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We keep hearing that North Carolina’s economy is turning around. But while it’s true that we’re slowly making progress in replacing the jobs lost during the Great Recession, the bad news is that the overwhelming majority of these new jobs just don’t pay enough to make ends meet. In fact, many don’t pay enough to keep workers out of poverty, despite working full time. Check out the latest Prosperity Watch for details.

At the heart of the American Dream is the idea that hard work is supposed to pay off—that anyone who works a full time job should be able to make ends and achieve upward mobility over the course of their lives. As discussed in the most recent issue of Prosperity Watch, however, seismic shifts in the global economy away from manufacturing and towards services have pushed this dream further and further away from too many of North Carolina’s workers. See the latest Prosperity Watch for details.

Governor McCrory’s Economic Development Board released it’s long-awaited strategic plan for the state’s economic development efforts this afternoon. Here is the Budget and Tax Center statement in response:

We all want to create jobs and grow an economy that works for everyone in North Carolina, and the best way to make sure that happens is to focus on raising family incomes after a decade of decline. While the Governor’s plan includes a number of useful proposals, there is an important contradiction between the plan’s call for additional tax cuts and the resources necessary to achieve the goals related to workforce development, innovation/entrepreneurship, and rural prosperity. These goals will be impossible unless the state provides adequate investment in higher education, community colleges, and rural community development initiatives. Funding for these initiatives are already well below where they were before the recession started in 2008, so it’s unlikely the state will be able to make significant progress on achieving these goals given the steep revenue losses resulting from last year’s tax cuts and any future round of tax reductions.

 

Folks interested in economic development policy should check out a new report released by the Budget and Tax Center today.  As discussed in the report, the state needs a fresh approach to creating jobs and growing the economy—an updated economic development strategy that fits the demands and challenges of the 21st century. At the heart of this new approach, the primary goal for the state’s economic development efforts should be achieving growth in median household income.

The fundamental challenge facing North Carolina’s economy in the first decades of the 21st century is how to replace rapidly vanishing jobs in declining manufacturing industries with jobs in growing industries that pay enough to allow workers and their families to make ends meet and achieve middle class prosperity.

To meet this challenge, the state should refocus its economic development goals to not just to promote “growth” for its own sake, but to ensure that as many people and regions as possible benefit from growth.  As a result, North Carolina should adopt an integrated, “all-of-the-above” approach to economic development, one that leverages the state’s existing assets and strategies—such as its top-notch research universities and regional clusters of thriving industries like pharmaceutical manufacturing—to support all types of business growth. This involves the expansion of existing businesses and the creation of new homegrown businesses, alongside strategies for attracting outside businesses to the state.

This involves fostering businesses in industry clusters that are not only expanding, but that also pay high wages and offer good benefits, and to target those efforts to the regions of the state that lagging behind.

Finally, a 21st century strategy requires 21st century ways of measuring whether that strategy is succeeding. As a result, policymakers need to use a broader range of indicators beyond economic growth— including median household income and poverty rates—that reflect changes in the standard of living and the ability of families to prosper in the 21st century.

For more details, see the report.

North Carolina’s unemployment rate dropped to 8.7 percent in August, according to the latest jobs report from the Division of Employment Security, but this “improvement” is largely the result of a mathematical quirk, and masks deeper, long-term problems in the state’s labor market—most notably, the lack of available jobs for unemployed workers.

While the number of unemployed people dropped last month, this is only because jobless workers gave up on their job search and dropped out of the labor force, not because they actually found jobs. In August, Read More