NC Budget and Tax Center

Three key points in assessing the Carolina Comeback

Our annual State of Working North Carolina report will be out next week and detail the ways in which the national recovery has yet to reach all North Carolinians and every North Carolina community. In the meantime, a debate playing out on the pages of the News & Observer deserves attention today

As Labor Day approaches, it is clear that a more careful consideration of the state’s economic well-being is needed instead of declarations of a “Carolina Comeback.”

Let’s be clear: There is nothing partisan about reviewing the data and considering whether the state is experiencing a strong recovery.  North Carolinians deserve an accurate accounting of how the economy is doing and where policy choices have fallen short of supporting better outcomes.

There is no debating that the state has seen employment growth, that wages appear finally to be growing, and that productivity (aka GDP) is on the rise. The latter is a fundamental requirement of an economic expansion (at least nationally) and the growth in jobs and wages should follow suit now that we are seven years past the start of the national recovery.

The issue is not whether these things are happening, but whether they have met our expectations for what an expansion should look like. When looking at the numbers relative to our neighbors, our nation and even our past performance, the current national economic recovery is failing to live up to expectations and our state’s great potential.

Here are some key data points that should be front and center when claims of the state’s robust recovery are cited.

  1. Employment growth is not keeping up with our state’s population growth, nor is it the envy of our neighbors.
    • North Carolina’s employment levels remain below pre-recession levels. 58.3 percent of the state’s population was employed in July 2016, below the 61.9 percent achieved before the recession.
    • North Carolina’s employment growth since 2009, when the recovery began, was 11.8 percent—on par with the rest of the South (12 percent) and slightly above the national average of 10.6 percent employment growth.
    • Starting at the arbitrary date of Governor McCrory’s inauguration month, January 2013, employment growth in North Carolina compared to the nation and our neighbors isn’t all that much different—even though the acceleration of the slow recovery notably began nationally in 2013 and 2014. North Carolina’s employment growth over that period was 7.8 percent.  That may be above the national average of 6.8 percent, but it’s behind our neighbors in Florida (11.7 percent) and Georgia (9.7 percent), as well as competitors like California (10.2 percent).
    • The state’s employment growth, again, has not been sufficient to meet the growth in the state’s population. There persists a jobs deficit in North Carolina of 397,000 jobs.
    • It has also been far below employment growth rates experienced in prior recession-recovery periods: 4.1 percent since this recession began, compared to 31.2 percent after the 1981 recession for the same amount of time and 22.2 percent growth after the 1990 recession for the same amount of time.
  1. Wages have not grown at a pace that signals a strong labor market or at a sufficient level to reach all workers in the state.
    • Nominal wage growth in North Carolina since the start of the recovery has been at an annualized rate of 2.4 percent. Economists generally agree that nominal wage growth needs to reach at least 3.5 percent to achieve widespread benefits to workers.
    • The average weekly paycheck in North Carolina is still roughly $80 below the national average.
    • The median worker in North Carolina in 2015, the last year for which data is available, was earning 3.8 percent less each hour worked than they were in 2009. That means with each work week, workers are bringing in less earnings than they were when the costs for housing and child care, for example, were much lower.
  1. Productivity is growing but has not delivered increased earnings or lower poverty.

There is much to be defensive about when the veil is lifted on the rhetoric of a “Carolina Comeback.”  The better response to finding that the data belies the strong recovery for all that we expect is to redouble our efforts and enact public policies that will actually deliver and ensure that more North Carolinians and communities across the state can benefit from the current economic expansion.

It will require rejecting the tightly held commitment to costly tax cuts and reductions to unemployment insurance for those who have lost their jobs through no fault of their own.  These policies are not delivering for the people and places in our state.

The great potential of the national recovery for North Carolina is squandered whenpolicy choicesexclude too many communities and people in North Carolina from the chance to work, earn and build the assets that will strengthen their families and communities.

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