NC Budget and Tax Center, Trump Administration

Trump administration turning its back on refugees, a moral and economic failure

The Trump administration is following through on its threat to bar America’s doors against people fleeing violence and persecution. Trump’s cruel words are matched with devastating deeds, snuffing out America’s light of liberty in many corners of the world.

A new report from the Fiscal Policy Institute shows how dramatically refugee resettlement has declined on Trump’s watch and provides compelling evidence that we are turning away the very people that have long made America the economic power of the world.

Beyond documenting how dramatically the Trump administration has reversed America’s history offering safe harbor to people facing persecution the world-over, the report shows that these policies will hurt the U.S. economy.

The report’s authors interviewed business owners about their experiences hiring and working with people who arrived in the United States as refugees, and the results show that Trump’s policies are cutting businesses off from precisely the kind of dedicated employees that proprietors love to find. For example:

  • Refugees tend to be more loyal employees: Most business owners reported that, once hired, refugees tend to stay in their jobs longer than other workers. As any employer will tell you, replacing good employees is expensive and challenging, so having reliable refugees as part of a workforce can be an enormous plus.
  • Successful refugee hiring can help employers find more reliable workers: Once companies figure out how to successfully support refugees as they become employees, these businesses often find it easier to recruit more people from refugee communities. Just as with retention, finding skilled and dedicated employees efficiently can be an enormous boon for businesses.

Turning our back on people facing war and torment is wrong, and this moral failing will come with economic ramifications now and into the future.

NC Budget and Tax Center

Another Policy Proposal Ignores Reality of Today’s Job Market

Leaders in the General Assembly appear poised to take health care away from parents with low income through a change to Medicaid,  and they plan to do it using a budget process where no amendments can be offered.

The change would likely take the form of what some other states have proposed, requiring a certain number of hours each month in order to maintain health care access.  This plan ignores the reality facing more and more working North Carolinians who don’t control their schedules and are often at the mercy of economic forces beyond their control.

For this reason, and given what we know about what has happened when implemented in other areas, rigid work requirements will not deliver on the intended goal of increasing employment.  Indeed, researchers have documented the ways in which this could actually reduce employment in the long-term and grow poverty.  It may also be too harsh to receive federal approval.

Here are key facts about today’s labor market that legislators should consider as they seek to take health care away from parents with low income:

  1. There are too few jobs for those who want to work. Despite the state’s employment growth since the national recovery began in 2009,  there are still 87 counties where there are more jobless workers than job openings. In many communities, finding work is still a challenge, regardless of whether elected leaders in Raleigh accept that fact or not.
  2. Work is increasingly unstable resulting in a lack of consistent work hours each month. Research by the Center on Budget & Policy Priorities finds that of low-income adults who have worked in the past year, at least 1 in 4 have less than 80 hours of work in at least month.  This threshold is the one used by Kansas to determine eligibility on a month by month basis and failure to meet it means the loss of health insurance for a period. The issue of unpredictable hours is prevalent in the labor market and has created increased income volatility and economic hardship.
  3. Temporary and contingent work means despite working in a year, many workers face unpredictable employment. Temporary work has grown by 52 percent in North Carolina compared to 32 percent growth in the national economy.  Temp workers in North Carolina earn well below the national average. Temporary workers have little control over how many hours they work in a given month, which could put their healthcare coverage at risk through no fault of their own.
  4. Work at minimum wage doesn’t pay enough to make ends meet. A minimum age worker in North Carolina with one child who works just below the 80 hour a month threshold or 20 hours a week would qualify for Medicaid.  The annual income limit for Medicaid is 43 percent of the Federal Poverty level for an adult.
  5. Our labor market depends on public policies that make sure people can get by in low-wage work. One in five North Carolinians can’t afford to make ends meet in North Carolina based on work alone.  Food assistance and housing support, health insurance and child care subsidies aim to ensure people meet their basic needs and stay connected to the workforce.  Restricting access to these supports hurts employment outcomes and the well-being of families.  It also creates the wrong incentives by creating “cliffs” for working people where adding hours and income push them out of eligibility without ensuring that they can secure the needed benefit through work.  This is clear in North Carolina where those receiving Medicaid who could be subject to a new requirement to work a certain number of hours in the month and can’t meet it would be pushed into the coverage gap.  As a non-expansion state, North Carolina would be driving people out of a pathway to self-sufficiency.

On the heels of hundreds of business leaders, workers and advocates gathered in Raleigh on Tuesday to ask legislators to raise the state’s minimum wage from the current federal level of $7.25, it is clear our legislative leaders continue to miss the opportunity to advance policies that address the most pressing issues in today’s labor market.

Now they could consider a policy proposal that would actually make things worse for North Carolinians.

Let’s hope they reject including work requirements in the budget bill and taking health care away from low-income parents.

NC Budget and Tax Center

Governor Cooper’s budget points state in the right direction

The Governor’s proposed budget changes directions for North Carolina after years of tax cuts by focusing on urgent and smart public investments that communities have identified as critical to boosting our state’s economy today and in the future. By stopping the scheduled tax cuts in 2019 for the richest taxpayers and profitable corporations, the Governor is able to make some progress in meeting needs that have gone unmet under the budgets that have prioritized tax cuts.

Indeed, the Governor’s $24.5 billion budget stands in contrast to the proposed spending target of members of the General Assembly. The Senate and House have agreed to a $23.9 billion budget that keeps the tax cuts for wealthy taxpayers and corporations.

What do these numbers mean?

