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jobs adAnyone who follows state government has grown used to the regular press statements from politicians celebrating new private industry job creation announcements. For Governor McCrory, it’s almost a ritual. Scarcely a week goes by these days in which the Guv isn’t announcing (and taking credit) for the creation of jobs in one community or another.

A few (like this December announcement of the expansion of a home appliances outfit in New Bern that could create 460 jobs over five years) are relatively impressive, while many others (like this November announcement of the creation of 27 jobs over three years) are, well, not so exciting. At times, one is led to wonder whether the Guv will take to issuing a press statement every time a new Starbucks opens somewhere.

That said, one can hardly blame McCrory for trying. The man clearly sees himself as the state’s head cheerleader and that is no doubt an important part of his role.

It’s important, however, for North Carolinians not to get too swept up in (or impressed by) the apparent drumbeat of successes emanating from the administration. As recent news headlines remind us, there is a powerful current of job losses flowing in the opposite direction.

Consider the following: During the final quarter of 2015, the Governor issued nine press statements celebrating new job announcements that would create quite a few jobs over three and five-year periods. All told, it was one of the better three month periods in recent memory. Even so, when one pro rates the job claims over the specified time periods, the numbers are fairly modest, with roughly a total of 650 jobs to be created in 2016. And, of course, all of those numbers are just projections.

Now contrast that number with just two hard and fast recent announcements on the other side of the job ledger: the announced MillerCoors plant closing in Eden and the planned Freightliner layoff in Rowan County. Between those two events, that’s a loss of 1,456 jobs right way. What’s more, thanks to the disastrous unemployment insurance cuts imposed by Gov. McCrory and the General Assembly in recent years, the help for the newly jobless and their communities will be minimal-to-non-existent.

The take away: Neither the recent plant closures nor McCrory’s sunny announcements present a complete picture of the economy of course. Moreover, it’s certainly okay for the Guv to play cheerleader and hold lots of ribbon cutting events. Ultimately, however, as was explained in yesterday’s Weekly Briefing, no amount of positive spin or cheer leading can make up for a lousy overall situation.

In 2016, North Carolina desperately needs a comprehensive approach to growing an economy that works for everyone and leadership from elected officials on a host of fronts to make it happen. As the numbers above indicate, merely slashing taxes to help the well-off and repeatedly declaring victory is nowhere near enough.

NC Budget and Tax Center

We have our work cut out for us in 2016. Over the last few days we released a series of charts that capture the key economic stories of the past year. To see the full series of charts, visit the Justice Center’s Facebook page. Given the short and long-term economic challenges we face, public policy choices will determine whether we build an economy that works for everyone.

Your Resolve to Act in 2016 can bring prosperity to more North Carolina homes.  By staying up to date on economic trends, sharing information with your networks and communicating directly with your elected officials, you make sure that the choices are clear in the policy debates that this year will hold.

Resolve to act in 2016 because our economy isn’t creating enough jobs. If we counted all of the people who have left the labor market over the last several years because there are not enough jobs to go around, unemployment in North Carolina is likely still north of 10%. Even those who have been able to find work represent a smaller share of North Carolinians with a job than before the recession started. Unfortunately, economic reality has not yet produced a change of course in Raleigh. Many elected leaders continue to believe that tax cuts will solve our economic ills, in spite of the fact that state’s like California and Massachusetts that focus more on investing than cutting have seen stronger recoveries than North Carolina or our neighbors to the south. Read More

Commentary

State Senate Leader Phil Berger has some questions about the news that MillerCoors is going to close its long-time facility in Eden, Rockingham County, laying off 520 people in the process. Last night, he and fellow Rockingham legislator Bert Jones sent a letter to the U.S. Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights with a list of questions they urged the panel to pursue in an effort to determine whether the Eden brewery closure falls afoul of federal anti-monopoly regulations.

The Senator’s efforts are admirable given the enormously negative impact the plant’s closure would have on the rural community, which already has one of the state’s highest unemployment rates. And we sincerely hope that the brewery remains open, staving off the kind of mass layoffs that proved so disastrous to the human and economic fabric in rural communities like Kannapolis.

But after years of watching the legislature systematically dismantle the very state investments that protect jobless workers and promote community resiliency in times of high unemployment, workers in Rockingham and across North Carolina have some questions for Senator Berger as well:

  1. Why should Rockingham workers lose their unemployment benefits if they can’t find a job after 12 weeks ? If the brewery closes, 520 workers will lose their jobs through no fault of their own. Given that there are already twice as many unemployed workers as available job openings in Rockingham County (according to NCWorks), it will be mathematically very difficult for most these laid off workers to find new jobs. Thanks to the policies enacted by the General Assembly in 2013, Rockingham County workers will only have 12 weeks to find a job before they lose their unemployment benefits—the lowest duration offered for temporary wage replacement in the nation.
  1. Why should these laid off workers in Rockingham County lose food assistance after just three months if they can’t find employment in a job market without enough jobs? Since welfare reform in 1990s, the federal government has required able-bodied adults with no dependents to find a job, be engaged in skills training, or participate in other qualifying activities after three months of receiving food assistance or lose this assistance altogether. At the same time, federal law allows states to request waivers from this time limit in economically distressed counties where jobs are not available. Unfortunately, the General Assembly banned the state from offering this waiver in 2015, despite the 77 counties that qualified due to weak labor markets. In effect this move will significantly reduce access to food assistance for workers living in those counties, including Rockingham, after July 1 when the prohibition goes into effect.

