Here’s the skinny on the new state budget’s fat incentive programs

This year’s budget goes big on economic development incentives. Forsaking previous General Assemblies’ libertarian hostility to targeted business investments, the state’s proposed spending plan creates a fat new program to land “transformative projects” (like a rumored Apple headquarters) and expands existing programs to provide more benefits to companies. Critics often deride these programs as ineffective, so the budget also opens the door for the Department of Commerce to assess the true economic impact of these programs at the county level after incentives are granted—an undeniably positive development.

The Latest Attempt to create a “Transformative Project” incentive program

The biggest move in the portion of the budget funding the Department of Commerce is the creation of a new “Transformative Project” category within the existing Job Development Investment Grant (JDIG) program. Rumored to come in response to a potential deal to land an Apple headquarters in the Triangle, this new JDIG program is broadly intended to support large-scale projects with thousands of jobs and significant private investment—the fourth such program in the last five years.

The problem is that this new program looks to be too generous in terms of what it gives to the company and too stingy in terms of how it benefits North Carolina:

  • Effectively eliminates the recipient’s corporate income tax liability for 30 years. The heart of the program allows companies to receive grants equal to 100 percent of their employees’ withholding taxes for 30 years, more than twice the normal JDIG grant period of 12 years.
  • Allows companies 10 years to ramp up, double the standard rate of 5 years. Recipients would now have an entire decade—rather than the current five years—before they have to show proof of job creation and investment to the Department of Commerce.
  • Makes it easier for companies to qualify as “transformative.” In the program’s current form, transformative projects would need to invest $4 billion and create 5,000 jobs to qualify. This year’s budget lowers these thresholds so that a company could qualify if it invests $1 billion and creates 3,000 jobs.

But the biggest problem with the “transformative project” program is that its definition of “transformation” isn’t terribly “transformative.” Read more


A win for seniors and the home health workers who take care of them


Sometimes good news is buried in the fine print. While the recently passed state budget undoubtedly sets North Carolina back on education and many other key investments, the spending plan also provides some very targeted assistance to seniors and adults with disabilities. And as a bonus, home healthcare workers—some of the lowest paid workers in the entire economy—will receive a raise.

Specifically, the budget spends an additional $3 million over the next two years to increase the hourly rate at which Medicaid reimburses home healthcare providers for the long-term in-house healthcare services they provide—services that allow our most vulnerable populations to age with dignity in their own homes and avoid institutionalization in a nursing home.

Over the past eight years, North Carolina reimbursed home health agencies just $13.88 an hour for the services they provided. This reimbursement rate was the fourth lowest in nation and well below what it took for home healthcare employers to cover overhead costs, pay workers enough to make ends meet, and turn a profit.

Going forward, the new reimbursement rate will be $15.60 an hour—a significant improvement that will boost homecare agencies’ bottom lines and increase their workers’ pay.  It represents a clear victory for seniors and homecare workers alike and comes at a critical moment for North Carolina’s seniors. As baby boomers retire and our state’s population ages, we will see a steady increase in community members with functional and cognitive limitations and a growing need for direct care that allows community members to continue to live with dignity.

The Medicaid increase represents a positive step forward for seniors because the low wages currently paid to direct care home healthcare workers threatens the provision of this care. Direct care occupations, including home care jobs, offer some of the lowest wages in the state. Median wages in the caregiving occupations pay less than $10 an hour, compared to the state’s $15 an hour median wage. That means that half of all home healthcare workers aren’t earning enough to rise above the federal poverty line despite working full-time.

Low wages increase worker turnover, increase long-run costs for providers, and disrupt the stability of care consumers receive. Homecare workers who don’t earn enough to make ends meet will either work additional hours, pick up second and third jobs, or even leave the profession altogether in search of better pay. All of these problems interrupt the continuity of the care seniors receive by making it more difficult to keep care schedules and find available workers.

Medicaid, administered by the state and jointly financed by the state and federal government, is the primary funding source for long-term services and supports for people with disabilities and seniors. There are two primary programs that Medicaid uses to support long-term care: Read more


Senate headed down the wrong path on state employee pensions, healthcare?

North Carolina’s state employees would see a bleaker and more uncertain retirement under a proposal heard in the Senate Pensions and Retirement Committee yesterday. Under the North Carolina Retirement Reform Act (SB 467), the traditional pension—the bedrock source of retirement security—would cease to exist for new state employees, as would health benefits upon retirement or departure from state employment.

