BTC recently released a report examining the economic consequences of the “whole budget”—taking into account both the plan’s $2.6 billion in spending cuts and its $1.6 billion in tax changes in FY2012-13—for all seven regions across the state. This blog post is one in a series detailing the results of this analysis.
Job losses over the last year have hit rural North Carolina disproportionately harder than urban areas, according to new unemployment data released by the N.C. Employment Security Commission last Friday—and worse may be coming as spending cuts in the recently passed state budget slowly phase in over the coming months.
Out of North Carolina’s 85 rural counties, 53 had unemployment rates over 10 percent in September, while only 5 out of the state’s 15 urban counties had similarly high rates. The average unemployment rate for rural counties (10.7 percent) is a full percentage point higher than the average jobless rate of 9.7 percent for urban counties. This leaves rural areas far more vulnerable to the negative economic impacts of budget-related spending cuts.
Over the past year, rural counties have seen their unemployment rates go up significantly more than their urban counterparts. Since September 2010, the rural unemployment rate jumped from 9.8 to 10.7 percent. Urban counties only saw a minimal increase, from 9.3 to 9.4 percent.
On top of high unemployment, rural North Carolina is experiencing a serious jobs deficit between the number of jobs filled in the months before the recession began in December 2007 and the number of jobs filled this September. Rural communities would need to expand their employment by 165,300 jobs simply to return to the employment levels seen before the recession in September 2007. Meanwhile, urban labor markets have recovered somewhat better—urban counties have a jobs deficit of only 111,234.
It is clear from these numbers that the labor market across the state is still struggling to recover from the recent recession, and rural communities are unquestionably suffering the most. Rural North Carolina is seeing higher unemployment rates and need to create thousands more jobs than the state’s urban counties in order to catch up to pre-recession levels.
Second—the worst is likely yet to come, as the spending and tax changes included in the recently passed state budget will hurt rural areas disproportionately harder than urban communities.
Every region will have more money taken of the local economy through spending cuts than is put back in through tax cuts, but rural regions are especially hard-hit. Taken together, the Eastern, Southeastern, Northeastern, and Western regions average a loss of $1.80 in spending cuts for every $1.00 put back into those regions through the tax cut, while urban regions like Charlotte only lose $1.50 in spending cuts for every $1.00 gained through tax cuts.
This will result in the loss of an average of 3.4 jobs from spending cuts for every one job created from tax cuts, but once again, rural areas are especially hard-hit. Rural North Carolina loses an average of 4 jobs due to spending cuts for every job gained back through tax cuts. Meanwhile, more urban regions like Charlotte only lose an average of 2.7 jobs from spending cuts for every job gained from tax cuts.
“Right-sizing” state government is disproportionately bad for rural North Carolina’s economy.