Should Government Agencies Move Out of Capital Cities?

In Raleigh, North Carolina, these are boom times. The state capital cradles the Research Triangle, where Duke University, the University of North Carolina at Chapel Hill, and North Carolina State University converge. It’s grown by 18 percent since 2010, making it the second-fastest-growing city in the country, and the broader Wake County region is expected to double in population by 2050. It’s got an international airport, a brand-new train station, and soon, an outpost of the cult-favorite supermarket Wegmans.

Sixty miles east down Highway 64 is Rocky Mount, a city of 56,000 straddling Nash and Edgecombe counties that has a little less to cheer about. Once a tobacco and textile hub, the city was gutted during the recession. Nash County has the highest unemployment rate in the state, at 5.2 percent; for years, Rocky Mount’s workforce has been shrinking.

But now, “after a long dry spell, we see that light at the end of the tunnel,” said David Farris, the president and CEO of the Rocky Mountain Chamber of Commerce. “And it is a train coming, but it’s the right kind of train. Bringing good things.”

The train is coming from Raleigh. And it’s bringing the Division of Motor Vehicles.

North Carolina’s state DMV office headquarters has sat in an aging building in downtown Raleigh for decades. But last year, citing leaks, poor fire safety, and asbestos, the state General Assembly declared that the DMV and its more than 400 employees would have to vacate the property by October 2020.

Some saw this as a perfect opportunity to bridge North Carolina’s growing urban-rural divide. Of the state’s 30 counties, 80 are rural, 14 are regional cities or suburban, and only 6 are urban. But—as in so many parts of the U.S.—it’s the urban centers that have seen most of the post-recession growth, enjoying an 11 percent employment boost from 2007 to 2017. Rural counties, meanwhile, have seen a 6 percent decline over that decade.

“[W]hy not move the DMV headquarters to a more rural area?” suggested News and Observer columnist Rob Christensen in June 2018. “In the long run, fast-growing Raleigh will not suffer, and it could help some other community.” The state was on a similar wavelength: Instead of limiting the search for a new DMV office space to Raleigh proper, the Department of Administration was directed to look around Wake County and in surrounding counties within commuting distance from the original headquarters. A dozen offers were submitted, from across Nash, Edgecombe, and Wake County.

And, after an extended debate, North Carolina’s Council of State decided to take the leap, voting unanimously this month to move the DMV to Rocky Mount—where Governor Roy Cooper was born and raised. Pending a budgetary approval by the General Assembly, which will likely happen before the end of the fiscal year, the government will lease Rocky Mount’s old Hardee’s hamburger headquarters for $36 million over a period of 15 years. The deal was the cheapest of all the proposals they got, the Council said.

For people like Farris who live and work in Rocky Mount, the potential move is something to celebrate: a redistribution of resources from the haves in Raleigh to the have-nots in the eastern part of the state, and a herald of better economic times ahead for the city. “We thought it met the mission—spoken and unspoken—by our general assembly,” said Farris. “Which was to put [the DMV] in a less expensive area that could also help an economically challenged region, and still be close in proximity to the capital.”

But for DMV workers now living and working in Raleigh, and for the union that represents them, the prospect of relocating is a solution in search of a problem.

“This is simply moving jobs from one area from another without any regard for the current employees,” said Rob Broome, the executive director of the State Employees Association of North Carolina (SEIU). This won’t expand the workforce in North Carolina, he said, nor increase net investment in the state the way a corporate relocation might. It will simply pad commute times for existing workers, and make their lives harder. Others “accused Cooper of orchestrating the DMV’s move to please his friends back home,” according to the News & Observer.

“It’s not an economic development victory when you simultaneously create economic distress for 400 state employees,” said Broome.

The battle over North Carolina’s DMV is important because, if the state moves forward, it could provide a state-level case study for an idea that’s been floated as a national fix for the burgeoning inequality between “superstar” cities and forgotten ones: moving some federal government offices out of Washington, D.C., and distributing them to more-distressed regions. In the Trump era, some Republican lawmakers have pitched legislation that would clear the way for such a break-up by repealing the federal law requiring government offices to be located in the District of Columbia. “There’s no reason why the Department of Agriculture has to be in the District of Columbia when it could be located in Indiana or another heartland state,” Indiana Congressman Luke Messer told Government Executive last year. Messer’s Strategic Withdrawal of Agencies from Meaningful Placement (SWAMP) Act followed a similar resolution proposed by Jason Chaffetz, a former Republican congressman for Utah, in 2017.

Some agencies have good reasons to stay in close proximity to the White House, such as, say, the Treasury Department. But about 85 percent of federal officials are already located outside of Washington. The Centers for Disease Control and Prevention are based in Atlanta. The Department of Defense has satellite operations in Silicon Valley and Boston. And the USDA is indeed planning to move two agencies out of the D.C. area. Recently, think-tank wonks, pundits, politicians, and policy analysts on both the left and right have been asking: Why shouldn’t other federal bureaucracies follow?

