NC Budget and Tax Center

Benefits of investing in early childhood education

A new report published by the Washington Center for Equitable Growth provides more evidence to the robust body of research that demonstrates the economic power of early childhood investments.  The report finds that public investment in voluntary, high quality universal prekindergarten education that is available to all 3 and 4 year old children in the United States would support broadly shared goals of generating faster and more widely shared economic growth.  It does so by improving children’s developmental achievements in the early years and educational and employment attainment in the out years.

The quality of the programming matters to achieving the greatest economic returns however.  The authors point to the standards that must be considered, not just in terms of the child’s experience, but inclusive of having the physical space to deliver a conducive learning environment to supporting the professional development and adequate compensation of the early childhood workforce.  Specifically, features of high-quality programming identified in the report are:  low child-to-teacher ratios, small class sizes, highly paid, well-qualified teachers and staff and instruction that is supportive and stimulating alongside services that meet not just the cognitive but the emotional, nutrition and health needs of children as well.

For North Carolina the results would be an estimated $8.7 billion in economic benefits and a return on investment of more than $7 for every $1 invested in the effort.  But as the report points out, it is critical to move beyond just budgetary impacts–and quantifiable returns–of early childhood investment to consider the value of delivering a high quality of life for every child and securing a competitive position for the state in the future.  It is these benefits, often difficult to monetize, that can have a catalytic impact on a state’s economic trajectory.

This new research, with specifics for how states can lead in implementing universal voluntary pre-K programs, should prompt deeper discussion in North Carolina.  In the current budget, the state continues to underinvest in prekindergarten in North Carolina providing fewer slots for 4 year old children than were served before the Great Recession started.  Growing the economy equitably demands an accessible pre-K program in North Carolina.  State leaders would be smart to invest today  to reap the greatest benefits in the future.

NC Budget and Tax Center

Grateful for the anti-poverty power of the federal EITC

New research out the Carsey School of Public Policy at the University of New Hampshire shows the powerful anti-poverty effect of the federal Earned Income Tax Credit in states.  North Carolina, it turns out, has seen one of the greatest shares of its population benefit from this policy in the country.

A full 3 percent of the overall population would have been poor in North Carolina were it not for the federal EITC. Such a growth in poverty would have further held back the economy from reaching its full potential as working families struggle to maintain spending and make investments in their careers and families that can boost the economy.

The boost to the economy from the economy occurs in the short- and long-term.  Children in families that receive the EITC also are more likely to do better in school and have increased lifetime earnings.

Here are some of the key findings from the report for North Carolina: Read more

NC Budget and Tax Center

North Carolina needs a better balance to our unemployment insurance system

The Governor has announced that another $600 million tax cut for businesses will be implemented after the state has reached an arbitrary balance of $1 billion in the Unemployment Insurance Trust Fund through drastic cuts that have harmed jobless workers by reducing the accessibility of the program, eliminating support for skills training and shrinking the critical wage replacement function of the program.

After jobless workers contributed more than two-thirds of the dollars to get North Carolina to this moment in lost wage replacement, now must be the time to re-balance the choices made in 2013 to reflect the principles of a sound unemployment insurance system.

That means recognizing that the economy needs jobless workers to maintain their consumer spending at a basic level in order to sustain demand for businesses goods and services.  Without temporary wage replacement, the ripple effect through the community of North Carolinians (who have lost their job through no fault of their own) not being able to shop for groceries, pay utility bills or mortgage payments or put gas in the car to get to job interviews holds back our communities from a strong recovery and growth.

As we have written about in the past, the Unemployment Insurance Trust Fund was ill-prepared for the Great Recession after policymakers cut taxes for employers in good times.  With the announcement today, North Carolina appears poised to make the same mistake: underfunding the program in good times leading to ineffective stabilization of the economy in bad times when jobless workers lose their jobs through no fault of their own.

In the meantime, jobless workers today still face a labor market with too few jobs for those who want to work, limited skills training opportunities and a system that is increasingly inaccessible.  North Carolina had just 13 percent of jobless workers receiving unemployment insurance in the second quarter of 2015 down from 39 percent in the second quarter of 2013 and ranking us 49th in the nation. Our economy needs a system that works for jobless workers and employers alike: the current approach continues to do neither.


NC Budget and Tax Center

Launching a timely discussion of how to ensure the future of work, works for us all

Yesterday, I joined with the folks at the Institute of Emerging Issues, John W. Pope Center for Higher Education and Michael Walden, economist with NC State University to discuss the opportunities and challenges that are emerging as automation and technological advances change work in our world and our state.

There’s much uncertainty about the future of work, but one thing is clear: the economy is changing and we must adapt our institutions, policies and approaches to ensure that the future economy can work for all North Carolinians.

It is an issue that people outside of the policy world are increasingly worried about. Increased productivity has not translated in strong wage growth over the most recent period and in fact many North Carolinians continue to experience falling wages despite economic growth. This has meant more people struggling to make ends meet or leaving the labor force.

The employer-employee relationship is becoming contingent–less full-time, consistent relationships with one employer–and with it jobs are not fulfilling traditional standards set for good, quality jobs. This means people working more hours, with less stability, and requiring income supports to cover the gap between their falling wages and rising costs for the basics so that the economy is sustained.

The discussion yesterday identified these challenges. We also touched on the imperative that our solutions focus today on equity so that where people live and who they are does not determine how they will fare in this emerging state of work. As we have written about in the past, without addressing the barriers that communities face to connecting to opportunity and the benefits of economic growth and ensuring that all children regardless of race or ethnicity have access to the tools and quality institutions that can support their lifelong economic success, the state will underperform now.  North Carolina will also be ill-prepared to compete in the future where our workforce will be more diverse and our communities will need to be resilient and connected.

The discussion also highlighted some promising solutions. Read more

NC Budget and Tax Center

Costly provision to eliminate identification options locally on the move

Amidst a flurry of legislation during this session’s waning hours, one provision added to HB 318 last week that would restrict how local communities deal with immigration will be heard in the House. As is so often the case with last minute bills, the real costs of this measure are not well understood, and they could be major.

The provision in question (on pages 5 and 6 of the bill) would invalidate local identification or policies that support local law enforcement efforts to achieve their goals for public safety and community building. This provision seems designed only to prevent local communities from implementing common-sense measures that protect public safety, and it could have negative consequences for local economies and local budgets.

Local public safety officials in Greensboro joined community leaders yesterday to caution state policymakers against moving ahead with this legislation.  They cited in particular the challenges it will have in helping immigrants report crimes and the likelihood that it will increase arrests as police will be unable to identify community members. A Burlington police officer shared: “If they limit the type of ID that we can accept, you’re gonna have a whole lot more people that are arrested and booked into jails tying up valuable law enforcement resources.” Read more