Commentary, NC Budget and Tax Center

Report: Children, teachers, parents benefit from early childcare and education system

N.C.’s youngest children would benefit from a high-quality early child-care and education system. So would everyone in our communities.

New research estimates that a “values-based” early child and education (ECE) system would benefit North Carolina’s children, teachers, and parents. A comprehensive publicly financed system that compensates educators fairly could serve between 368,000 and 485,000 children and would employ between 152,000 and 205,000 ECE teachers at fair wages once fully implemented. 

The report comes as the state must grapple with the growing evidence  reinforced in December by the court-ordered report from West Ed on the state’s failure to provide the constitutionally required sound, basic education — that North Carolina needs to consider all the ways in which children must be supported to thrive.  We must also consider the reality that as a state we are not supporting the education and brain development of our youngest children with a high-quality early child care and education system to help them thrive. 

The report, from Economic Policy Institute (EPI) and the University of California, Berkeley’s Center for the Study of Child Care Employment (CSCCE), explains that many proposals for ECE reform have focused primarily on improving access and affordability for families, but have ignored the elephant in the room: ECE is substantially “funded” through low teacher pay and inadequate supports for ECE teachers, who are primarily women  specifically, women of color.  It considers a bold proposition — leveraging public financing to reach more kids with quality care. 

The authors find that ECE teachers in North Carolina with a bachelor’s degree are paid 28.8% less than their colleagues in the K-8 system. And the poverty rate for early educators is 17.6%, much higher than North Carolina workers in general (10.6%) and more than 7.4 times as high as other teachers. 

Policymakers and other stakeholders in North Carolina have an opportunity to disrupt this problematic status quo and ensure that North Carolina’s system has the funding it needs to work effectively for children, families, and teachers.   

The federal government already provides North Carolina about $650 million annually, and parents pay $1.1 billion.  Moreover, with recent agreement reached in Congress to expand the Child Care and Development Block grant, North Carolina policymakers could have the opportunity once again to make transformational investments for our youngest children — and revisit the missed opportunity of the last economic expansion.   

The latest research released from the nonpartisan Economic Policy Institute estimates that once this values-based system is fully implemented, there would be an annual cost for a high-quality and comprehensive ECE system in North Carolina ranging from $9.1 billion to $12.4 billion, or $25,000 to $27,000 per child.  These figures are not far from the investments per child we see in high quality K-12 systems   

 North Carolina would benefit tremendously by making a serious investment in early care and education. The reality that our state leaders can no longer ignore is that we need a stronger public commitment to the early childhood system in order to ensure every child is supported to their full potential.  We must invest early and now in a solid pathway to 3rd-grade reading and the full realization of our state’s constitutional obligation to a sound, basic education for every child. 

NC Budget and Tax Center

New report: Reliance on piecemeal budgeting is harming NC

Image: Adobe Stock

A new report from N.C. Budget & Tax Center analysts Leila Pedersen and Suzy Khachaturyan (“No final budget, no accountability: Piecemeal budgeting neglects community priorities”) offers a scathing assessment of the General Assembly’s failure to pass an adequate and timely state budget.

This is from the introduction:

Budgets are moral documents. So what values are reflected when the state fails to pass a budget? For the first time in recent history, North Carolina has failed to pass a comprehensive budget. Because the General Assembly refused to adequately fund health and education, North Carolina broke the state budget up into dozens of “mini-budgets,” at least 20 of which have been signed into law (see Appendix). This piecemeal approach caused many pressing priorities to slip through the cracks, leaving working families to pick up the pieces.

State budgets set priorities for how to spend our collective tax dollars. Decisions about how to invest public dollars determine who has access to the goods and services people need to live healthy, productive lives. Since 2013, North Carolina’s self-imposed tax cuts for big corporations and wealthy individuals have slashed revenues, causing communities to fight over smaller pieces of a shrinking pie. The General Assembly’s scarcity mindset has resulted in inadequate funding for many communities’ most pressing needs. With a fairer tax code, North Carolina could adequately fund Medicaid and teacher pay — the very issues that resulted in the 2019 budget veto.

