Commentary, NC Budget and Tax Center

Why mass deportation would cause a $10.6 billion loss for NC industries (graph)

In case you missed it, the Budget and Tax Center is out with a powerful new installment in its Prosperity Watch series — this one on the massive beneficial impact of immigrants to the North Carolina economy and what it would mean if we embarked upon the kind of mass deportation policies advanced by some political candidates. This is from the “Mass deportation would mean $10.6 billion loss for NC industries”:

Immigrants are an important element—as workers, consumers, and business entrepreneurs—in building a thriving state economy.  Current rhetoric on mass deportation as a policy to address our broken immigration system overlooks immigrants’ contributions to state and local economies, and, additionally, the impact that an absence of workers would have on major industries.

A new report measuring the economic consequences of a mass deportation policy reveals a $236 billion reduction in total GDP and a cost of nearly $900 billion in lost revenue over 10 years for the federal government. Nationally, the industries that would be hit the hardest by the absence of an undocumented immigrant workforce would be agriculture, construction and leisure and hospitality. Estimates indicate that these industries would experience a workforce reduction of 10 to 18 percent or more.

For North Carolina, such a policy would result in a more than $10.6 billion loss for local industries. Manufacturing would experience the largest cut with a loss of approximately $2.4 billion in annual GDP. Construction ($2 billion) and Leisure and Hospitality ($1.3 billion) would experience the second and third highest losses in annual GDP if mass deportation were to occur. Our state simply cannot afford such a hit to industries still recovering from the effects of the recession.

 

These estimates do not account for additional setbacks in the form of reduced state and local tax revenue. Removing undocumented immigrant taxpayers would prevent our state from investing in education and work opportunities.

Instead, policymakers should seize the opportunity of growing our economy by lowering the barriers to immigrants’ full economic participation. This can be done through different policy choices, such as action in Congress that would enable a legalization program and eventual pathway to citizenship for the 338,000 undocumented immigrants currently living in NC. States can also improve economic opportunities for immigrants by promoting proven integration policies for immigrant families including: in-state tuition, access to professional licensing/credentialing, English language training, and transportation and access to jobs.

NC Budget and Tax Center

Logic Fail: Conservative NC group peddles misleading paper on tax cuts

Did you know that drinking lemonade can give you sunburn?

If you haven’t, don’t worry, it’s not true. However, a paper just released by the Civitas Institute traffics in just these kinds of erroneous connections. The study claims that recent tax cuts in North Carolina have led to thousands of new jobs, but the analysis simply doesn’t stand the weight of scientific scrutiny.

The study unabashedly ignores any published research that does not fit its worldview. Whole forests have been sacrificed to print papers on the relationship between taxes and economic performance, many finding little or no relationship whatsoever. The relationship between taxes and growth is complex, contextual, and evolving, so there is ample evidence that simply cutting taxes does not lead to stronger growth. Sadly, the Civitas Paper simply sails past any and all confounding evidence en route to their pre-chosen destination.

In so doing, the Civitas-hired researchers commit a cardinal analytical blunder called “omitted variable bias”, something covered in most introductory statistics classes. That may sound like a complicated term, but it’s actually perfectly intuitive, which brings us back to lemonade and sunburns. Just looking at data on lemonade and sunburns could lead one to conclude that drinking the stuff is associated with elevated risk of developing dry, reddened, and painful areas on the skin. Of course, it’s really the sun that causes both sunburn and a thirst that only lemonade will quench, but you wouldn’t know that if you didn’t include data on how sunny it was.

Unfortunately, the heart of the Civitas study is rooted in precisely this kind of logical fallacy. The report acknowledges that many policy and economic factors are strongly related with each other, but rather than dealing with the complexity of the real world, the study chooses instead to separate each policy into its own statistical model. As a result, the analysis cannot discern what is actually causing the economy to grow faster or slower. However, the write-up of the findings acknowledges none of these shortcomings or the other methodological problems, and its policy prescription is equivalent to imploring dermatologists to direct their patients to steer clear of lemon-infused sugar water if they want to avoid sunburn. Read more

NC Budget and Tax Center

SNAP works for North Carolina’s children

The Supplemental Nutrition Assistance Program (SNAP) helps North Carolina families put food on the table. But we know now that it accomplishes much more than that.

