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jobseconomyThis is new from the experts at the N.C. Budget and Tax Center:

Labor force decline still driving drop in unemployment for many metro areas

RALEIGH (April 29, 2014) — Despite falling unemployment rates, most of North Carolina’s metro areas are still waiting for meaningful job creation, according to new jobless numbers released by the Division of Employment Security this morning. Nine out of the state’s 14 metros saw weaker job creation over the last year than they did over the same period in previous years. In 7 of 14 of the state’s metro areas, the drop in the unemployment rate between March 2013 and March 2014 was driven by a shrinking labor force and not by large-scale employment growth. Read More

Another month, another underwhelming jobs report for North Carolina. The Tar Heel state created fewer jobs and saw a smaller percentage of unemployed workers find employment than the rest of the nation over the last year, according to the February jobs report released by Division of Employment Security this morning.

The numbers tell a clear story: 2013 was a rough year for the state’s labor market. While the state saw its payrolls expand by 65,000 new jobs (1.6 percent) since March 2013, this represents slower job growth than the 1.7 percent rate of job creation in the nation as a whole. Even more troubling, this represents a reversal from the previous year (March 2012 to March 2013), during which North Carolina outpaced the nation in job creation 1.6 percent to 1.5 percent.

Not only did North Carolina underperform the rest of the nation over the last year, the state’s performance in 2013 stacks up poorly compared to its performance in previous years. Over the past year (March 2013-2014), the state created 200 fewer jobs than it did over the same period the year before (March 2012-2013), and only created 100 more jobs than were created from March 2011-2012—hardly signs of an increasing job creation trajectory.

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At his Tax Day press conference, Governor McCrory repeated the often-heard claim that the effect of cutting taxes on the state’s economy speaks for itself. Last year’s tax cuts may be speaking, but they’re not telling the story its proponents hoped—for the very good reason that tax cuts are just a poor strategy for promoting business growth and long-term job creation.

Here’s the Governor on Tuesday:

“Businesses are relocating to North Carolina because of the changes we made in our tax code and that speaks for itself.”

This claim does not bear up under serious scrutiny. In fact, decades of evidence support the opposite—taxes don’t drive business location decisions. Rather, the public investments that taxes make possible are the most important factors in determining where companies decide to locate—investments like an educated workforce, infrastructure, strong industry clusters, and proximity to research and development institutions.

So let’s examine the evidence Governor McCrory presented, starting with Lee Controls—a New Jersey-based company that recently relocated to Brunswick County and cited tax reform as one of the major reasons for their move. The company is promising to create just 77 jobs over several years. While creating even one new job moves the state in a positive direction, the fact remains that trying to dig North Carolina out of the job losses from the Great Recession is going to require more employment growth than can be generated by one 70-job project at a time.

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Partial privatization of the N.C. Department of Commerce took another step closer to reality yesterday when the Economic Development and Global Oversight Committee (or EDGE Committee) reported out updated enabling legislation that authorizes the establishment of a nonprofit corporation to conduct significant pieces of the state’s business development activities. Using last year’s SB 127 as a template, the new version of the bill includes important changes—some for the better, some for the worse, and some that make us go “huh?”

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Acclaimed economist Dean Baker says it’s quite simple to explain why North Carolina’s jobless rate has fallen over the last year:

“It’s very clear, people dropped out of the labor market,” explained Baker in a recent Raleigh interview.

Baker joined Chris Fitzsimon on NC Policy Watch’s News and Views last week to discuss why the state’s economy continues to falter, and when we are likely to see employers increase their hiring. Baker also noted that North Carolina’s employment growth is below what many other states are experiencing.

Listen to the full radio interview online, and be sure to read Rob Schofield’s Weekly Briefing: Five basic things you should know about the state of the economy.
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