Presently, piecemeal spending decisions largely neglect the needs of communities without wealth and access. Annual budgets provide clarity about state priorities. A piecemeal approach to budgeting fails to provide the certainty that agencies need to be effective, the direction local governments need to plan sustainably, and the opportunity to hold lawmakers accountable to the people they were elected to serve.

The report goes on to present damning details of how the 2019 budget failure is harming three vital areas in particular: public schools, health care, childcare assistance. It concludes this way:

North Carolina cannot let the dangerous precedent of piecemeal budgeting become the new normal. For a state budget to reflect the values of all communities, it must be clear, comprehensive, and transparent. We need to hold our lawmakers to account by urging them to put the public interest ahead of partisan power struggles. In 2020, lawmakers should prioritize:

  • Investing in public schools, specifically school construction, teacher pay, and closing the achievement gap in light of the Leandro report.
  • Increasing access to health care by fully funding Medicaid expansion and closing the coverage gap.
  • Expanding child-care assistance to families without accessible, affordable, quality options.
  • Building affordable housing stock by streamlining funding streams and targeting additional resources to communities at risk of displacement.
  • Protecting our environment by ensuring all communities have the resources they need to keep the air and water clean for current and future generations.

Without a comprehensive budget, it is even more important that we hold our lawmakers accountable. The best way to ensure that state legislators put the public interest ahead of private interests is to ground policy solutions in community needs. Public investments in education, child care, health, housing, and the environment are the stepping stones toward a more equitable and prosperous North Carolina.

Click here to read the full report.

Commentary, NC Budget and Tax Center

New report: NC must do much more to combat poverty

Image: Adobe stock

Last year, 1.4 million North Carolinians lived in poverty and struggled to make ends meet, according to data presented in a new report by the Budget & Tax Center.

The report, Fight Poverty, Promote Prosperity for North Carolina, by Alexandra Sirota, Director of the N.C. Budget an Tax Center, summarizes the most recent data from the U.S. Census Bureau and demonstrates the multiple ways in which hardship plays out for people and communities across the state, holding us all back from fully realizing our potential to deliver a high quality of life to everyone.

The report details the ways in which people and communities across the state still face barriers to getting ahead such as lack of access to good-paying jobs, unaffordable childcare, little access to public transportation to get to work, and inadequate education and job training resources. The data on who and which communities experience poverty reflect the legacy of historic policies, practices, and ways in which present day decisions by policymakers reinforce disparate outcomes.

Despite low rates of unemployment, far too many North Carolinians are being left out of the state’s economic recovery.

Among the report findings:

  • North Carolina’s poverty rate is 1 percentage point higher than the U.S. rate (13.1 percent), and it has the 15th highest poverty rate in the nation.
  • 2018 marked the first time in the 10 years of economic recovery that the state’s poverty rate returned to pre-recession levels.
  • Fourteen percent of North Carolinians lived in poverty in 2018, living on less than $25,100 a year for a family of four. Poverty often strikes harder in households with children. In 2018, 19.7 percent, or nearly one in 5 kids in North Carolina, lived in homes that struggled to afford the basics.
  • The state poverty rate (14 percent) declined by 0.7 percentage points over the past year and is at its lowest since 2007, when the Great Recession hit.
  • The state’s median income ($53,855) in 2018 was statistically unchanged from both 2017 and 2007, meaning there has been no progress in raising middle-class living standards for the average North Carolinian since the beginning of the Great Recession.

Click here to explore the full report in PDF format.

Commentary, NC Budget and Tax Center

Powerful op-ed refutes Berger’s claims about a rosy NC economy

Be sure to check out NC Budget & Tax Center economist Patrick McHugh’s new op-ed in Raleigh’s News & Observer. In “As the NC GOP hails tax cuts, most incomes stagnate and poverty remains high,” McHugh offers a powerful rebuttal to a recent piece that appeared under the name of state Senate President Pro Tem Phil Berger, in which he attempted to claim that everything is going swimmingly with the North Carolina economy, thanks to GOP tax cuts.

