NC Budget and Tax Center

Work requirements for access to healthcare ignore a simple truth about modern employment

Proposals to require people to report on work hours in order to access Medicaid (something that’s being considered this session at the North Carolina General Assembly both for exiting program participants and as a part of GOP proposals to close the coverage gap) fly in the face of some very basic labor market realities of the 21st Century.

As we noted in our recent report, research has consistently showed that the vast majority of those receiving Medicaid who can work are working. Those who have jobs are often working in low-wage, part-time jobs with unpredictable schedules that would make it difficult to report work hours in compliance with requirements and keep their health care.

A new report released by the Urban Institute this week provides additional findings using newly available survey data about the unique challenges facing workers and their risk of transitioning in and out of compliance with work requirements week to week for reasons beyond their control.

The researchers find:

“Our survey indicates that most nondisabled adults whose families participated in safety net programs in the past year were not on the sidelines but in the game, with nearly three in five working at the time of the survey, including about half working for an employer. However, work schedules for these adults are often unstable and unpredictable:

  • One in five works a rotating, split, or irregular shift.
  • Over half report fluctuations in weekly work schedules of 10 hours or more during the past month.
  • More than a third (39.1 percent) usually know their schedule one week or less in advance.
  • More than half (56.0 percent) have little to no input on when their workdays begin and end.”

The reality of unpredictable work schedules and hours and the very nature of work arrangements in today’s labor market make it impossible to design work requirements to help people stay employed and healthy.

NC Budget and Tax Center

Tax changes in Senate, House budget proposals continue to benefit richest North Carolinians

The tax decisions in the Senate and House budget this year — as with each year — determine what the state is able to invest in. For years, North Carolina legislative leaders have prioritized tax cuts for the few over investments in all of our well-being.

Our tax code can and should support smart public investments that would otherwise not be provided or accessible to all in our state. Our tax code also shouldn’t ask more as a share of income from those with the lowest income while giving breaks to the few and special interests if there aren’t demonstrated broad-based benefits to our state.

The House and Senate budget agree on many of the major tax provisions in the two budget proposals.

The Senate budget, however, makes even deeper cuts to the franchise tax in pursuit of its goal eliminate the franchise tax in the near future. The Senate proposal would also increase the standard deduction threshold higher than the House proposal, which would mean a greater revenue loss and only a modest difference in the experience of taxpayers. Both proposals include extensions of tax breaks for the aviation and motor sports industry, a tax break for those receiving economic development incentives. Both also include a shift to the ways in which sales are apportioned across states to determine sales taxes owed and the extension of a gross premium tax to prepaid health plans in light of the transition to Medicaid managed care. Both proposals comply with the by expanding online sales tax collections, but with different revenue estimates.

Read more

NC Budget and Tax Center

A half dozen economic challenges that tax cuts at the top don’t fix

North Carolina legislative leaders are once again debating the value to our economy and well-being of cutting taxes for the wealthy and big companies. The debate tends to remain constrained to the short-run evidence from 2013 to the present on various traditional economic indicators at the state level. My colleague Patrick McHugh has pointed out that a review of that data should lead us all to conclude that the tax cuts since 2013 have delivered no special boost to the state’s economy.

And yet, we should also be considering the opportunity cost of North Carolina’s tax cut experiment.

It has kept our state from addressing genuine economic challenges that public policy and public investment could make progress on in favor of a flawed economic theory that at worst exacerbates the challenges and undermines a pathway to better economic outcomes for all.

Here are just SIX of the economic challenges that North Carolina faces that are not addressed by tax cuts at the top or for big companies:

  1. Job growth is concentrated in just a handful of counties, leaving the rest of the state struggling with too few jobs for those who want to work and the need for infrastructure to connect people to the areas where jobs do exist. Tax cuts that focus on reducing the rate on corporate profits don’t target the small businesses and homegrown companies that are the primary job creators statewide and integral to the smaller communities across the state. Instead, these tax cuts are primarily delivered to shareholders, many of whom do not even reside in North Carolina. At the same time, tax cuts drain the state of revenue that could provide dollars to local governments and regions to connect each community to where the jobs are.
  2. Income inequality continues to rise across the country and in North Carolina. Since the recovery began in 2009, until the last available data in 2015, the top 1 percent in North Carolina have captured more than all of the income growth. How is such a thing possible? The answer: When the income of the bottom 99 percent of North Carolinians actually declines over the same period. As has been well documented in the academic literature, there is no consensus that tax cuts for the highest income taxpayers will lead to new job creation.   Tax cuts at the top have made worse the concentration of income.
  3. The job growth that is happening isn’t paving the way to the middle class for majority of North Carolina workers and isn’t strong enough to accelerate wage growth for all. The quality of jobs that get created in an economy matter for the ability of those jobs to improve well-being. When jobs pay too little for people to make ends meet or make it difficult to move up the economic ladder, the ability to reach our economic stride is blocked. Read more
Education, Higher Ed, NC Budget and Tax Center

