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This week’s issue of Prosperity Watch grapples with an under-reported and historically unprecedented trend in North Carolina’s economy–while the state has experienced a total of more than 4 percent total growth in Gross Domestic Product from 2006 through 2011, job creation over this period has been virtually nonexistant. This trend in manufacturing is even more pronounced.

So what’s causing this troubling divergence between economic output and job creation? See the latest Prosperity Watch for details.

According to the latest issue of Prosperity Watch, North Carolina’s job growth has remained stubbornly stagnant over the last year, with the unemployment rate stuck between 9.6 and 9.4 since February 2012. Even more troubling, however, is the fact that what little employment growth the state has experienced since the end of the recession has largely occurred in low-wage service industries. In effect, the state is losing the middle-wage jobs that used to provide a pathway into the middle class for many North Carolinians and replacing them with jobs in industries that pay significantly below the state average—a boom in low-wage employment.  See the latest issue of Prosperity Watch for details.

Earlier this week, the N.C. Division of Employment Security released the latest jobs numbers for January, and unsurprisingly, North Carolina’s labor market is continuing to struggle. As the latest issue of Prosperity Watch makes clear, the state’s employment recovery is still lagging the national average, and despite slowly beginning to close this gap, much work remains to provide adequate employment opportunities for North Carolina’s workers.  See the latest Prosperity Watch for details.

 

In his press conference yesterday, North Carolina House Speaker Thom Tillis reiterated his desire to eliminate the state’s corporate income tax, expressing his earnest (but misguided) belief that abolishing the tax will ensure stronger job creation across the state. This belief is misguided because it rests on a fundamentally flawed assumption—that corporations will always reinvest the savings they get from the tax repeal into creating new jobs or paying existing workers higher wages inside North Carolina.

In reality, there is no guarantee that multinational corporations with locations and subsidiaries across the entire world will take their North Carolina state tax cut and reinvest it in their North Carolina operation. In fact, if we look at recent national corporate investment patterns, there’s actually no guarantee that these corporations will reinvest additional income in job creation (or higher wages) at all.  

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A new report from the Annie E. Casey Foundation suggests an entire generation of young Tar Heels is aging with limited work experience or job-readiness skills.

Last year, nearly 6.5 million American teens and young adults ages 16 to 24 were disconnected, that is they were not enrolled in school while also unemployed. In North Carolina, about one in every five young people in that age group were  disconnected.

“Far too many of our young people are not in school, not working, and have few employment prospects placing them at risk of chronic underemployment and reduced financial stability later in life,” said Deborah Bryan, President & CEO of Action for Children North Carolina. “The potential economic and social cost of youths’ lack of access to employment extends well beyond the lives of those young people affected; it undermines our state’s ability to achieve a prosperous future.”

According to the Casey Foundation, only 41 percent of North Carolina’s young people were employed in 2011, compared to 60 percent in 2000.

The report emphasizes the need to reengage high school dropouts and provide multiple pathways for disconnected younger workers to build their job-readiness skills. Advocates at Action for Children North Carolina note that when young people have no connection to school or jobs, government spends more to support them.

The entire report Youth and Work can be viewed online here. To view disconnected youth by race, click the image below.