Here’s McHugh:

Most families in North Carolina aren’t getting ahead in the way Berger is portraying it. The typical family income is slightly higher than it was in 2010 when we were just exiting the Great Recession, but the median income still buys less than it did at the turn of the Millennium. Our labor market is increasingly segregated between handsomely-paying white collar careers and low-wage jobs that don’t bring in enough to get by. We’ve lost many of the middle-income jobs that used to be the pathway from entry-level positions to a more comfortable life. Berger’s tax cuts haven’t fixed that problem.

The lack of good job opportunities has an even more devastating impact on communities and families trying to escape poverty. Our state has one of the highest rates of poverty in the country and last year (the most recent figures available) over 1.4 million North Carolinians were under the incredibly low threshold the Federal Government defines as the poverty line (less than $26,000 for a family of four).

Poverty is widespread but imposes a particularly harsh weight on some communities. One out of every five children in our state was in poverty last year, which should be enough in-itself to stop any elected leader from claiming their economic policies are working. We have also failed to dismantle the long-standing obstacles to opportunity which trap Black and brown North Carolinians in poverty far more often than their white neighbors.

North Carolina’s economic growth under the current tax cutting regime has been remarkably unremarkable. Job growth since 2010 has been identical to the regional average and slower than South Carolina and Georgia. The low tax mantra is also hard to square with the fact states along the West Coast which aren’t as allergic to taxing wealthy people and corporations added jobs faster than North Carolina over the last decade. Clearly having the lowest corporate tax rate in the country hasn’t propelled us to the lead of the pack.

Meanwhile, as McHugh points out, repeated tax cuts are devastating core state services and structures that boost the middle class. McHugh’ on-the-money bottom line:
Senator Berger isn’t alone in spinning stories to defend his policies. The real question is how much truth gets sacrificed, and the consequences to people whose lives are written out of the story.
Click here to read the entire essay.
Commentary, NC Budget and Tax Center

New numbers cause concern that NC economy is lagging and could slip backwards

In case you missed it earlier this week, the latest assessment from experts at the N.C. Budget and Tax Center indicates that care must be taken to prevent a state economic decline. This is from a release entitled “Worrying economic trends for N.C. persist in October labor market numbers”:

Uninspiring unemployment and labor market participation rates from October’s state labor market release suggest that the state’s economy is lagging and is in danger of slipping backwards in the coming months. The number of people looking for work in the state has exceeded 200,000 and is 20,000 more than October of 2018. The state unemployment rate of 4 percent is higher than the national average (3.6 percent) and is also higher than it was one year ago. These trends reinforce concerns that a slowing economy will exacerbate an incomplete recovery, leaving many North Carolinians in the cold.

Click for more labor market data charts

“As we approach the end of the year, it is obvious that North Carolina’s economy is not working for all,” said William Munn, Policy Analyst with the Budget & Tax Center, a project of the NC Justice Center. “Worrying unemployment rate trends and slowing employment growth is evidence that 2019 is shaping up to be another year of lost opportunity and evasive prosperity, book-ending a decade of an incomplete recovery.”

Highlights from the October labor market release include:

  • The number of North Carolinians looking for work increased: There are more than 200,000 North Carolinians looking for work throughout the state, an increase of nearly 20,000 from October of last year. Comparatively speaking, the national number of unemployed has decreased over the past 12 months, from 6,112,000 to 5,855,000 . While this is an indication of a state labor market absorbing more eligible workers into the labor force compared to the nation, it still signals an economy unprepared for growth.
  • The North Carolina unemployment rate is higher than national average: Last month’s state unemployment rate of 4 percent is higher than it was 12 months ago at 3.7 percent. The U.S. unemployment rate of 3.6 percent represents an increase from last month, and while the state’s rate slid, there is still a notable gap.
  • The share of North Carolinians with a job has decreased since the Great Recession: Even as the number of workers in the state’s civilian labor force has grown over the past decade, the percentage of those with jobs has shrunk. In December of 2007, the state’s labor force numbered 4,530,400, and the share of employment was 62.1 percent. Last month, labor market data revealed that the state’s labor force increased to 5,128,600, but the percentage of North Carolinians with jobs slipped to 59.4 percent.

For data charts, visit NCJustice.org/LaborMarket.

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s weekly Prosperity Watch report.