Commentary

The latest from analysts at the N.C. Justice Center:

July Jobs Figures Show NC Falling Behind the Nation

RALEIGH (August 21, 2015) — The July labor market data released this morning show North Carolina continues to lag behind the nation in a few vital ways.
Wages in North Carolina are not growing as fast as the nation, and are actually down slightly compared to a year ago. Furthermore, the unemployment rate in North Carolina has gone up over the last six months while unemployment nationwide has fallen.

“North Carolina’s economy remains far from its position prior to the recession,” said Patrick McHugh, economic analyst with the Budget & Tax Center, a project of the NC Justice Center. “This reality is reflected in wage levels and a labor force participation rate that have yet to reach their pre-recession levels.”
Highlights of the July data include:

• Growing wage gap between North Carolina workers and the national average: For North Carolina, the average weekly paycheck came in at $763.49 in June. When factoring in inflation, the real buying power of wages in North Carolina remains well below pre-recession levels. Wages nationwide have grown faster than inflation over the last year. All told, this means that the average weekly North Carolina paycheck is now $101 less than the national average.
• Still more North Carolinians out of work than before the Great Recession: Even though the ranks of the unemployed have declined over the past year, there are still nearly 280,000 North Carolinians looking for work, approximately 64,000 more than before the Great Recession.
• Percent of North Carolinians employed still near historic lows: July numbers showed 57.6 percent of North Carolinians were employed. This leaves North Carolina well below the level of employment that was commonplace before the Great Recession. In the mid-2000s, employment levels reached a peak of about 63 percent. The percent of North Carolinians with a job remains below the national average, as it has been since the Great Recession.
• Labor force participation grows, but still below pre-recession norms: The size of the labor force, a measure of people who are employed or are looking for work, grew by just under 3 percent over the year. While this is a good sign that some workers are returning to the labor force, the share of North Carolinians who are employed or looking for work is still lower than before the Great Recession.
• US making much more progress in reducing unemployment than North Carolina: Even while the state continues to add jobs, growth is not enough to push unemployment below the 5 percent threshold that most economists see as the top-end of a healthy labor market. While the national unemployment rate has come down over the last six months, the ranks of the unemployed have grown here in North Carolina.

For more context on the economic choices facing North Carolina, check out a recent report on building an innovation economy for all and the Budget & Tax Center’s weekly Prosperity Watch platform.

Commentary

Today’s Fayetteville Observer hits the nail on the head with this editorial condemning the state Senate’s plan to turn North Carolina’s Medicaid program over to giant, for-profit insurance corporations:

“The N.C. Senate’s drive to restructure the Medicaid program is making less sense all the time.

We understand lawmakers sometimes succumb to the urge to fix what’s not broken. But when they, and the voters, see mayhem coming, they usually back away.

We hope that’s happening this week, as members of the General Assembly get more evidence that our Medicaid management model is anything but broken.

According to just-released long-term review by the State Auditor’s office, the agency that administers the Medicaid program here is saving taxpayers a bundle – and providing improved medical outcomes at the same time.

The audit measured results achieved by Community Care of North Carolina from 2003 through 2012. The physician-led program has won national acclaim for its effectiveness in running the health-insurance program for the poor and disabled. Other states are copying the system, which has produced budget surpluses for the past two fiscal years.

Medicaid, funded jointly by the state and federal governments, covers about 1.4 million North Carolina residents. According to the audit, Community Care succeeded in managing medical conditions and keeping patients out of the hospital. That resulted in savings of about $78 per user per quarter, which adds up to saving state and federal taxpayers something approaching half a billion dollars a year.

Most lawmakers would likely agree that we’re talking real money there, yet the drive for privatization still has its hooks in the Senate, our legislative branch most driven by ideologues. Read More

Commentary

In case you missed it the other day, the Charlotte Observer ran one of the best essays yet on the disastrous consequences that North Carolina can expect if the ALEC-inspired “Taxpayer Bill of Rights” becomes embedded in the state constitution and what we ought to do instead.

Leslie WinnerIncrease teacher pay without TABOR

By Leslie Winner

I was talking to the superintendent of a small school system last fall, and she mournfully told me about losing her best high school math teacher to South Carolina, where he would earn $10,000 more per year for doing the same job. We all know young adults who would be good teachers, who would like to teach in North Carolina, and who won’t go into teaching, or who are leaving or won’t come to North Carolina, because we do not pay enough for a teacher’s family to live on. We all know of schools that will open this month without a qualified teacher in each classroom, that are facing a shortage of math, science, and foreign language teachers, because those schools cannot find enough qualified teachers to hire.

