastructure grants, competitive business incentive programs and building redevelopment funds. However, many more state programs now rely on the tier system — including several noneconomic programs. Some private foundations and nonprofit organizations use it to deal with counties as well.
Tier 1 counties are given preference in their economic development grant applications and often receive higher state matches for local dollars. The One North Carolina Fund, a job incentive program, divvies it up like this:
- In a Tier 1 county, the local government must provide no less than one dollar for every three dollars provided by One NC.
- In a Tier 2 county, the local government must provide no less than one dollar for every two dollars provided by One NC.
- In a Tier 3 county, the local government must provide no less than one dollar for every one dollar provided by One NC.
The idea is that Tier 1 counties, like Anson, need the money more but have less resources to compete for it. They need the extra help. In some counties, however, that one-to-three requirement may still be too steep of a challenge for the county to take advantage of the program.
Although annual tier designations are usually announced late in the year, late changes in the data cannot always be captured, so a lag occurs between tier designations and potentially major shifts. The 2025 tier designations were announced in late 2024 and did not account for the economic disruption of Tropical Storm Helene, which hit the state in late September. The 2026 tiers will likely be announced in early December.
Key findings
- Carolina Public Press analyzed publicly available state economic records on distress tier assignments, economic indicators and demographic information between 2014 and 2025, finding that:
- 20 of the 40 Tier 1 counties have held that same status for more than a decade. Even though the system was originally intended to promote economic growth, it has failed to move the state’s most disadvantaged communities forward.
- 19 counties operate in a kind of permanent recession, posting unemployment rates 20 to 55% higher than the state average for decades.
- 13 of the 20 Tier 3 counties have held that same status for more than a decade. Many counties have become stuck, unable to progress to Tier 2, with Tier 3 completely out of reach for them.
In Eastern North Carolina, two distinct clusters of counties have remained in the most distressed tier since the system’s inception, pointing to a regional economic issue that the system has been unable to address. The northeastern cluster maps onto the counties with the highest percentage of Black North Carolinians, revealing deep socioeconomic problems spurred by inequity and systemic disadvantages based on race, often with long historical roots. The tier system obscures these kinds of issues and has not led to economic progress for these counties.
It is possible for a county to improve in nearly every indicator and still shift down to a more distressed tier. This happens because counties are judged against other counties, not on their own, and a fixed number of counties will always be in each tier.
The system is not flexible enough to respond to economic crises in real time, such as a hurricane, factory closure or pandemic. The 2025 tiers, for example, did not address or represent the economic havoc wrought by Hurricane Helene in late 2024 in many mountain and Western Piedmont counties.
Wealthy enclaves distort rankings by obscuring real poverty in adjacent communities within the same county. In Tier 3 Union County, for example, wealthy Charlotte suburbs in the west prevent heightened state attention to the eastern town of Marshville, where the poverty rate is 18%.
The system, once designed to distribute a single tax credit, now is applied across state agencies, economic and not. In some cases, this punishes counties with a system that was intended to incentivize growth.
A lack of mobility
Since North Carolina implemented its three-tier system in 1987, the designations were meant to be dynamic. The ranking was intended to incentivize growth in struggling areas, eventually helping them move out of the most distressed tier and make room for other counties that needed special attention from the state.
That is not what happened.
CPP analysis showed that half of the 40 Tier 1 counties — or the most economically distressed — have held that same status for more than a decade. It reflects a kind of economic fatalism that’s becoming increasingly pervasive.
“There are parts of North Carolina that do not have anything, and may never have anything much,” Orange County economic development director Steven Brantley told CPP.
The pattern holds at the other end of the spectrum as well. More than half of the 20 Tier 3 spots have always been occupied by the same counties, CPP analysis showed. Think counties like Wake, home to Raleigh, and Mecklenburg, home to Charlotte.
The static tiers hide the fact that the poorest counties don’t improve while the richest counties just get richer.
In Eastern North Carolina, two distinct clusters of counties have remained locked in the most distressed tier since the system’s inception. An economic issue plagues these counties that the tier system does not, and cannot, address.
