Commentary, NC Budget and Tax Center

Labor Day 2016: The hard truth about the supposed “Carolina Comeback”

The North Carolina Budget and Tax  Center released the “State of Working North Carolina 2016” today and, as in recent years, the story it tells about the North Carolina economy is not an especially pretty one. The following is from the release that accompanied the report:

SOWNC 2016Hard work is supposed to provide the income to allow people to get by and set their children up for future success. North Carolina policymakers have violated that promise, both with their policy choices that make it more difficult for North Carolinians to connect to good jobs and with their failure to enact the policies that make sure work translates into greater economic security.

The national economic recovery began in 2009, but it has yet to reach North Carolinians across the state. Too many workers have failed to find work or left the labor market for lack of jobs in their community.  Far too many who are working find their wages falling short of what it takes to make ends meet and otherwise contribute to their communities’ improvement.

The precarious state of working North Carolina in the so-called “Carolina Comeback” is a result of policymakers’ failure to embrace the current reality: We need a policy response to address a number of long-term trends, including:

  • The economic transformation away from manufacturing and towards a service economy;
  • The changing nature of work and relationships between workers and employers; and
  • Demographic shifts in the workforce.

State policy choices have instead prioritized trickle-down economics over common sense, which makes North Carolina workers’ struggle for economic well-being even greater in the current context.

Our 2016 analysis of the State of Working North Carolina demonstrates clear evidence that contradicts the trumpeting of a “Carolina Comeback” —and shows that low taxes, low regulation and lax labor standards largely do not lead to better economic outcomes nor address the challenges facing North Carolina.  The following pages detail critical ways in which overall economic growth, jobs, and the changing nature of industry opportunities are falling short of what our economy, our communities and our people need to thrive.

While North Carolina has benefited somewhat from the national economic expansion, the state has not done enough to make sure this period of economic expansion reaches every North Carolinian and every community.

Workers across the state and from diverse backgrounds are at a disadvantage relative to their peers across the country and in the South — even relative to the generations of North Carolina workers before them — because of bad policy choices. Policymakers have chosen to shrink investments in institutions that have built bridges to new careers and protected workers from poverty, and to reduce the standards and guidelines that make it possible for businesses to compete, new markets to expand and workers to thrive. These choices hurt all North Carolinians.

Click here to read the report.

NC Budget and Tax Center, Uncategorized

Bipartisan agreement to address persistent poverty

The persistence of poverty in certain regions and communities across the country and within North Carolina has long held back the broader economy from performing at full capacity and delivering the greatest benefit to the most people.  In North Carolina, there are still 10 counties where poverty rates have remained above 20 percent for more than three decades.

That is why the emerging bipartisan consensus on setting a reasonable target to direct federal funds to these communities is encouraging.  The plan states that at least 10 percent of a federal program’s funds should go to counties where at least 20 percent of the population has lived in poverty for at least 30 years.  In the upcoming months, there may be several opportunities for the plan to be incorporated into the guidelines for funding the federal government.  In the meantime, from this Politico article, it is clear that a broad swath of the country could stand to benefit and that those affected by persistent poverty are diverse.

Nearly 500 counties across the United States suffer from the kind of persistent poverty that would make them eligible for the plan’s targeted funding, [Representative] Clyburn says — and it would give more Republican lawmakers something to brag about to constituents than Democrats. In 2009, Clyburn likes to note, 84 Republicans represented those counties, compared with 43 Democrats. The GOP held 311 counties and Democrats represented 149. (In terms of total population, the parties were more evenly split, with Republicans representing 8.3 million people from those counties and Democrats representing 8.8 million; another 14 counties with 5.3 million people were split between Republicans and Democrats.)

2017 Fiscal Year State Budget, Back to School Series, NC Budget and Tax Center

Back to school – Ensuring a high quality education for all students

This is the first of a Back to School blog series (see Part 2, Part 3, Part 4 and Part 5) that highlight various issues to be aware of as the 2016-17 school year kicks off.

It’s back to school time, and more than 1.5 million students are preparing to embark upon a new school year. Currently the 10th largest public school system in the nation, North Carolina has experienced steady growth in the number of students entering school doors in local communities across the state – enrolling more than 100,000 additional students over the past decade. This makes it more important than ever to increase investment in schools to ensure the growing number of students in North Carolina receive a high quality education.

