NC Budget and Tax Center

North Carolina’s recovery from the Great Recession has been slow and uneven across the state. While some cities have rebounded and are thriving, many communities—particularly communities of color— continue to struggle due to a shortage of good-paying jobs.

It is in this context of uneven opportunity and access that our state and nation should not just reflect on the legacy of Dr. Martin Luther King Jr. but also act to build a more equitable economy.

Ensuring that all people—regardless of where they live, their skin color or their background—can get an education find work that enables them to support their families and get ahead is increasingly the only way to create sustained economic growth. The academic literature and the experience of various small-scale policy efforts have increasingly shown that the pursuit of more equitable economic outcomes yields stronger and more sustained growth that benefits everyone. In North Carolina alone, closing the difference just in wages across racial groups would grow the economy by $63.5 billion.

North Carolina will be increasingly diverse in the years ahead. By 2040, 48.2 percent of the population will be from communities of color. Yet differences in access to and success in school, the labor market, and asset building, for example, have meant that the future strength of the economy is eroding as we underinvest today in opportunities for communities of color. Read More

NC Budget and Tax Center

The American Immigration Council released last week a summary of the emerging research on the positive economic potential of the Executive Action on Immigration. These national findings for stronger economic growth, increased tax revenue and higher average wages for all workers suggest state-level benefits, particularly in North Carolina, will be positive– albeit modest– as well.

Here are some additional reasons why North Carolina is poised to particularly benefit economically from immigration action that provides temporary status to parents of children born in the United States and expansion of the Deferred Action for Childhood Arrivals (DACA) program providing work authorization for children raised in the United States.

  1. One of the major drivers of estimated improvements to GDP growth resulting from the immigration action is growth in the labor force. The benefits of an increased labor force to North Carolina would be significant given that the state’s labor force has actually declined over the past year despite the population growing. Data on the labor force participation rate of the total foreign-born population (not just those without documents) showed participation rates were nearly 10 percentage points higher than for the U.S. born population.
  1. North Carolina had a high application rate for immediately eligible youth under the previous Deferred Action for Childhood Arrivals. 60 percent of those immediately eligible applied in NC. If this expanded program generates similarly high application rates, the result will be a greater number of residents in North Carolina benefiting from work authorization and the economy benefiting as well. One factor that continues to limit the economic benefits in North Carolina of DACA is the fact that these students, despite being educated in NC public schools, are not eligible for in-state tuition at post-secondary institutions. This runs counter to practices in 17 other states where laws permit certain students without documents who have attended and graduated from secondary schools to pay the same tuition as their classmates at public post-secondary institutions thus increasing their earning potential.
  1. Revenues are down in North Carolina as a result of the tax plan put in place in 2013. Executive action on immigration won’t solve the problem of a tax code that is inadequate but it would increase tax compliance and earnings that are subject to income taxes. The Center for American Progress estimates that if those benefiting from the executive action on immigration were able to receive temporary work permits, an additional $197 million in revenue would be collected over five years.

North Carolina stands to benefit from the Executive Action on immigration and should ensure that those eligible are able to apply so that the full economic potential of this federal policy can be realized.

NC Budget and Tax Center

Every holiday season there is renewed attention to the hardship that many of our neighbors face. While this focus is often temporary and disconnected from an examination of the causes and consequences, it is always an opportunity to make more concrete the data on poverty that too often falls flat in policy debates.

It is the stories of parents working two and three jobs to afford modest gifts at Christmastime and the job losses or medical debt that have pushed families further into poverty that feature prominently in the media coverage of the season and prompt people to act through charitable contributions. These stories are just a fraction of the daily experiences of 1.7 million Tar Heels who are living on less than $23,000 or less than half of what it actually takes to make ends meet. Charity alone won’t fix the structural issues—low-wage jobs, no jobs and with our state’s economy, public policy changes are needed.

So how can policymakers and other leaders be motivated to care and address these hardships through policy change? There are a number of organizations in North Carolina that host poverty simulations for a day, a sanitized and temporary look at hardship for those not accustomed to go without but whom often have the power to make things better. The idea is that by better understanding the reality of hardship, better policy choices can be made.

An on-line tool, SPENT, created by the Urban Ministry of Durham provides a similar data-based experience for the user interested in digging deeper into the structures that support (or don’t) struggling families. It presents the impossible choices that families living in poverty face like whether to pay the gas or electric bill or take a job that pays only slightly more than child care. Here are some other data found in this tool: Read More

NC Budget and Tax Center

BTC - Missing Workers November 2014

The latest report on labor market conditions was released on Friday showing that despite improvements in North Carolina, there remains a long way to go to proclaim a fully recovered economy. One measure of just what remains unaddressed is the number of missing workers in the state, those workers who if job opportunities were stronger would be in the labor market looking for work.

In November 2014, there were an estimated 302,285 missing workers in North Carolina. If these workers had actually been counted in the official unemployment rate that rate would be 12.4 percent, more than twice the official rate for November of 5.8%.

NC Budget and Tax Center

One key measure to assess the strength of the recovery is to look at how nominal wages, wages not adjusted for inflation, grow over time. The reason being that low and flat nominal wage growth is an indicator that employers don’t have to offer wage increases to keep employees since the labor market market continues to be weak.

As the Economic Policy Institute indicates in their release of the Nominal Wage Tracker,  an on-line platform with useful graphics and up-to-date data, a target to aspire to is between 3.5 and 4 percent which is likely the point at which workers would start to see real benefits from economic growth. The actual year over year growth has been 2.11 percent.