The northeastern cluster of Tier 1 counties is aligned with the cluster of counties that are home to the highest percentage of Black North Carolinians. Some of the economic challenges in these counties are rooted in the history of racial economic disadvantage going deep into the region’s history. The tier system obscures these counties’ specific struggle into a broader category of distress.
One such northeastern county, Edgecombe, is currently tied with an adjacent county, Halifax, for highest unemployment rate in the state. It has been designated as Tier 1 for as long as the system has been around.
“I’m sick and tired of Edgecombe County being at the top of every bad list,” Edgecombe County Manager Eric Evans told Carolina Public Press.
“We’ve been able to capitalize on it and tap into resources that we otherwise might not have. But really changing the economic outlook for these counties takes a whole lot more than just a designation and first dibs at federal and state funding.”
Because of its tier designation, Edgecombe County received a job development grant and other incentives from the state that helped the county attract Natron Energy, an international industrial battery manufacturer. Natron planned to bring more than 1,000 jobs and an investment of $1.4 billion to Edgecombe County with a “gigafactory” at Kingsboro Business Park, midway between Rocky Mount and Tarboro.
Other companies had promised to come to the business park before — namely CSX and Triangle Tire — but pulled out at the last minute. Now, it’s happening again.
“We just found out recently that (Natron) just couldn’t make things work, and they pulled a plug on the project,” Evans said.
The state incentives are enough to get companies interested in North Carolina’s poorest areas, but not enough to ensure follow-through.
For all the bad PR that Tier 1 counties get, many don’t actually receive that much special treatment from the state. In the two years that Renee Perry has served as Vance County manager, she hasn’t seen any money or incentives come in as a result of Vance’s economically distressed status.
Halifax County Manager Dia Denton doesn’t think her county will ever ascend out of Tier 1, but she doesn’t necessarily see that as such a terrible thing — the system just fails to appreciate Halifax’s dominance in the agriculture sector, she says.
But that may not be of much help to workers in Halifax County who don’t happen to own farms. Like Edgecombe, Halifax has a perpetually high level of residents without jobs.
Challenges in every tier
Tier 1 counties aren’t the only ones with challenges.
Many wealthy, older North Carolinians own second homes in the mountains. Should that mean that the county receives less funding to repair buildings? What about counties whose populations are rapidly growing — should that mean they receive less funding to build new schools?
Logic would suggest not, but that’s the way it works under the current system.
For Tier 3 counties, their relative success can handicap parts of the county that aren’t as affluent as others.
Karen Howard is a county commissioner in Chatham County, which has been designated as non-distressed for upwards of a decade.
“In a community like Chatham, we certainly have condensed wealth and a lot of opportunity, but we also have deep pockets of poverty,” Howard said.
“The lack of access to some of the grant and funding opportunities in towns like Siler City and Goldston has been crippling. The model itself is the challenge. Towns that are distressed and unable to access or manage the funding opportunities because of where they are located are just at this permanent disadvantage. The system is unable to take in nuance.”
The same sentiment is felt by other Tier 3 counties, such as Iredell and Mecklenburg.
“Being a Tier 3 county excludes us from multiple revenue sources that are desperately needed,” Beth Milton, Iredell County manager, told CPP.
“It punishes a less vibrant area of a county because of another’s success.”
In the state’s largest city, Charlotte, the tier system breeds even more contradictions. Mecklenburg County Commissioner Arthur Griffin argues that Charlotte has many more poor people than sparsely populated, rural counties, but those people are excluded from the benefits of the tier system.
In North Carolina’s cities, economic success is accompanied by deep pockets of poverty. The system is designed to ignore those pockets, Griffin argued.
Officials from Tier 3 counties like Iredell feel they contribute more to the state economy, and are unfairly punished for it.
“In North Carolina, counties classified as Tier 1 and Tier 2 — accounting for 80 out of the 100 counties — receive a far greater share of state funds despite paying less than 20% of the state’s total taxes,” said Gene Houpe, an Iredell County commissioner.
“In contrast, Tier 3 counties like Iredell contribute the majority of the tax revenue yet receive little to no support back from the state. This disparity leads to severe reductions in state incentives for economic development, local grants, and much-needed capital funding for school projects.