Almost all of us in North Carolina deeply believe that our public schools should prepare each child for a meaningful and productive life. Kids are different from each other, and each child deserves to get a year’s worth of growth for a year’s worth of school. Parents also deserve to be confident that their children will finish school prepared for the future. We know that to accomplish this, schools must have good teachers in each classroom and enough up-to-date textbooks and technology.

Since North Carolina is currently significantly behind in providing enough funding for teachers, textbooks, and technology, I was surprised to read that talk of TABOR, the so called “tax-payer bill of rights,” has resurfaced in the legislature. This proposed amendment to the state’s Constitution would both cap North Carolina’s income tax at 5%, helping those with higher incomes, and cost the state $1.5 billion a year in revenue. It would also limit increases in state spending, based on inflation and population growth, limiting North Carolina, effectively, to the amount we are spending now, with no room for improving public schools even in prosperous times.

We are fortunate to have thousands of effective, dedicated teachers in our schools. To keep them, and to attract new ones, we need to recruit smart young adults into the profession, provide the best with prestigious teacher scholarships, prepare them well, respect and support them as teachers, and pay them enough so they can support their families while they work as teachers. Currently, about half our teachers quit in their first five years. If we invested in recruiting, preparing, supporting, and paying them well, more would stay longer, reducing the number we need to hire each year, and allowing us to invest more into recruiting, preparing and supporting the next round of new teachers. Read More

Commentary

DENRpicFor many years, North Carolina has been lucky enough to be served by a dedicated group of public servants of both major political parties who were committed to protecting and preserving the state’s natural environment from the frequently destructive impacts of rapid population growth, industrialization, mushrooming energy use and all of the other trappings of modern American society. A large number of these fine people served in an agency that has long operated under the moniker “Department of Environment and Natural Resources” or “DENR” for short.

In 2015, however, it’s now clear that things have changed. Oh sure, there are still some dedicated public servants of both major parties doing their best to pursue the goal of preserving something of our natural environment, but increasingly, it’s clear that DENR’s leadership has no real interest in such a mission. In recent days, for instance, the appointed leader of what is supposedly North Carolina’s environmental protection agency spent much of his time: a) promoting offshore oil drilling near North Carolina’s beautiful and fragile coastline and b) railing against efforts by the federal government to promote clean air and fight the existential threat of global warming. What’s next — a new DENR initiative to promote fracking?

The bottom line: “DENR” clearly no longer stands for what it once did. It is obvious, therefore — at the risk of giving the McCrory people an idea that they’ll run with — that the agency should be rechristened the Department of Exploitation of Natural Resources.

They won’t even have to change the acronym. A change to the symbols in the above logo might be apt however. How about an oil spill, some smoggy air and a patch of parched and barren land?

NC Budget and Tax Center

The new state labor market data will come out tomorrow.  Ahead of that and in light of the current discussion of unemployment insurance in the General Assembly, it seemed a good time to revisit the state of the labor market for jobless workers and the effectiveness of unemployment insurance in providing workers with the support they need while looking for work and in buttressing the economy.

Prosperity Watch this week looked at data available from the North Carolina Department of Commerce that shows at the county level the ratio of jobless workers to job openings. More than two-thirds of the state’s counties still have more jobless workers than job openings.  Even if all the job openings in those 83 counties were filled, there would still be workers looking for work.

Even while North Carolina has cut the number of weeks that workers can claim unemployment insurance, a lack of job openings means that a lot of people are spending prolonged periods out of work..  Despite the official recovery, one out of three jobless workers has been out of work for 26 weeks or more.  The long-term unemployed face a host of additional barriers to employment including discrimination in the application process, lapse in skills for the work place and mounting debt that may make transportation or housing difficult to sustain.

Unemployment insurance was designed to prevent just this kind of vicious cycle.  The system is meant to ensure that workers who lost their jobs through no fault of their own—like because of a business downturn—can meet their basic needs while they look for work and thus not withdraw completely from participating in economic life as consumers, renters or homeowners.  Today however, the system is not meeting that goal:

  • The state has a 15% recipiency rate, measuring the number of jobless workers who receive unemployment insurance, for the first quarter of 2015 which ranks us 47th in the country.
  • The state has an average weekly benefit amount of $231.30 which ranks us 47th in the country.
  • The average duration that a jobless worker receives unemployment insurance is 12.9 weeks which ranks us 45th in the country.

Read More