Reaching our state’s educational attainment goal

At this time of year, graduation stories are ever-present, yet their broader meaning to the strength of our economy is less discussed, as are the real barriers to completion that many young people face.

The research is clear that states with large numbers of bachelor’s degree holders have higher median wage levels than other states, according to the Economic Policy Institute. An advanced education also helps make workers more upwardly mobile in North Carolina. The Working Poor Families Project reports that the median earned income for someone with a bachelor’s degree is $18,000 higher than for someone with only a high school diploma.

Recognizing these real economic and community benefits, state leaders through the myFutureNC commission have set a post-secondary attainment goal that by 2030, two-thirds of North Carolinians aged 25 to 44  will hold a post-secondary degree, with a commitment to ensure that workers are acquiring skills and credentials that align with the goals of the state.

One overlooked source of people who can help North Carolina reach its goal are the Dreamers who have been educated here in North Carolina and are blocked from a pathway to post-secondary attainment due to their arrival to this country without documentation, as well as the lack of a tuition equity policy in our state.  Dreamers seeking to attend college in North Carolina are forced to pay out-of-state tuition – often 300 percent higher than the in-state tuition their peers pay – despite having spent their childhoods enrolled in North Carolina schools. In recognition of the inequity this creates, 21 states across the country have set up policies that recognize the investment that young people have in their educational futures and that communities have made in their education to date.

Estimates based on new data from the Migration Policy Institute suggest that, in North Carolina, an expanded tuition equity policy could benefit at least 1,470 graduates each year.

In a brief we released earlier today, Lissette Guerrero looks at the already significant economic contributions of all foreign-born workers and notes the critical role that post-secondary attainment and access to skills training for adult workers could provide in further boosting the economic and community contributions of these workers.

Indeed, as we have written about in the past on the topic of tuition equity, tuition equity can improve educational opportunities for young people in North Carolina and in turn boost employment outcomes and the productivity and growth of industries and the broader economy.

Tuition equity led to a 31 percent increase in college enrollment for undocumented students and a 33 percent increase in the proportion of Mexican young adults with a college degree in the states that adopted the policy. In addition, the average high school dropout rate decreased by 7 percentage points—from 42 percent to 35 percent—in states with tuition equity.

As yesterday’s Undocugraduation event demonstrated, the potential of young Dreamers is vast and important and to continue to block these youth from accessing post-secondary education would  put that potential to waste.

NC Budget and Tax Center

April labor market data confirm NC job growth is still unexceptional

The data released last Friday by the Bureau of Labor Statistics affirms the message delivered on the Senate floor last week by some lawmakers. North Carolina has not experienced a surge in employment nor is the state’s level of employment in a better position compared to historic levels. The tax cut experiment since 2013 has failed and due to the loss in the ability to fund foundational investments to a strong economy—health and well-being of families, education of children and the workforce, infrastructure in communities and regional connections—it is likely to hold us back from reaching our full economic potential

As noted on the Budget & Tax Center’s labor market update for April 2019, year over year job growth was just 1.6 percent, below the national average of 1.8 percent. North Carolina’s employment growth remains in line with regional neighbors and has not achieved notable acceleration from tax cuts.

The state’s unemployment rate has remained steady over the past year, hovering around four percent. Unlike the recent trend nationally, North Carolina’s labor force continues to grow albeit slower than the working age population. This is likely due to the reality that there are still too few jobs for those who are looking for work.

North Carolina’s employment to population levels remain below historic levels and below the national average as does our labor force participation rate. North Carolina needs to create 16,000 jobs each month to get back to pre-Recession employment levels in three years.  While clearly getting back to that level sooner should be the goal, the month over month change in employed persons has not hit that 16,000 threshold since January 2018.