“The debate has mostly been about the economic reasons for doing so,” said David Fontana, a law professor and constitutional scholar at George Washington University. The federal government employs 5 to 6 million people across the country, and 467,000 in the Washington, D.C. region alone. Instead of pursuing corporate relocation projects like Amazon HQ2—which boost local employment at the expense of large tax breaks—advocates of the plan note that the government could give struggling areas a free shot of economic energy by moving some of these workers around. Losing a few federal agencies would barely dent Washington’s half-trillion dollar economy, Richard Florida has argued.

Though the reshuffling would cause “short-term disruption,” as Matthew Yglesias wrote in Vox, it could be a win-win: “[I]n the long run, relocated agencies’ employees would enjoy cheaper houses, shorter commutes, and a higher standard of living, while Midwestern communities would see their population and tax base stabilized and gain new opportunities for complementary industries to grow.”

Logistics-wise, North Carolina’s micro-version of this plan could be much easier to execute, said Patrick Woodie, the president and CEO of the North Carolina Rural Center, a rural economic advocacy organization. “It’s not so far away that it’s removed from the labor shed of Wake County,” Woodie said.

And the DMV could be the right state government office to do it, according to columnist Christensen. It needs a new building anyway, and has already been taking various steps toward decentralization. There are more than 160 regional offices statewide, and in 2006, it “moved more than 80 call center jobs to a new office in an industrial park near Elizabethtown in Bladen County” to relieve overcrowding.

Relocating the 400-plus employees now working in Raleigh is a bigger, more disruptive deal, however. “The other examples where the state has chosen to move out of Wake County—the center of state government and most state operations—and build facilities in other places are usually start-up facilities,” said Woodie. In those cases, the state was hiring up; starting from a baseline of zero current employees, not uprooting the lives of already-stable hundreds.

“That’s part of why something like this doesn’t happen more often,” said Fontana. “If you’re moving lots of people, that’s a lot of political enemies. If you’re moving them right now, they’re intense enemies.”

That seems to be exactly what’s going on at the DMV. While the state has been floating this proposal for months, it failed to give workers enough time and room to weigh in, Woodie acknowledged. Directly following the council’s vote, the DMV polled 255 employees on their opinion on the move; 145 said they’d rather leave their jobs than commute, according to WRAL. Only 48 said they’d definitely stay, and the rest said they’d wait and see.

Nicole Hunter, who works at the DMV in Raleigh, told CityLab that if the office moves to Rocky Mount her current 15-minute commute would leap to over an hour, making it almost impossible to get to her grandson’s daycare in time for 5:30 p.m. pickup, and then to her aging parents’ house. “Daycare charges late fees: It’s $5 a minute for being late,” she said. “If I get into any traffic issues, imagine what late fees would be like.”

David van Vleet, another DMV worker who lives in Durham, said that his commute would grow from 35 minutes to an hour and a half, each way. He just attended a goodbye party for his boss, who already chose to leave rather than move. “It’s brain drain,” van Vleet added. The office works with complicated computer software that takes training and institutional knowledge: If almost 150 people quit, he said, the DMV’s operations will slow. He, too, is a “wait-and-see.”

Farris says that commute times won’t swell so dramatically. “On the stopwatch, we’re probably only five minutes further than most of them have to commute now,” he said, citing bad traffic within the city. Each day, 1,008 Wake County residents already commute into Nash County, says Woodie, and 3,286 Nash County residents do the opposite commute.

But those without a car will find it harder: No public transportation service connects Rocky Mount and Raleigh, though Broome is hoping the DMV will invest in a shuttle service if the move is approved. “NCDMV has started conversations with local transit authorities to see what transportation options are available for employees,” Patrice Bethea, a spokesperson for the DMV, told CityLab in an email.

(For a glimpse of how challenging it is to create mass transit in the Research Triangle, see the current controversy over a long-planned light rail in nearby Durham.)

The current relocation assistance package for state workers covers moving expenses for those who are transferred to a facility more than 35 miles away, and allows “three trips of three days each to locate a new residence.” But it does not explicitly include the additional commuting costs incurred if workers don’t move, and only covers a quarter of current DMV workers, Broome said. “They’re talking about expanding [it], but the bottom line is they still haven’t come forward with any solid proposals.”

Bethea said that the DMV does not have control over setting the policy for relocation assistance, but that they are “working with State Office of Human Resources and NCDOT Human Resources to identify ways to assist employees with the transition to a new location.”

This element of disruption is where the federal hypothetical breaks down, too. If the Department of Health and Human Services spirited its headquarters away to, say, Toledo, Ohio, would all 32,000 of its D.C. workforce cheerfully come along for the ride? And if they didn’t, would there be another qualified cache of bureaucrats available there to hire? “It’s one thing if you’re just creating jobs that don’t exist,” said Fontana. “It’s another thing to ask people who’ve made their lives in a place to forcibly move those lives.”

