Falling Behind in NC, NC Budget and Tax Center, Poverty and Policy Matters

February labor market data: Rural NC needs lots of love

Since February of 2017, North Carolina’s unemployment rate has fallen from 5 percent to 4.2 percent. But the lower unemployment rate, with its frequent fluctuations, simply reflects the prosperity of urban centers of the state and masks the struggles of rural North Carolina, where in many places things are worse than before the Great Recession.

February’s labor market data showed that more than half of the state’s counties have unemployment rates higher than the state average. Of these 57 counties, 36 are concentrated in rural Eastern North Carolina. This means that 63 percent of the counties with unemployment rates higher than the state average are clustered in the eastern part of the state.

NC counties (orange) with unemployment rates higher than state average (Feb 2019)

A more in-depth look into February’s labor market release shows that since the beginning of the Great Recession, 28 Eastern N.C. counties lost approximately 50,000 jobs, or 8 percent of their collective employment. This is a starkly different reality from Wake and Mecklenburg counties, whose employment has increased 33 and 36 percent respectively since December of 2007. There were 21 Double Whammy counties in February — those who have fewer jobs presently than at the beginning of the Great Recession and have also lost jobs year-over-year. A particularly startling example of this is Washington County, which lost 3 percent of its jobs since February 2018 but almost 30 percent from the start of the Great Recession. It is evident that things are not headed in the right direction.

(Above) 28 eastern N.C. counties that have lost 50,000 jobs (8%) collectively since the Great Recession

It is clear from analysis of the labor market over time that rural North Carolina is not recovering from economic and natural shocks, and state lawmakers need to invest in policies to help these communities, not in tax cuts that mostly help the wealthy and large corporations. It is far past time we focus on an economic strategy that supports a full recovery for families throughout all of the state’s communities.

Falling Behind in NC, NC Budget and Tax Center, Raising the Bar 2015

Senate tax plan would continue down a path to nowhere

A tax plan state Senate leaders presented this week would promote neither shared economic opportunity nor prosperity across North Carolina. Far from it.

The proposal would cost more than $1 billion in annual revenue loss as the tax plan continues down the path of handing out more costly tax cuts to large, profitable corporations at the expense of everyday North Carolinians. This approach won’t restore the state’s economy to a sound footing.

The proposed tax plan does nothing about persistent stagnant wages, an uneven economic recovery in which all gains are going to the wealthiest North Carolinians, and the lack of economic and job growth in many parts of the state. Senate leaders would pay for only a portion of the income tax cuts by having North Carolinians pay more in sales taxes, which hit people making relatively low incomes the hardest. And the state would continue to walk away from its responsibility to make much-needed investments in our public schools, public colleges and universities, repair the state’s eroding infrastructure, and other building blocks of a strong economy.

Key aspects of the Senate tax plan stand out as strong reasons why its adoption would fail to promote broad prosperity.

  • The proposal’s reduction of the personal income tax rate to 5.5 percent from 5.75 percent has no benefits to the state’s economy or its competitiveness. At the cost of much-needed public revenue, the tax rate cut won’t drive significant job creation, motivate businesses or people to locate in North Carolina or encourage local investment. Not only do income tax rates affect these factors negligibly, if at all, North Carolina’s personal income tax rate is already in line with the region’s, falling in the middle among southeast states.
  • While putting a limit on how much in itemized deductions a taxpayer can claim is good policy, using the added revenue this produces to reduce tax rates isn’t. Because this proposal would place all itemized deductions—mortgage interest, charitable contributions, medical expenses, etc.—under the cap, it creates greater equity in the treatment of taxpayers. Capping itemized deductions reduces revenue loss from these deductions and helps address inequities in the tax code, as wealthier taxpayers typically benefit more from deductions.
  • Increasing the standard deduction is a wasteful way to address the problem of too many North Carolinians struggling to make ends meet because it deprives the state of much-needed public resources that could boost public investments that promote economic growth. A better way to help hard-working taxpayers keep more of what they earn is to adopt a strong refundable state EITC to help offset not only income taxes, but sales and property taxes that fall hardest on those with lower incomes.

Read more

Falling Behind in NC, NC Budget and Tax Center, Poverty and Income Data 2013, Poverty and Policy Matters

Increasing income inequality not a recipe for an economy that works for all

New data released by the US Census highlight the pervasiveness of poverty nationally and in North Carolina. In 2013, one in six North Carolinians lived below the federal poverty rate – less than $24,000 a year for a family of four and  $12,000 a year for an individual. For communities of color, the poverty rate is far worse: 32.5 percent for Latinos, 28.9 percent for American Indians, and 28 percent for African Americans.

These daunting poverty rates highlight that far too many individuals and families across the state face economic hardship. The persistence of poverty has been accompanied by a rise in income inequality, which poses consequential implications for the overall economy and North Carolina’s state economy. The bulk of economic gains from the ongoing economic recovery have flowed to a small group of high-income earners. In the first three years of the economic recovery, the top 1 percent of income earners captured 95 percent of the income gains nationally. Here in North Carolina, income for the top 1 percent of income earners in the state grew by 6.2 percent from 2009 to 2011 while the bottom 99 percent saw their income decline by 2.9 percent. The latest US Census data show that this early post recovery trend is likely to hold. By 2013, the top 20 percent of households in North Carolina captured more than half of all income earned by all households in the state (see graphic below). Read more

2015 Fiscal Year State Budget, Falling Behind in NC, NC Budget and Tax Center

New state budget continues to underfund crucial public investments

This week the Budget & Tax Center released a new report on North Carolina’s 2015 fiscal year budget. While other states across the country are beginning to reverse the worst cuts made during the Great Recession, North Carolina continues to underfund crucial public investments in order to pay for tax cuts that took effect this year. Lawmakers failed to provide a high-quality education for all children, protect natural resources, support community-based economic development, or provide adequate health and human services to North Carolina residents.

Under the final budget, state investments are 6.6 percent below pre-recession levels five years into the official economic recovery. The new budget for the 2015 fiscal year is the 7th budget enacted since the Great Recession hit, and North Carolina has yet to bounce back to its pre-recession investment level. This is in contrast to spending during previous economic recoveries – spending did not dip after the 1981 and 2001 recoveries and state lawmakers restored investments to the levels that were in place when the 1990 recession hit within three years. Read more

Falling Behind in NC, NC Budget and Tax Center

First in Flight from the EITC: Heather’s Story (VIDEO)

Lawmakers let the state Earned Income Tax Credit expire at the end of 2013, making North Carolina the first state in nearly 30 years to eliminate this proven anti-poverty tool. The state EITC helps promote shared economic prosperity for all North Carolinians. It goes only to working people with modest incomes, offering extra support to pay for basic necessities.

In a new video from the series “North Carolina: First in Flight from the EITC,” Heather Partridge talks about how the state EITC has helped her family. Heather lives with her husband and three daughters in Gibsonville, where she works at Hardee’s and earns $7.55 an hour – just barely above the state minimum wage of $7.25. In past years, the EITC has helped Heather pay for everyday goods for her children as well as pay off debt.  Read more