NC Budget and Tax Center

Recovery held back by fiscal austerity

To hear it told this election season, North Carolina’s recovery is something to behold.  Nevermind the evidence that employment levels remain depressed and hardship high. Researchers from the Economic Policy Institute released a study this weekend that suggests that were it not for the policy choices North Carolina policymakers have made (and their Congressional counterparts), North Carolina would have experienced a far more robust a recovery.

The analysis looks at various measures of the strength of the economic recovery to demonstrate the relatively slow performance compared to prior economic expansions nationally.  Josh Bivens, author and economist with the Economic Policy Institute, then turns to an analysis of public spending, which in a downturn serves an important role in filling in the gap between where employment and output should be and where it is.

And yet, the graph below from the analysis shows that cutting spending was the actual response post-2010, slowing the pace of recovery.  From Bivens:

[The graph] shows the growth in per capita spending by federal, state, and local governments following the troughs of the four recessions. Astoundingly, per capita government spending in the first quarter of 2016—27 quarters into the recovery—was nearly 3.5 percent lower than it was at the trough of the Great Recession. By contrast, 27 quarters into the early 1990s recovery, per capita government spending was 3 percent higher than at the trough, 23 quarters following the early 2000s recession (a shorter recovery) it was 10 percent higher, and 27 quarters into the early 1980s recovery it was 17 percent higher.

 

Bivens concludes that: “If government spending following the Great Recession’s end tracked spending that followed the recession of the early 1980s for the first 27 quarters, governments in 2015 would have been spending an additional trillion dollars in that year alone, translating into several years of full employment.”

The full piece is worth a read here.

NC Budget and Tax Center, TANF 20 Years Later

TANF at 20: How it contributed to a tattered safety net for struggling families

This blog is the first post in a series that will detail how lawmakers have weakened Temporary Assistance for Need Families (TANF) over the last 20 years, explain why TANF is a cautionary tale rather than a model for other work and income support programs, and map out a better way forward.

Come Monday, Aug. 22, it will be 20 years since President Bill Clinton signed into law what’s widely known as welfare “reform”—an overhaul of the nation’s main assistance program for families struggling to make ends meet. Lawmakers created Temporary Assistance for Needy Families (TANF) to, as President Clinton pledged, “end welfare as we know it.” And the 1996 welfare law did just that—the reforms created a harsh hole in the nation’s safety net for the most vulnerable families across the U.S.

The welfare law imposed a five-year limit on benefits—ending the legal right to basic assistance—with the expectation that recipients who can work do so. Policymakers also expected states to maintain a temporary safety net to help families weather short-term troubles and a bad economy. The law gave states a great deal of spending flexibility over programs when it converted federal aid to a fixed block grant, but many states like North Carolina have significantly reduced basic assistance without using TANF to help parents prepare for or connect to work.

The result: TANF does little today to help families regain their footing on the economic ladder or to connect them to work to reduce their need for supports—thus violating the purported intention of the law to move people off welfare to work. In fact, Peter Edelman and Barbara Ehrenreich, two of our nation’s foremost experts on poverty, warned President Clinton and Congress at the time that this would happen, as they recall:

“We argued that the low-wage jobs available to former welfare recipients would not pay the bills. We warned that the legislation didn’t provide adequate child care for single mothers thrown off welfare. And we cautioned that many welfare recipients faced serious barriers to success in the job market.”

Their warnings fell on deaf ears and in the end accurately depicted the fallout of TANF 20 years later. Read more

Commentary, NC Budget and Tax Center

New analysis: NC teacher pay still mired near the bottom (state-by-state chart)

The most recent edition of the NC Budget and Tax Center’s “Prosperity Watch” feature by BTC Director Alexandra Sirota has more sobering news on teacher pay in North Carolina:

Prosperity Watch: N.C. teacher pay still lagging as they go back to school

As children, families, teachers and communities prepare to head back to school, the issue of teacher pay continues to linger in North Carolina. Despite incremental changes in the past two years by state lawmakers to change the structure of pay for teachers and invest more in teacher pay, North Carolina teachers remain near the bottom among their peers in other states for average pay.  Even with the changes to the state’s teacher plan made in the 2016-17 budget, analysis shows that average teacher pay will likely just reach $49,620. That means that many teachers across the state will still earn far below what it takes to make ends meet in their counties.

New research from the Economic Policy Institute (EPI) provides another benchmark against which we can measure North Carolina teacher pay and compensation.  Researchers compared the weekly wages of teachers to the pay of workers with similar education levels. They also reviewed compensation packages.  A public school teacher in North Carolina earns just 65 cents for every dollar that a comparable worker earns, according to findings from the research. That ranks North Carolina third lowest in the country, with only Colorado and Arizona faring worse. Both of these states that have pursued rigid restrictions to their respective state budget and tax policies, and teachers and students have seen the limits that result.

PW 64-3 teacher payEven though this data precedes some of the more recent policy decisions enacted by N.C. lawmakers to adjust teacher pay, the small investments made in Fiscal Year 2016-17 due to tax cuts are unlikely to result in significant change to the ratio of wages earned by public school teachers compared to their peers with similar education levels in other areas of employment.

When teachers are not paid at levels comparable to workers with similar education in other professions, the ability to retain good teachers erodes.  Good, quality teachers are an important and integral part of both an enriching learning environment for students and the stability of classroom and school performance. These findings from EPI underline the need to better compensate quality North Carolina teachers in order to keep them in our classrooms, preparing every child in the state for success.

 

NC Budget and Tax Center

Prosperity Watch: SNAP (food stamps) caseloads declining quickly

The latest issue of Prosperity Watch takes a look at the trend in SNAP caseloads between January and April of this year. We selected this period because it covers the time in which 23 of the state’s 100 counties began cutting people off SNAP after re-imposing the three-month time limit in January.

We found that the number of North Carolinians on SNAP fell quickly during this period, especially in the counties that reinstated the three-month time limit for childless, non-disabled adults (see the map below).

Jump over to Prosperity Watch for the full details and another graphic. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Budget falls short of being a visionary plan for North Carolina’s economic future, finds a new report from the NC Budget & Tax Center

North Carolina lawmakers approved their state budget this month, a budget constrained by limited aspirations. The pursuit of a rigid spending formula combined with another round of tax breaks prevented lawmakers from proposing an adequate budget, let alone a bold one, as we explain in our new Budget & Tax Center report.

The new tax breaks in the budget come on top of recent tax breaks, which together are projected to cost more than $2 billion annually once fully implemented. While the budget reinvests in some worthy programs and services, these investments are just a small fraction of what we need to build thriving communities and boost economic opportunity in North Carolina. The reality is that without tax giveaways to the wealthy and powerful, much more could have been possible to improve North Carolinians’ quality of life and to build a stronger, more inclusive economy for all.

Read the report to learn more about what lawmakers prioritized in the 2017 fiscal year budget, areas where investments fall short of what’s needed to help North Carolinians thrive, and what lawmakers’ fiscal decisions mean for the state’s ability to boost quality of life and shared prosperity.