Research increasingly shows that SNAP, formerly known as Food Stamps, can ward against the long-term effects on children experiencing poverty, abuse or neglect, parental substance abuse or mental illness, and exposure to violence — events that can take a toll on their well-being as adults.  As a new Center on Budget and Policy Priorities report finds, SNAP helps form a strong foundation of health and well-being for low-income children by lifting millions of families out of poverty, improving food security, and helping improve health and academic achievement with long-lasting consequences.

It’s doing all that across North Carolina. SNAP is improving our children’s futures.

SNAP delivers more nutrition assistance to low-income children than any other.  This year, SNAP will help about 20 million children each month — about one in four U.S. children — while providing about $30 billion in nutrition benefits for children over the course of the year. In North Carolina the impact is even greater. In 2014, SNAP helped about 663,000 children each month, or 29 percent of our state’s kids.

snap-helps-large-shares-of-north-carolinas-children

SNAP’s benefits are modest, but they’re well-targeted to children and families that need them the most. While households across the state receive an average of $255 each month, families with children get $390 on average. Furthermore, families experiencing deep poverty receive higher benefits.[i] In 2014, SNAP benefits lifted over 96,000 families out of deep poverty. It’s no surprise that SNAP helps lift more children out of deep poverty than any other government assistance program.

In fact, much of SNAP’s success can be attributed to its design, including that consistent national structure that effectively targets food benefits to those with the greatest need; eligibility rules and a funding structure that make benefits available to children in almost all families with little income and few resources; a design that automatically responds to changes in the economy; and rigorous requirements to ensure a high degree of program integrity.

SNAP is helping to give thousands of North Carolina’s children the foundation they need to succeed. Efforts to reform or enhance it should build on its effectiveness in protecting the well-being of our children — and those nationwide — and preserve the essential program features that contribute to that success.

[i] Deep poverty is defined as income at or below 50 percent of the Federal Poverty Line

Commentary, NC Budget and Tax Center, The State of Working North Carolina

Voters agree: Don’t call it a (Carolina) Comeback

We’ve been hearing a lot about a Carolina Comeback for the last few years, but it turns out that most of us haven’t been feeling it. A recent WRAL News poll finds that only a quarter of North Carolina voters think our state’s economy is stronger than it was four years ago. Additionally, “more than two-thirds of voters said their own economic well-being is either the same or worse than it was four years ago.”

Unfortunately, this isn’t a huge surprise. As the latest State of Working North Carolina report shows, bad policy choices have made overall economic growth, jobs, and changing industry opportunities fall far short of what we all need to thrive. This report, Don’t Call it a Comeback, explains the data that back up how North Carolina voters feel about their economic opportunities.

Hopefully lawmakers will take these poll results as a sign: they need to start prioritizing policy decisions that will create an economy that works for all.

Click here for the WRAL News poll.
Click here to see the NC Justice Center’s latest report, Don’t Call it a Comeback.

NC Budget and Tax Center

Jobless workers and their communities still hurting under unemployment insurance changes

The Unemployment Insurance Oversight Committee is set to meet on Wednesday to discuss the state’s unemployment insurance system.  It is unclear what will be discussed as of today but let’s hope North Carolina’s leaders spend time considering just how poorly the system is working for jobless workers and their communities.

The latest available data from the US Department of Labor provides benchmarks on key standards that the system should meet in providing a temporary, partial wage replacement to those who lose their job through no fault of their own.  The goal of the program is to stabilize these jobless workers spending in the broader economy while they look for new work and ensure that busiensses aren’t hit by the impacts of low demand for their goods and services.

Here are the lowlights for North Carolina’s system:

  • Just one in 10 jobless workers received unemployment insurance in the Second Quarter of 2016, ranking North Carolina last in the country. Prior to changes North Carolina ranked 24th.
  • The average duration of unemployment insurance is just 10 weeks, ranking North Carolina last in the country. Prior to changes North Carolina ranked 31st.
  • The average weekly benefit amount of $241 leaves jobless workers with too little wage replacement to keep up with the basic costs of living and ranks North Carolina 46th in the country. Prior to changes North Carolina ranked 25th.

North Carolina’s unemployment insurance now reaches too few jobless workers for too short a time period and provides too little in payments to stabilize their spending in the economy. In communities facing persistently high joblessness and too few job openings as well as though facing mass layoffs. The failings of today’s unemployment insurance are all too real and the reach of its harm extend beyond those immediately affected to all of us.

Let’s hope these issues get discussed by leaders on Wednesday. Policymakers should choose to fix the state’s unemployment insurance so that it works for jobless workers and communities.