Read More

NC Budget and Tax Center

With the sounds of Small Business Saturday in the air, it’s a good time to take stock of how main street businesses in North Carolina have fared over the last several years. The end of the Great Recession certainly improved the prospects for small businesses, but the recovery here in North Carolina has had a decidedly big-business bent. Most small businesses have not seen the level of growth that their larger competitors have enjoyed during the recovery, a clear sign that we have not done enough to help Main Street to prosper.

Small Business Saturday Blog Post - NC Growth by Firm Size 2009-2015

As can be seen to the left, the fastest growth in employment during the recovery has occurred in larger businesses. The biggest businesses (more than 1000 employees) have expanded their collective workforce by more than 15% since 2009, the next largest set of establishments (between 500 and 1000 workers) by almost 12%. In contrast the smallest businesses in North Carolina have struggled to take advantage of the current period of prolonged economic growth.

The growth gap between larger and smaller businesses that we’ve seen in North Carolina has not happened to the same degree in many other states. Large firms have added jobs faster than smaller companies over the last six years nationwide, but the difference in North Carolina is much more pronounced. Growth for the largest US companies was twice that of the smallest, while here in North Carolina the largest companies lapped the smallest group five times.Small Business Saturday Blog Post - NC and US Growth by Firm Size 2009-2015

This imbalance is an economic problem because small businesses are the veins circulating capital through local economies. Owners with roots in a community often source more locally, spend more of their earnings nearby, pay better, and invest in their communities. All of that helps to keep money flowing around and creating jobs. None of this is to denigrate how many large companies can help communities, but when local businesses don’t prosper, growth doesn’t always translate into deeper economic health.

Recent economic results call for a different approach to supporting small businesses. Instead of continuing to focus on cutting the corporate income tax, which mostly helps big companies, we should be plowing more resources into programs that help small businesses get loans, find new customers, and retrain their workers. The General Assembly did take a few steps in the right direction this last session, like appropriating funds to The Support Center which makes loans to small companies. But, particularly compared to the tax breaks lavished on large companies over the last few years, the assistance provided to small businesses has not been up to scratch.

So when you hit the shopping trail this season, head to your local small businesses first, particularly if they pay their workers well, offer benefits, and are invested in your community. Big box stores have their place, and some are good corporate citizens, but it’s the small businesses in North Carolina that could use a boost.

Commentary

As this week’s edition of The Weekly Briefing made plain, state leaders remain absurdly out of touch with the economic reality on the ground in North Carolina. The following announcement from colleagues at the N.C. Justice Center highlights this problem once more

Jobless workers struggle even as Division of Employment Security announces $600 million in tax cuts to employers
Employment remains more than 4 percentage points below pre-recession levels, according to October data 

Jobless workers continue to struggle with an economy that fails to provide enough jobs and an unemployment insurance system that is ill-equipped to deliver partial wage replacement to stabilize the economy, even as North Carolina’s Division of Employment Security announced $600 million in tax cuts to employers.

Employment levels as a share of the population remains more than 4 percentage points below pre-recession levels, according to today’s announcement on labor market conditions for October 2015.

Last month’s state employment rate was 5.7 percent, the same level as one year ago. However, the number of unemployed North Carolinians has increased over that period by 11,591 jobless workers. The national unemployment rate was 5.0 percent in October, dropping by 0.7 percentage points over the year.

“North Carolina should not be issuing tax cuts for employers when we have failed to reach what are generally agreed to be safe levels for our state’s Unemployment Insurance Trust Fund,” said Alexandra Forter Sirota, Director of the Budget & Tax Center, a project of the North Carolina Justice Center. “Instead, our state policymakers need to re-balance their approach to ensure the system can deliver partial wage replacement to jobless workers and in so doing serve as a stabilizing force in the economy.”

Important trends in the October data also include:

  • The percent of North Carolinians employed is still near historic lows, and below the nation. October numbers showed 57.5 percent of North Carolinians were employed, leaving the state well below employment levels 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.
  • There are still more North Carolinians out of work than before the Great Recession. There were more than 270,000 North Carolinians looking for work in October, almost 50,000 more than before the Great Recession.
  • North Carolina’s unemployment insurance system only provided temporary wage replacement to 22,545 North Carolinians. The number of jobless North Carolinians receiving unemployment insurance has dropped precipitously since 2013, ranking us 49th in the country on this measure and hindering the ability of the program to serve as a stabilizing force in the economy.

“North Carolina’s labor market is still too weak to ensure jobs are available for all those who seek employment,” Sirota said. “This affects all of us, as wages are falling short of the growth needed to boost the economy in the immediate and long-term.”

For more context on the economic choices facing North Carolina, check out the Budget & Tax Center’s weekly Prosperity Watch platform.