NC Budget and Tax Center

NC Budget and Tax Center

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

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

A report by the Tax Foundation, funded by the NC Chamber Foundation, gets it wrong in its assessment of the impact of tax changes made by state lawmakers in recent years. The plethora of charts and figures created by the Tax Foundation fails to detail the important loss of revenue that has hindered the state’s pursuit of important foundation-building for a strong economy—investments in schools, research and development, entrepreneurship and innovation. The assessment also masks the shift in tax responsibility to the majority of North Carolinians and away from the wealthy and profitable corporations.

Proclaiming that the state’s tax climate has leapt from one of the worst to now one of the best largely as a result of tax cuts provides no insight regarding the fiscal and economic health of North Carolina. Just as a good accountant understands that positive business earnings don’t equate to a financially sustainable enterprise, this reality also applies to tax policy and the economy. In fact, the Tax Foundation’s rankings reflect little more than the tax policies they and their corporate funders want to see rather than a robust body of evidence about what economies need to prosper. In fact, the pursuit of low-taxes has not been demonstrated to consistently deliver the economic returns promised.

Below are three notable takeaways from the Tax Foundation’s assessment of tax changes passed by state lawmakers since 2013. Read More

NC Budget and Tax Center

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

The September local employment numbers highlight the persistent jobs challenge that North Carolina faces. At a time when local economies across North Carolina continue to experience the realities of an uneven recovery that has yet to return to pre-recession conditions, Governor McCrory will likely sign a bill today that will further negatively impact our state’s workers and families.

The expected signing of HB 318 means that the time limit on food assistance will go into effect  for 77 counties that qualify for a waiver due to weak labor market conditions. This could result in up to 105,000 childless North Carolinians losing food assistance, driving up demand at local pantries and holding back consumer spending in local groceries.

The latest labor market data show just how damaging the timing of HB 318 could be. All but one metropolitan area and the overwhelming majority of North Carolina’s 100 counties still have more people looking for work than before the economic collapse in 2007. This trend highlights the persistent jobs challenge North Carolina faces – more people desire to work than are jobs available to meet this demand for employment.

“There is a persistent narrative when assessing local labor market conditions in North Carolina. The recovery has been uneven and is bypassing a lot of people who live in both rural and urban areas,” said Cedric Johnson, Policy Analyst at the Budget & Tax Center, a project of the NC Justice Center. “In light of the labor market news, it is still clear that there are too few jobs for all who want to work in North Carolina.  Moreover, there are also too few skills training opportunities for those who seek retraining for new careers.”

Key findings from the county data include:

  • Only 22 of North Carolina’s 100 counties have reached the 5 percent threshold for unemployment that many economists view as full employment.
  • The number of people looking for work is still higher in 81 counties than it was before the recession.
  • 65 of North Carolina’s 100 counties have not gotten back to pre-recession levels of employment.
  • 16 counties actually lost jobs over the last year.

Key findings from the metropolitan data include:

  • 8 of North Carolina’s 15 metropolitan areas have added jobs since the start of the Great Recession. However, the number of people looking for work has grown much faster in every metropolitan area except one (Hickory-Lenoir-Morganton) during that period.
  • In 14 of North Carolina’s 15 metropolitan areas, the increase in the number of people looking for work is more than 20 percent higher than pre-recession levels.
  • Hickory-Lenoir-Morganton is the only metro area to experience a decline in labor force (2.8 percent), number of employed workers (2.8), and number of workers looking for work (3 percent) since the start of the Great Recession.