The makeup of students in public schools has changed over time. Last school year, no single race or ethnic group represented a majority of North Carolina’s student enrollment—a reflection of the changing demographic trend in the state’s broader population. Furthermore, one of every two students in public schools qualified for free or reduced school meals, which indicates that a significant number of students reside in low- and moderate-income households and face persistent economic challenges.

One way to ensure that our schools have the resources to provide a quality education to all students, regardless of their socio-economic background, is through the state budget, which serves as an important source of education funding for our schools. For the upcoming school year, the state budget under which schools will operate is a mixed bag of incremental progress in some areas and persistent lagging support in other areas. For the 2016-17 school year, state funding per student remains 8.1 percent below 2008 pre-recession level, with more than 81,000 additional students enrolling in public schools during this time. Consequently, our schools are challenged with educating more and more students with fewer resources.

Back to School - State Budget


Lawmakers limited their ability to boost investment in public schools by passing costly tax cuts in recent years that largely benefit the wealthy and profitable corporations. The state’s ability to invest in public education will continue to be limited in the years ahead as the cost of the tax cuts grow larger. For the current fiscal year, these tax breaks reduce available revenue by $1.4 billion, dollars that otherwise would have been available to lawmakers to boost investments that promote student achievement. Once all tax changes are fully in place, this annual cost grows to more than $2 billion. Read more

NC Budget and Tax Center

More than 20 percent of NC students attend a high-poverty school

According to data from the National Equity Atlas, one out of every five children in North Carolina attends a high-poverty school. Among students of color, that number is one in three. High-poverty schools are defined as schools in which 75 percent or more of the student body qualifies for the federal free or reduced priced lunch program. Because many high-poverty schools are faced with having limited resources to educate and care for students who often need extra supports, they often struggle to provide a quality education equal to their middle-class and wealthier counterparts.

The concentration of low-income students in high-poverty schools cannot simply be explained as a rise in poverty. Over the past decade, North Carolina has seen only a modest increase in the number of students who are eligible to receive free or reduced lunch. Prior to the beginning of the recession, just over 48 percent of students applied for the free or reduced lunch program in the 2007-08 school year. That number peaked at 58 percent in 2013 school year and has since decreased to 53 percent this past year.  In the same time period, the percentage of students enrolled in high-poverty schools has nearly doubled.

Rather than an increase in the number of low-income households, concentrated high-poverty schools are often the result of economic and racial segregation. Rising income inequality and a deterioration of the social safety net has contributed to a decline in middle class and mixed-income neighborhoods. Although this trend in socioeconomic and racial segregation is not exclusive to North Carolina, it is particularly damaging in a state that ranks 43rd in the nation in per pupil funding. To make matters worse, there are large gaps in per pupil spending across counties; in 2012, the highest spending county spent $2,280 more per student than the lowest-spending county.

The gap in student achievement between low- and high-income students has grown. A large part of this expanding achievement gap is explained by the increasing segregation of schools. If we do not address the proliferation of high-poverty schools, many of our students will leave high school unprepared for post-secondary education and underqualified to participate in the workforce.

While a the achievement gap and an unprepared workforce are real problems, the reality is that the increased concentration of students in high-poverty schools is only a symptom of a larger issue. When we fail to make adequate public investments and address systemic barriers, inequality expands and opportunity shrinks. And far too often, children, especially children of color, pay the costs.

NC Budget and Tax Center

Three key points in assessing the Carolina Comeback

Our annual State of Working North Carolina report will be out next week and detail the ways in which the national recovery has yet to reach all North Carolinians and every North Carolina community. In the meantime, a debate playing out on the pages of the News & Observer deserves attention today

As Labor Day approaches, it is clear that a more careful consideration of the state’s economic well-being is needed instead of declarations of a “Carolina Comeback.”

Let’s be clear: There is nothing partisan about reviewing the data and considering whether the state is experiencing a strong recovery.  North Carolinians deserve an accurate accounting of how the economy is doing and where policy choices have fallen short of supporting better outcomes.

There is no debating that the state has seen employment growth, that wages appear finally to be growing, and that productivity (aka GDP) is on the rise. The latter is a fundamental requirement of an economic expansion (at least nationally) and the growth in jobs and wages should follow suit now that we are seven years past the start of the national recovery.

The issue is not whether these things are happening, but whether they have met our expectations for what an expansion should look like. When looking at the numbers relative to our neighbors, our nation and even our past performance, the current national economic recovery is failing to live up to expectations and our state’s great potential.

Here are some key data points that should be front and center when claims of the state’s robust recovery are cited. Read more