Although the bill exempts current state employees from these dramatic changes to retirement benefits, new state employees (those entering service after July 1, 2018) would be required to forego the guaranteed post-retirement income of the defined benefit pension in exchange for the opportunity to enroll in a new 401k plan. Even more troubling, future state employees would no longer have access to the state employee’s health system.

There are quite a few problems with this idea:

  • Way more risk with 401Ks. Shifting retirement savings from the pension to the 401k places a state employees’ retirement security at the mercy of the stock and bond markets. While the potential to earn more exists, the risk of catastrophic loss is even higher—just ask the millions of baby boomers approaching retirement in 2008 and saw their 401k values collapse in the Great Recession. By 2013, the median worker aged 56-61—e.g., those closest to retirement—saw his retirement savings drop by half after 2007. The picture is even grimmer for workers aged 50-55—the median worker saw her retirement savings lose 70 cents out of every dollar in value over the same period.
  • Less income for retirees. 401k-only plans do not provide sufficient income for retirees to make ends meet without Social Security and Medicare. According to the Employment Policy Institute, the bottom half of workers nearing retirement age (56-61) have less than $17,000 in savings; those between 50 and 55 have just $8,000. This is clearly insufficient to give any meaningful retirement security to state works, given that it takes a family of two at least $35,700 per year to make ends meet in North Carolina.
  • Weakens ability to compete with private sector. Pay for state and local government workers in North Carolina is already below the average wage for private sector employees in the same occupations, and a strong pension and health insurance has historically been a major way of attracting and retaining workers who might otherwise choose the private sector instead. SB 467 ends one this important competitive advantage for talent.

Given these issues, it’s clear that SB 467 is the wrong path for ensuring state employees’ retirement security. As the Budget & Tax Center’s Patrick McHugh aptly noted in February about similar proposals, this approach simply amounts to balancing the books on the backs of state workers at a time when the challenges facing the state’s pension system—while real—do not constitute a crisis requiring these kinds of drastic cuts to benefits.


Under fire, Trump pick for Secretary of Labor withdraws

President Trump suffered his first defeat on confirming his cabinet this afternoon when his pick for the US Department Labor, fast food magnate Andy Puzder, withdrew his name from consideration following weeks of rising controversy over his background.  Puzder has come under increasing fire for his questionable labor practices, his failure to properly withhold taxes for his nannie, and disturbing revelations of assault on his ex-wife.

Puzder’s withdrawal represents a real win for workers, who have been heavily contesting his nomination since it was announced last month. As CEO of Hardees and Carl’s Junior, Puzder repeatedly refused to pay his frontline managers and workers enough to make ends meet—in fact, he even refused to pay his workers what he promised. His companies have faced dozens of fines from the California Department of Labor and a growing list of class action lawsuits around the country focused on his company’s unwillingness to pay his employers overtime when they work more than 40 hours a week. In 2014, for example, a court found that Puzder had short-changed his employees by almost $20 million in unpaid overtime wages.

An astonishing 60 percent of the official investigations into Puzder’s labor practices have found that his company violated workplace safety and wage and hour laws—the laws that provide the basic, historically accepted legal requirements that employers pay their employees for the hours they’ve worked and ensure that their workplaces do not present a threat to their health and well-being.

Not only has Puzder made his fortune by cutting corners on his employees’ health, safety, and wages, he’s publicly and repeatedly talked in glowing terms about replacing his human workforce with robots. Try this on for size—he told Business Insider last year that he was considering firing his human employees and replacing them with automated systems, because

“[Machines are] always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”

Given that the USDoL is the federal agency designed to protect workers, Puzder’s nomination represented a clear case of the fox guarding the henhouse. It is undeniably good news for workers that he will not be Secretary of Labor.


Homecare workers in every North Carolina county earn too little to make ends meet

Home healthcare workers are earning wages that pay far below what it takes to make ends meet across every county in North Carolina, according to a new brief from the Workers’ Rights Project. This wage gap is weakening the overall economy and damaging the quality of long-term care seniors receive in their homes.

Direct homecare occupations like personal care aides, home health aides, and nurses assistants are some of the fastest growing in North Carolina’s economy—a trend that will only accelerate as demand for home healthcare services expand with the aging of the state’s baby boomer generation, the report finds. The population over 65 is projected to more than double by 2050, indicating a growing need for direct care that allows seniors to continue to live in their homes with dignity. Unfortunately, these growing occupations pay some of the lowest wages in the economy.

Caregiver - 3 maps together-ALLAN

Specifically, the report finds that:

Read more