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Industry vulnerability, not tax policy, explains North Carolina’s high unemployment
Posted By Allan Freyer On April 30, 2013 @ 11:24 am In NC Budget and Tax Center | Comments Disabled
A new report  from the Budget and Tax Center explodes two persistent myths about North Carolina’s economy that are often used to justify cutting taxes. First, the report dispenses with the false claim that North Carolina’s overall economy is uncompetitive compared to our neighboring states. Turns out that our state is leading or in the middle of the pack in every major indicator of economic health—except for the unemployment rate.
Leaving aside Virginia—an anomaly in the South due to the rapid, federally-fueled growth of its DC suburbs—North Carolina has the lowest poverty rate in the region, median household income second only to Georgia’s, and annual per capita economic growth second only to Tennessee’s over the past decade. That last measure probably would have topped Tennessee’s if not for North Carolina’s rapid population growth—the Tarheel State saw an 18 percent jump in population between 2000 and 2011 (the sixth highest in the nation), while Tennessee had 11.6 percent growth over the same period. Even North Carolina’s loss in household income over the past ten years—while undoubtedly troubling—is not out of line with the losses in other states.
This means we face an unemployment challenge, as opposed to a more deep-seeded problem with the state’s overall competitiveness.
Second, the report delves into the reasons for this challenge and finds that it is due to long-term over-reliance on a set of declining, less competitive manufacturing industries in comparison to surrounding states, and not to uncompetitive tax policies. Specifically, the report finds, the driver of our state’s higher unemployment is decline in those specific industries that proved the most vulnerable to offshoring, outsourcing, and global competitive pressures—examples include textiles, apparel, and furniture—and happened to employ a larger share of North Carolina’s workers prior to the 2011 and 2007 recessions than were employed in other states.
Specific findings include:
In effect, the state’s challenges with unemployment stem from being overly concentrated in less competitive industries, rather than having less competitive tax policies. Certainly, North Carolina’s conistent top ranking among the best states in which to do business by corporate leaders makes it clear that tax policy isn’t holding back the state from attracting business investment. As a result, investing in job training and infrastructure to attract and grow competitive industries of the future is a far better approach to reducing unemployment than the tax cuts currently discussed by the legislature.
Article printed from The Progressive Pulse: http://pulse.ncpolicywatch.org
URL to article: http://pulse.ncpolicywatch.org/2013/04/30/industry-vulnerability-not-tax-policy-explains-north-carolinas-high-unemployment/
URLs in this post:
 report: http://www.ncjustice.org/?q=budget-and-tax/btc-brief-long-term-manufacturing-decline-explains-north-carolinas-lagging
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