“One of the most pressing issues we face in Iredell is the lack of adequate funding for school capital projects. Due to rapid growth, our county is required by law to build new schools to accommodate the increasing population. However, we do not receive enough funding from the state to meet these obligations, and the financial strain is becoming unsustainable.”
Growing uses for the tiers
The tier system was never intended to impact public school funding. Over the nearly 40 years the system has been in effect, its influence has grown beyond the purposes for which it was designed.
“The program was built in 1987 for one specific economic development incentive program,” explained Anson County Planning Director Nick Addison.
“Since then, the state has expanded this program to kind of be all-encompassing. Michelangelo didn’t paint the Sistine Chapel in broad strokes.”
The tier system doesn’t just dictate which counties get which job creation incentives. It now impacts random county programs, like spay-and-neuter programs, farmland preservation programs, school construction, waste- and drinking-water reserve programs, community colleges, oral health preventative services and medication assistance programs.
The tier system has seeped into the grant-making decisions of nonprofits like the Golden Leaf Foundation, a major grantor for counties impacted by the decline of the tobacco industry. It can also affect federal funding streams, when those are operating normally.
The School of Government at UNC-Chapel Hill recently published a study examining the effectiveness of the tier system. One of the authors, Carolyn Fryberger, blames the increasing use of the tiers for many of the system’s unintended consequences.
“The goal of the system is now very unclear,” Fryberger said.
“It was originally created under this one very specific statute for a very specific use. It is now used in every program, across every department, in every issue area, in ways that it was not intended and was not designed.”
These tier designations, whose influence has grown to represent so much of counties’ identity, in many cases, are not all that meaningful.
Tier soup
The prescribed number for each tier results in a “musical chairs” effect where a county can improve or decline just because of another county’s unrelated performance.
Some counties wobble between tiers. The counties that hover near tier boundaries need not experience meaningful changes to switch. Caldwell County, for example, has switched between Tier 1 and Tier 2 six times in the last 10 years.
In the most recent rankings, Caldwell once again moved tiers, from medium distressed to most distressed — with hardly any meaningful, or negative, changes in its economic outlook.
Between 2024 and 2025, Caldwell County’s property tax base increased by $9,700. The median household income increased by $8,900. These are positive changes.
It experienced population growth at a rate of 1.32% between July 2020 and July 2023, which is faster than it had been growing in previous periods, but slow compared to the statewide growth rate of 3.95%.
The unemployment rate in Caldwell was 3.65%, exactly on par with North Carolina’s over the same period. It represented an increase in unemployment in Caldwell, but just by 0.3%. That tiny fraction amounted to a decline of 12 positions in the unemployment rate rank among North Carolina counties.
The county moved from Tier 2 to Tier 1, spurring bad PR and making it less attractive for potential businesses.
“Last year, when we moved down in the tier rankings, we saw improvements in three of the four categories,” Ashley Bolick, Caldwell County economic development director, told CPP.
“The only area that we saw a decline was in unemployment rate, and our unemployment rate was still the second-lowest unemployment rate we’ve reported since we’ve been keeping records. So it’s hard to think of yourself as a Tier 1 community when all of your metrics are improving. People think we are going backwards, and that is not the case.”
In Surry County, the median household income dropped by just $2,300 between 2024 and 2025. That amounted to a drop of 30 positions in the median household income ranking, and Surry moved from Tier 2 to Tier 1. That marks the sixth time Surry County has shifted in 10 years, complicating the county’s economic planning.
The distress tiers system magnifies relatively insignificant changes like these while obscuring more meaningful changes. A Tier 1 county could improve dramatically without ever exiting its tier, and that improvement would be completely obscured by the system.
The tier system touches nearly every corner of North Carolina’s economy, from school construction to businesses recruitment to animal control. It has calcified into a static ranking that fails to capture economic reality and punishes counties at both ends of the economic spectrum. It resists the very changes it was intended to promote.
For North Carolina’s poorest counties, the system represents anything but a beacon of hope.