North Carolina has historically appropriated at the state level each year an amount that is 6 percent of the size of the economy as measured by state personal income. Governor Cooper would spend 5.1 percent in 2018-19, bringing us back to the level the state was investing at in 2017. The General Assembly leadership would spend 5 percent, or basically hold the line on the state’s diminished investments since the recovery began in 2009.

Here’s a baker’s dozen of investments in Governor Cooper’s budget that will position the state for long-term economic success:

  • Directs $110 million in revenue into teacher and principal pay with a stated goal of reaching the national average for teacher pay in four years.
  • Adds $55 million for mental health personnel and training, including $40 million for local school districts to hire more nurses, counselors, psychologists, and social workers who directly support student mental health
  • Provides an additional $25 million for textbooks and digital resources for all students.
  • Invests $366 million for state employee compensation and benefits package that among other things provides a recurring cost of living adjustment that is the greater of $1,250 or 2 percent. This is the largest increase in over a decade.
  • Adds 79 positions to the Judicial branch to effectively meet workload needs and new ‘Raise the Age’ legislation
  • Adds $9 million in community mental health funding to expand treatment and recovery services to help combat the opioid crisis
  • Invests $14.5 million in the clean-up and ongoing monitoring of air and water quality from Gen-X
  • Invests $28 million to improve the safety and security of prison facilities
  • Provides $3 million for state matching funds that will be used to leverage an additional $14 million in federal funds for drinking water infrastructure projects
  • Provides $30 million to create the NC GROW (Getting Ready for Opportunities in the Workforce) Scholarship, for students enrolled in curriculum programs or non-credit short-term workforce training programs leading to industry credentials in high-demand fields
  • Provides $17.5 million to increase Broadband Connectivity access and improve service to under-served households, businesses, and community anchor institutions
  • Prioritizes low-income housing by including $7 million to assist in developing more safe and affordable housing units in the state
  • Directs $175 million to begin necessary digital and physical upgrades, such as replacing the state’s 25-year old accounting system and repairing university and state buildings

As legislators prepare to release their budget for 2019, they should consider the Governor’s budget and stop the scheduled tax cuts in 2019 in order to make investments that help all North Carolinians and help our state be competitive in the future.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

The minimum wage doesn’t even come close to what workers need

Today, the Raising Wages NC coalition is at the North Carolina General Assembly urging legislators to raise the state’s minimum wage to $12 an hour by 2020 and $15 an hour by 2022. This modest, common sense ask isn’t just the right thing to do, it makes economic sense. It’s good for workers who are able to pay for basic expenses, for businesses when consumers have increased purchasing power, and for the health of our entire economy.

One tool that can help make clear just what workers need provide for their families and make ends meet is the Living Income Standard (LIS). Using nine different measures, the LIS documents just how much workers need to earn in order to provide for their families based on family geography, food and housing costs, childcare, healthcare, transportation, and many more common expenses.

With this level of detail, we are able to understand how the expenses of workers in a high-cost, urban county may differ from the expenses of a worker in a rural, more affordable county. Despite differences in the costs families incur, one thing remains consistent across the state: In no county are low-wage workers able to cover the basic necessities while earning the minimum wage.

From the report:

The first step in closing the divide between what people actually earn and what it takes to meet basic needs is raising the state’s minimum wage standard. $7.25 is simply too little to support a family and the economic activity needed to sustain jobs across the state.

Work not only allows individuals and families to meet most basic needs, it also opens the door to new opportunities and a sense of dignity and purpose, all of which have driven America’s economic growth for generations. Restoring the promise of work in well-paying jobs with benefits is the central challenge confronting North Carolina as the state maps a pathway to greater economic security that reaches more households.

The Living Income Standard should be one measure of our progress on that path. It can assess how successful the state is at creating jobs that – at the very least – don’t generate greater societal costs. And it can support efforts to build understanding and a willingness to engage based on the simple fact that in order for families to make ends meet, their wages must match the costs of basic household goods.

In order to see how much workers need to earn in order to make ends meet in your county, visit our 2018 County Economic Snapshots and 2016 Living Income Standard.

Brian Kennedy II is a Public Policy Fellow for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center, Uncategorized

Governor Cooper recognizes North Carolina is in a hole, stops digging

Governor Cooper released a proposed budget for 2018-19 that takes an important, though modest, first step in reversing the state’s failed tax cut experiment. The Governor proposed freezing corporate income tax rates at 3 percent rather than allowing them to drop again in January 2019, while also stopping personal income tax rate cuts on higher incomes.

Combined, this fiscally responsible approach will ensure $110 million is available in 2018-19 for public investments in areas that have immediate needs. Over the full Fiscal Year, the result will be an estimated $223 million in revenue available. Even more work will be required to undo the years of cuts that have been the priority of North Carolina’s General Assembly.

The hole we are in is deep.

This prudent first step in this year’s budget process demonstrates, however, what is possible when leaders put public investments before tax cuts. The Governor’s budget invests in a number of priorities in communities across the state, including increasing the number of school nurses and psychologists, funding classrooms, ensuring the Department of Environmental Quality gets the funding it needs to monitor air and water quality, and funding the transition of young people to the juvenile justice system under the Raise the Age proposal, among others.

There is no doubt that the damage of cutting tax cuts to our public institutions and communities has been years in the making and a more thorough adjustment from the tax-cutting approach will be required.

That should not diminish the importance of Governor Cooper’s recognition  that the first step when realizing you are in a hole is to stop digging.  Let’s hope the General Assembly follows suit.

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