People choose to live in urban areas like Raleigh for reasons that go beyond their jobs. Hunter, who lives in the Raleigh-Garner neighborhood, says she needs to stay in the city because of the services it provides for her grandson and parents. “It’s accessible to everything. I’m in the middle of everything,” she said. “The only thing that’s in Rocky Mount is Hobby Lobby. I’ve drove through it to go other places: There’s nothing in there.”

Hunter says she hasn’t decided what she’ll do if the move happens. But Broome thinks the state’s implicit goal is to replace a big chunk of its Raleigh-based DMV workforce with new employees in Rocky Mount. “I had a manager once who explained to me that you can either fire people or make them so miserable that they quit,” he said. “They’re banking on employees becoming so miserable with this new commute that they’ll quit. And that’s somehow going to create new jobs in Rocky Mount.”

Farris denies this, saying he expects that there will be little short-term hiring within the new host community, and that only as people retire and switch jobs will Rocky Mount workers take their places. The transformative economic development potential of the move would be realized through other, more indirect means: The addition of the agency will help catalyze more growth in Rocky Mount. Ultimately, as the city comes to life, future employees would be less reticent to relocate from other parts of the state.

Already, Rocky Mount is on the path to realizing this future, Farris says. The Chinese tire manufacturer Triangle Tyre will break ground on a plant in Rocky Mount within the next few months, employing 800 people in its first phase and, when complete, expected to create a total of 1,100. Corning, a material manufacturing company with an office in Durham, is planning an Edgecombe County plant, which will add another 250 jobs by 2019. Pfizer is expanding in the area, too. After buying the Rocky Mount Mills—an old cotton mill and village on the Tar River—in 2007, the Capitol Broadcasting Company has developed offices, apartments, restaurants, and breweries, including a $50 million events center, which Farris says is as versatile as “a Swiss army knife.” The complex would be a three-minute drive from the DMV’s proposed new lot.

One less-discussed aspect of the decentralization scheme is the changes it might bring to Raleigh. While downtown “busts at the seams,” said Woodie, the DMV’s crumbling office sits in the southeast part of the city, which is at the front-lines of gentrification, “right on the edge of where all that pushing-out activity is happening.” The neighborhood is 65 percent African American, with a median income of $44,000—lower than the city’s overall—and an unemployment rate of 5.6 percent. If the state rehabilitates and rents out or sells the land the DMV once occupied, locals are worried about what might come in to replace it.

And though the DMV was always going to have to move out of its current location, Broome and others have called the decision to sign a 15-year, $32 million lease rather than buy property in Rocky Mount a bad deal. The old Hardee’s HQ was last sold for $2 million in 2015, and has been deemed a flood risk by the state.

But the economic calculus is almost tangential to the symbolic weight of such a move—especially to those who would want to see capital-city-decentralization executed on a national scale. It’s not only about moving around workers. It’s about changing the dynamics of political power.

Proponents of busting up D.C.’s federal colossus might say that the acute polarization that’s gripped the U.S. stems in part from the physical distance separating national policymakers and their constituents across the country. “Federalism gives power to people outside of Washington, but they’re so far outside of Washington that they can’t be heard inside of Washington,” said Fontana, adding that some believe “the only way to ensure power isn’t concentrated is spreading it out geographically.” Or, to paraphrase James Madison: The concentration of powers is the very definition of tyranny.

For a long time, politics was kind of the one thing D.C. had going for it. “It’s always been a defining feature of the U.S. that the political capital is not the financial capital or the entertainment capital,” said Fontana. That’s also true at the state level, often: Capitals aren’t sited in the biggest or flashiest cities. New York’s is Albany, not Manhattan; California’s is Sacramento, not L.A. or San Francisco. By separating governance and commerce, each was said to be kept more pure.  

But the District’s wonky company-town brand is starting to shift as it swells with affluent newcomers who don’t all work in government. Amazon is planning to build a campus in nearby Arlington, Virginia, which promises to bring at least 25,000 tech jobs paid an average of $150,000 to the region. To transform into the tech hub it hopes to be, perhaps D.C. should release its grip on national governance.

North Carolina has its own version of this dynamic: The state has recently been a battleground for red state/blue city standoffs between liberal voters in booming major cities and more conservative ones in economically lagging areas. Hosting North Carolina’s DMV office probably won’t suddenly make Rocky Mount a locus of state decision-making, nor will it drastically change Raleigh’s political role. But it could help ease North Carolina’s urban-rural/left-right polarization. “The DMV gives us diversification in types of businesses and industries that we’re getting,” said Farris. “But it also signals to the rest of the Eastern part of the state, which has struggled over the last 20 years, that our leadership in Raleigh is very sensitive to the needs of Eastern North Carolina.”

And maybe the Rocky Mount DMV experiment will be so successful that the state will consider shifting other government resources outside Raleigh. That’s another fear federal workers—and their state-level counterparts—may have over such a plan, said Fontana. “You’re worried: Are they going to move me next?”